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TMI Blog1990 (3) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... ock having geometrical shape which falls under sub-heading 3921.11 of the new Tariff and eligible for exemption under Notification No. 243/83-C.E., dated 9-9-1983. He explained that the Department grossly erred in classifying this item under the sub-heading 3909.60 on the two grounds: (i) Blocks as such omitted under sub-heading 39.21 and (ii) the goods in question obtained by reaction of two non-plastic chemicals i.e. rigid polyurethane foam is of 'primary form'. 5. The learned Advocate explained that though the term block as such is omitted under sub-heading 39.21 but it finds place very much in the Notes 10 of the Chapter 39 as blocks of regular geometrical shape and further according to Notes 6(b) of the same Chapter 'primary form' applies only to blocks of irregular shapes. It means blocks of regular geometric shape are not primary form. He said that the blocks cut by the appellants have a very consistent length and width. The height of the block is controlled by the discharge rate of the chemicals, the speed of the conveyor at the prevailing temperature. This being a regular geometric shape, comes under Tariff Item No. 3921.11. He submitted further that it is not the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the classification for the earlier period as rigid polyurethane foam falling under erstwhile Item 15A(3) of the old Tariff Act and the appellants were enjoying partial exemption upto the introduction of Central Excise Tariff Act, 1985 and after introduction of the new Tariff Act the appellants filed classification list claiming partial exemption in respect of rigid polyurethane foam falling under sub-heading 3921.11 under Notification No. 243/83 dated 9-9-1983. However, without approving the classification list the appellants were directed to pay duty. These classification lists which were kept alive altered the classification while approving at very late and that too modified the classification without issuing show cause notice prior to change of classification. Dictionary meanings, Board's opinion, intention of the legislation, historical background have to be taken into consideration while classifying a particular item. In the case of ambiguity or if two views are possible the benefit should go to the appellants. In this connection he relied on the following decisions: 1.1986 (159) ITR 85 (90) - Commissioner of Income Tax v. J.K. Hosiery Factory 2.1989 (177) ITR 583 - M/s. Ko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two decisions cited by the learned DR are not relevant to this case on the ground that the items are different in the first case and the second judgment never dealt with the present issue. 10. We have considered the arguments advanced by both sides on the issue of classification. It is evident as admitted by the appellants that the rigid polyurethane foam is in the form of bun like block. The term 'block' is omitted in the entry under Tariff 39.21. Now the point to be considered whether the block is of irregular shape or blocks of regular geometric shape. In view of the explanations under Notes 6(b) and Notes 10 of the Chapter 39, primary form is applicable only to blocks of irregular shape and if it is blocks of regular geometric shape it can be classified under 39.21 as explained in Notes. 10. The contentions of the appellants' counsel that rigid polyurethane foam is block of regular geometric shape is not acceptable at this stage as it was clearly admitted by the appellants before the Adjudicating authority that the rigid polyurethane foam is obtained by chemical reaction of the chemicals and having irregular shape in block form and the product tested by the Department by N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are more or less the same as those given in the preceding paragraph, then the blocks could be classified under 3909.60. Perhaps such a classification is bound to create a disparity in the practice of classification before 1-3-1986 and after, to the disadvantage of the party. However, this is a fiscal matter on which I have no comments. It is also necessary to point here that the view expressed in the case of blocks may not be applicable to specific articles made by pouring the reaction mixture into moulds. Here, no primary form is obtained before the formation of articles. The article results simultaneously with the formation of resin in the mould. The edges of such articles removed from the mould may require trimming to give precision to the shape, but before such trimming, the article cannot be considered as a primary form." 11. Accordingly as per para 4 of the opinion opined that the blocks would not perhaps be considered having regular geometric shape and in that sense bun like blocks can constitute a primary form. 12. The term block is specifically omitted under sub-heading 3921.11. Nothing is implied as there is no intendment nor equity in tax law. It has to be read, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajan, the learned DR while arguing on this point submitted that the demand on RT 12 assessments cannot be compared with that of the demand under Section 11-A and raising demand on RT 12 is only a requirement of Rule 173(1) of the Act. Non-issuance of show cause notice will not vitiate the proceedings and at best it can be treated as violation of principles of natural justice and he has no objection for sending the matter back to the Asst. Collector on this limited issue with the direction for issue of a show cause notice. 16. The point to be considered on the second issue is whether the demand raised without issuing show cause notice amounts to void or mere violation of principles of natural justice. 17. On perusal of the records it is evident that wherever the Department has raised demand on RT 12 it raised without issuing a show cause notice. The Kerala High Court had an occasion to examine Rule 1731 in the case of Inspector of Central Excise v. M/s. Good Shepherd Rubber Co. (supra) and on some of the similar facts of the present case and while deciding the issue the High Court quashed the assessment on the ground that no show cause notice was issued under Rule 10 for recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that appeal the appellants urged that the original assessment on RT 12 return was in violation of the principles of natural justice since no opportunity to present their case was offered to them and there was no notice to show cause against the assessment at that stage, and that the notice to show cause issued subsequently did not result in a proper adjudication. The Bench held that the appellants were correct in their submission that the procedures had become vitiated in consequence of failure to afford an opportunity to be heard at the time of RT 12 assessment and to failure to adjudicate on the notice to show cause subsequently issued. (ii) The learned advocate cited inter alia two judgments of Supreme Court, vide Sri. Nos. 2 and 3 in paragraph 13 of foregoing order. In 1988 (35) E.L.T. 349 (S.C.) in the case of Union of India and Others v. Madhumilan Syntex Pvt. Ltd. (supra), the Hon'ble Supreme Court has held that Section 11A of the Central Excises and Salt Act, 1944 clearly proceeds that prior Show Cause Notice must be issued to the person against whom any demand on ground of short-levy or non-levy of payment of excise duty is proposed to be made. In 1989 (20) ECR 30 (SC) in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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