9911796707
TMI Blog1984 (2) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants used to import Vinyl Acetate, a monomer, on which the authorities levied and collected additional (Countervailing) customs duty with reference to Item No. 68 of the Central Excise Tariff Schedule (hereinafter referred to as CET). The monomer is converted into polyvinyl acetate, a polymer. Till 17-6-1977, the appellants were paying excise duty on polyvinyl acetate (hereinafter referred to as PVA) under Item No. 15A(1)(ii) CET. The duty paid PVA was used in the manufacture of adhesives described as Nevisol, Nevisol-SH Nevisol-P, Nevisol-W and Nevisol-ST. The appellants also produce polyvinyl alcohol solutions of 9%, 15% and 19.9% by dissolving PVA powder in water. The water solution, according to the impugned order, is a mechani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emical modification involved in this process. Therefore, there was no justification to charge duty on the end products. Mere physical modification did not amount to manufacture. In the circumstances, the status quo ante as it existed before 18-6-1977 should be restored. The Appellate Collector in his order dated 14-2-1980, held that in the case of PVA, Dibutyl Phthalate was used as a plasticizer and the mixing process brought about modification of PVA. In the case of polyvinyl alcohol powder, he held that the addition of water and use of a high speed stirrer brought about physical modification. He further held that Item No. 15A CET as amended in the 1977 Budget, took within its scope modified products of PVA without making any distinction b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise has clearly held that change in the form of duty paid artificial or synthetic resins from solid/powder form into liquid or paste form and vice versa by the simple process of adding water and/or stabilizers, additives etc. would not amount to manufacture, liable to duty again when there is no chemical reaction in the process of conversion from one form into another. The benefit of this view has been given to the appellants in respect of the subsequent classification lists but the present dispute has survived. (e) In so far as the adhesive preparations are concerned, they were mixtures of duty paid polymer with duty paid water solution of polyvinyl alcohol and Dibutyl Phthalate. Here also, the ratio of the Government decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir uses were indicative of the fact that there was manufacture involved. In support of this proposition, reliance was placed on the Supreme Court decision in the case of Delhi Cloth and General Mills reported in 1977 E.L.T. 199, as also the decision of the Supreme Court in the case of Deputy Commissioner, Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers in 1980 E.L.T. 343. (b) Prior to 19-6-1977, the Tariff Item 15A took in only straight or pure resins. With the changes brought about in the 1977 Budget, the item took in also modified resins. The tariff did not distinguish between chemical and physical modification. In this connection, the book Plastics Dictionary by Dickinson was referred to. At page 166, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot, in our opinion, be resolved by only looking at the question whether the change brought about by the appellants on the raw material amounted to chemical modification or physical modification. The Tariff Item 15A(1)(ii) covers polymerisation and co-polymerisation products, such as,.......polyvinyl acetate, polyvinyl chloro acetate and other polyvinyl derivatives...... . The description of sub-item (1) of Item 15A makes it clear that it covers the specified artificial or synthetic resins and plastic materials......in any form, whether solid, liquid or pasty,...... . The goods in dispute are adhesives prepared by mechanical mixing of duty-paid synthetic resin, namely, polyvinyl acetate dispersion with water solution of imported polyv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned with the CCCN terminology as a result of the 1977 Finance Bill, the pattern being broadly the same, assistance can be usefully derived from the CCCN and its Explanatory Notes to understand the scope of Item 15A CET subject, of course, to the consideration that the express language of the C.E. Tariff Item is kept in view. Applying these considerations, we are of the view that the products before us are more appropriately classifiable as adhesives or glue and not under Item 15A CET ( Artificial or synthetic resins and plastic materials and cellulose esters and ethers and articles thereof ). As such, the appropriate classification would be under Item 68 CET. 8. We set aside the impugned order and direct that the goods be reassessed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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