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TMI Blog1998 (3) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of this product was commenced in 1964-65 from which time, they had been classified and cleared on payment of Central Excise duty under Tariff Item 15A(1) until the present dispute arose in August, 1978 when the assessees changed their stand and wrote to the Jurisdictional Assistant Collector stating that their product was a commercially modified synthetic resin which could not be used as raw material in the plastic industry and was exempted from duty in terms of Notification dated 28-11-1962. 3. A show cause notice was issued to the assessees on 30-9-1978 proposing rejection of Form 1 dated 10-8-1978 and 21-8-1978 describing Prescol Glue as `other goods with the remark that they do not attract duty under Tariff Item 68 vide Board s letter dated 28-11-1962. The Assistant Collector adjudicated the notice vide his order dated 8-11-1985 holding that the product in question was Aminoplasts covered by the definition of Aminoplasts resin falling for classification under Tariff Item 15(A). The lower appellate authority held that the product was not a synthetic resin and not a condensation product of the genus amino plast so as to qualify for classification under Tariff Item 15A(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Item 15A(1) during the entire period in question and urges that the impugned order may be set aside and the appeal of the Revenue allowed. 6. On behalf of the respondents, it is contended mainly by Shri N.K. Bajpai, learned Advocate that although admittedly some condensation takes place in the manufacture of the product, further condensation is stopped and the product is only a pre-condensate with low molecular weight and product is soluble in water, as contrasted with resins which are of high molecular weight and insoluble in water. He submits that the product in question is not a synthetic resin. On a specific query from the Bench as to whether the product could be considered as a `resol convered by Explanation II to Tariff Item 15A(1) (after its amendment with effect from 1-3-1982) the learned Counsel states that there is no finding that this product is a resol. He invites attention to the order dated 31-10-1988 passed by the Principal Collector of Central Excise, Delhi wherein classification of the same product has been upheld as adhesive under sub-heading 3501.90 of the Schedule to the Central Excise Tariff Act, 1985, discharging the show cause notice proposing clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondensation and polyaddition products, whether or not modified or polymerised and whether or not linear (for example phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, sillicones); polymerisation and co-polymerisation products (for example, polyethylene, polytetrahalaoethylene, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl, acetate, polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and polymethacrylic derivatives, coumaroneindene resins); regenerated cellulose; cellulose nitrate, cellulose acetate and other cellulose esters, cellulose ethers and other chemical derivatives of cellulose, plasticised or not ( for example collodions, celluloid); vulcanised fibre; hardened proteins (for example, hardened easters in and hardened gelatin); natural resins modified by fusion (run gums); artificial resins or resinic acids (ester gums); chemical derivatives of natural rubber (for example chlorinated rubber, rubber hydrochloride, exidised rubber, cyclised rubber); other high polymers, artificial resins and artificial plastic material, including alginic acid, its salts and esters; linoxyn. (2) Articles of materials described i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay excise duty in respect of our goods namely, Synthetic Resins, which were manufactured and then modify by specifically added to them certain chemicals so that the same become suitable for specific purpose as mentioned hereunder. For your information, we may further add here that the following chemicals are added to the Synthetic Resins which we manufacture and which are made by us suitable for specific purposes as mentioned below : 1. Plywood Resins - Grade : Prescol G * Prescol L Chemicals used - (a) Starch and its derivatives. (b) Plyvinyl Alcohol. (c) Sodium Lauryl Sulfonate. (d) Paraffin oil. (e) Magnesium and/or calcium carbonate. After the addition of the said chemicals to our products of Synthetic Resins, they become suitable for specific purpose, namely: plywood bonding. We add the following chemicals to the Synthetic Resin manufactured by us in order to make them suitable for specific purposes, namely :- II. Paper Resins-Grades : Prescol PW Prescol W Chemicals used - (a) Triethanolamine. (b) Hydrochloric acid. (c) Magnesium and/or calcium carbonate. We add the following chemicals to the Synthetic Resins manufactured by us in order to make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this sub-item of the Tariff item. As in the earlier period, Aminoplast is also specifically included in this sub-item without any qualification. 10. Clause (c) of Explanation II to Tariff Item 15A as it stood during the period from 1-3-1982 to 27-2-1986, clarifies that for the purpose of sub-item (1) of Tariff Item 15A, condensation products are to be taken to apply only to goods of a kind produced by Chemical synthesis answering inter alia to the description of resols, liquid polyisobutylene and similar artificial polycondensation or polymerisation products. Resoles are polymerisation products. The products of the respondents are produced by chemical synthesis of urea and formaldehyde. The definition of Aminoplasts and Amino resin in the Six-Language Dictionary of Plastics and Rubber Technology, compiled by A.F. Dorian is as under :- (1) Amino Plastics - Plastics based on amino resin; (2) Amino Resins (Amino Plastics) - A synthetic resin derived from the reaction of urea, thiourea, melamine or allied compounds with aldehydes, particularly formaldehyde. The term Amino plastics has been defined in Chemical Synonyms and Trade Names by William Gardener as `a term applied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular weight or all resins are polymers. Although according to the definition in Hawley s Condensed Chemical Dictionary, the definition of synthetic resin excludes modified and water soluble polymers (often called resins), Tariff Item 15A(1) covers condensation products whether or not modified or polymerised. Further, it is not correct to contend that all synthetic resins necessarily have to be insoluble in water. As noted in para 24 of the Tribunal s final Order No 466/90-C, dated 8-5-1990 from the Hand Book of Water Soluble Gums and Resins, edited by Robert L. Davidson, various water soluble resins have been discussed. It states that Chapter 24 of the Handbook deals with polyvinyl Alcohol and states that polyvinyl Alcohols are water soluble synthetic polymers with excellent film-forming, adhesives and emulsifying properties. It cannot therefore be said that synthetic resins can never be water soluble. Further we note that in the Hand book titled Amino Plastics by C.P.Vale and W.G.K. Taylor (page 68 and 69 of the paper book filed by the respondents, it is set out that urea formaldehyde or melamine formaldehyde resins in a low state of condensation are used for moulding powder manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the respondents was not able to give a definite answer. In other words, the learned Counsel was not in a position to contend that the product in question was not resol. 17. The respondents relied upon the report prepared by one Dr. A.K. Mukherjee, Assistant Professor, Indian Institute of Technology, Delhi on the nature of their product. In that report, the following conclusions have been drawn : (i) Prescol Glue which is water soluble is not polymeric. Hence it does not belong to either synthetic resin or plastic material, but belong to a class known as oligomers. (ii) The condensation Oligomeric product thus produced is water-soluble and made into a complex formulation by the addition of essential ingredients which serves the purpose of an adhesive. (iii) The water soluble urea-formaldehyde condensates used as adhesives are distinct from the products called as artificial resins, synthetic resins and plastics. 18. The report of D. Mukherjee shows that he has described the respondents, product as synthetic resin in several places. It is true that he has stated that it a monomeric urea-formaldehyde resin and not a polymeric urea formaldehyde resin but the Tariff entry is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at polymer chips manufactured by the assessees could not come under the category of artificial or synthetic resins. The test laid down by the Supreme Court for determination as to whether the product was covered by Tariff Item 15A was that it should answer the basic description of `artificial or synthetic resin and plastic material . Applying this test to the present case, we have already set out in the earlier paragraphs of this order our reasons for holding that the disputed products in this case are synthetic resins. It is also relevant to note that the judgment of Hon ble Supreme Court also notes that synthetic resins are used chiefly as plastics in varnishes and adhesives (defined in Webster s Dictionary). The Court has also noted that most of the application of the term `resin is those linear or cross-linked or (cross linkable) polymers that are used in molding, casting or extruding operations and in surface coatings and to most cross linked or cross linkable polymers, no matter what the end use (as in adhesives, textile finishes etc.) (preparation methods of Polymer Chemistry by Sorenson and Campbell). 20. The claim of the respondents is that their products are used as gl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess or chemical synthetic but the result of mechanical mixing of two types of resin on which duty was already paid as resin. In the present case however, the respondents resin is the result of condensation process and no duty was paid thereon earlier under Tariff Item 15A(1). The facts of the earlier case are thus entirely different and the decision therein is not applicable to the case in question. The respondents also relied upon the order dated 31-10-1988 by the Principal Collector of Customs and Central Excise, Delhi classifying the products under Chapter heading 35 as adhesives, ruling out the classification under Chapter 39. 21. We have carefully perused and analysed that order. In that case, the charge of the department that the respondents were manufacturing and clearing amino resins falling under Chapter 39 in the garb of glue falling under Chapter 35 was based on the fact that the analysis of the sample of the product revealed that the product had the characteristics of amino resin (Urea formaldehyde) in primary form as described in Chapter note 6(b) and Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. The Principal Collector held that the product i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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