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TMI Blog1990 (12) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... -1983. The appellants' contention that the product was P.V.C. Compound was not accepted. Hence the present appeal. 3. We have heard Shri C.M. Korde, Advocate, for the appellants and Shri L. Narasimha Murthy, DR, for the respondent Collector. 4. Notification No. 206/77 reads as follows :- "Exemption to PVC compound. - In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 (1 of 1944), the Central Government hereby exempts the plastic material commonly known as polyvinyl chloride compound (PVC Compound) from the whole of the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944)." [page 34 of the Paper Book] It may be seen that the term 'PVC Compound' has not been defined except that it is the plastic material commonly known as Polyvinyl Chloride Compound. 5. The process of manufacture of the product is as follows :- "Basic PVC Resin is mechanically mixed with Plasticizers, Additives, inorganic fillers and blowing agents to obtain a homogeneous compound of the desired viscosity. The Compound is then deaerated and packed. The following inputs are used to obtain the said compound. (1) PVC Resin &en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [page 39 of the paper book] On 5-2-1979, the Suptd. of Central Excise communicated to the appellants the test report received from the Chemical Examiner, Bombay. On the subject product, it stated : "Sample is in the form of a paste. It is composed of polyvinyl Chloride Synthetic resins plastisizers and inorganic fillers. It is not a PVC compound." [page 42 of the paper book] It appears from the Superintendent's further letter dated 15-6-1979 (page 43 of the paper book) that the Deputy Chief Chemist, Bombay had reported on the product in identical terms. He further stated that in view of the test report, the product should have been classified and assessed to duty as synthetic resins at 40% ad valoram from the beginning. To this, the appellants replied on 27-6-1979 (page 46 of the paper book) reiterating that the product was P.V.C. Compound and gave a technical explanation in respect thereof. It appears that on 12-5-1980, four representative samples of the product were drawn by the Central Excise Inspector. On 29-9-1980, the Superintendent issued a show cause-cum-demand notice (page 49 of the paper book) alleging suppression of the information regarding the correct composition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (The original of the letter was seen by the Bench. It was apparent that the date was erroneously shown as 22-2-1982. It should have read as 22-2-1983. It is the appellants' contention that there was in fact no test by the Chief Chemist. This will be dealt with later). Followed a second show cause notice dated 26-11-1982 (page 72 of paper book) for Rs. 15,01,924.83 for the period from 1-10-1980 to 28-2-1981. By reply dated 4-1-1983, the appellants denied any liability to pay the amounts. Followed yet another show cause notice on 21-2-1983 (page 85 of the paper book) for disallowing the exemption claimed in C.L. No. 1/82-83/12-3-1982 provisionally approved as eligible for exemption under Notification 206/77. In reply dated 15-3-1983 (page 89 of the paper book), the appellants sought the basis for the stand that the product was not PVC Compound. On 20-2-1984, the Superintendent forwarded a sample to the Chief Chemist, Delhi for test and opinion (page 91 of the paper book). On 5-6-1985, the Asst. Collector wrote to the appellants sending "a copy of the test report received from the Chief Chemist, Central Revenue, New Delhi dated 23-11-1982 was already made available to you by Supdt. C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es & Salt Act. There was no saving clause in Section 11-A in respect of proceedings initiated under the repealed rule and, therefore, the proceedings in pursuance of the said show cause notice were illegal. However, in view of the decision of a 5-Member Bench of this Tribunal - Atma Steels Pvt. Ltd. & Others v. Collector of Central Excise, Chandigarh & Others - 1984 (17) E.L.T. 331 - holding that proceedings initiated with reference to a rule or provision validly subsisting at the time of initiation of the proceedings can continue in spite of repeal or substitution of the original rule or provision, the Counsel did not make any further submissions on the point while not abandoning it. In view of the said decision, we hold that there was no illegality in the adjudication of the said show cause notice even after the repeal of Rule 10. 9. On the merits of the dispute, the Counsel strongly relied on the material on record in support of his contention that the subject product was nothing but a PVC Compound. Though the Deputy Chief Chemist had reported that it was not a PVC Compound, the basis for such a conclusion has not been disclosed. On the other hand, the report purportedly of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng when used in polymer technology, does not necessarily involve a chemical reaction. In polymer technology, PVC compounding means addition of substances such as plasticizer and fillers to PVC resin to obtain various types of plastic materials which are known as PVC Compounds. The expression plastisol is used to describe a dispersion of polyvinyl chloride in plasticizer. A plastisol is obtained by the process of compounding PVC Resin and is nothing but a plastic material. I have scrutinised the process of manufacturing Crown Cork Sealing Compound in the factory of Dr. Beck & Co. (I) Ltd., is as under: "PVC Resin is mixed with plasticizers, additives and fillers to get a polyvinyl chloride compound. The compound is then de-aerated and packed." The above process is clearly a process of compounding PVC Resin to obtain a plastisol which is a polyvinyl chloride compound." 12. At pages 148-150 is a certificate from Dr. M.S. Wadia, Professor of Organic Chemistry, University of Poona. It states, quoting Norman L. Perry, in the chapter "The compounding of PVC" in Encyclopedia of PVC edited by L.I. Nass, published by Marces Dekker Inc. New York (volume 2, page 848) - "In the simplest se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 5-5-1988 (page 166 of the paper book) a copy of the letter dated 29-12-1980 from Dr. Iqbal, Head, Division of Technical Services, National Chemical Laboratory, Pune, to the Asst. Collector. In this letter, it has been opined that a mixture of PVC with ingredients such as plasticizers, stabilizers, solvents, pigments, fillers, etc. is termed as a PVC Compound and that the material under dispute can be definitely treated as a PVC Compound. This, however, is an unsigned letter and the original of this letter was not placed before the Bench. As such, we are not in a position to take note of this letter. 15. Our attention was then drawn to the book "Encyclopedia of PVC" edited by Leonard I. Nass, published by Marces Dekker, Inc. New York, extracts from which are at pages 153 to 163 of the paper book. It is this book opinion has been referred to earlier. Apart from the passage referred to earlier, the book also has the following passage at page 848.(page 155 of the paper book) :- "Compounding PVC essentially involves, adding to the base PVC resin, the components that will allow it to be processed into a finished product with desired properties, at minimum cost. The "families" of mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment has sought to place reliance is the purported opinion of the Chief Chemist that the product which is a 'Plastisol' is not a PVC Compound. This has been controverted by the evidence placed on the record pointing to the contrary. The only other material against the appellants is the Deputy Chief Chemist's opinion that the product is not a PVC Compound, which is not supported by any evidence whatsoever. The Collector has not dealt with the evidence placed on record by the appellants. 19. The Learned D.R., in response to a query from the Bench, states that the Chief Chemist's report dated 30-6-1978, referred to and relied upon by the Collector in the impugned order, has not been made available to him and, therefore, he is not in a position to make any submissions thereon. He refers to the "Encyclopedia of PVC" (page 153 of the Paper Book) and states that it may be seen that the product is a formulated product; it is not the result of simple mixing and, therefore, it is not a PVC Compound. Referring to the following passage occurring in the said book (page 155 of the paper book) :- ".....As material for the ultimate product compounded polyvinyl chloride can be formed by almost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, the inference sought to be drawn by the learned D.R. is that the Department has established that the subject product is not a PVC Compound. 23. We have considered the submissions of both sides. The appellants have established their claim that the subject product is a PVC Compound by adducing expert opinion of distinguished authorities such as the Professor of Organic Chemistry of the University of Poona, Dr. S.H. Iqbal of the National Chemical Laboratory, Pune, etc. as also by the evidence as to trade understanding of the product. The manufacturing process has been extracted earlier. It may be seen that PVC resin is mechanically mixed with Plasticizers, additives, inorganic fillers and blowing agents to obtain a homogenous compound of the desired viscosity. The Compound is then deaerated and packed. The resin forms 55 to 60% of the product, plasticizers 35 to 38%, additives and inorganic fillers 2 to 5% and blowing agents etc. 1 to 2%. As the extracts from the technical books show, the expression 'compounding' in relation to PVC resin is applied not in the normal sense of the term 'compound' as understood in Chemistry, that is to say, a chemical combination of the ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that Plastisol is nothing but a PVC Compound. The "Encyclopedia of Chemistry" relied on by Shri Murthy, the learned D.R. also states that Plastisols are dispersions of powdered PVC resin in plasticizer. We do not see that this book, extracts from which have been furnished, says anything to the effect that Plastisol is not a PVC Compound. The Condensed Chemical Dictionary also clarifies that the term "formulation" applies also to mixtures to provide optimum specific properties for the end use desired. 25. In view of the overwhelming evidence brought on record by the appellants, we are of the view that the subject product, namely, Crown Cork Sealing Compound manufactured by the appellants is nothing but a sort of PVC Compound. 26. On the question whether the appellants had suppressed any material information etc. or any of the ingredients required to invoke the extended period of limitation was present in the instant case, the Learned Counsel for the appellants submits that in the impugned order the Collector does not discuss this aspect at all but, nevertheless, proceeds to confirm the demand which goes beyond the normal period of limitation. That the Collector does not discu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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