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TMI Blog1984 (2) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... their appeal No. 1332/83-C [this order is in respect of the assessment of their product after 1-3-1982 i.e. after the reform of Item No. 15A of the Central Excise Tariff. The appellants claimed that the silicone emulsions prepared are of duty paid silicone oil and would not be liable to duty a second time as the process of making the emulsions in the appellants factory did not amount to manufacture as defined in Section 2(f) of the Central Excises and Salt Act, 1944]. 2. The product manufactured by Hico Products is named by them Katrang AF 150 and they sought classification under Tariff Item No. 68 of the Central Excise Tariff from the time they started its production in December, 1976. A good deal of correspondence went back and forth between the Assistant Collector and the factory. In their classification list of 21st December 1976, the manufacturers claimed assessment under Item 68 and this was approved by the Superintendent of Central Excise, Khopoli in January 1977. The Supdt. however said that the product would be assessed provisionally under Rule 9B of Central Excise Rules, 1944 pending chemical test by the Deputy Chief Chemist, Bombay. The Chemist reported in Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st and also filed an appeal to the Appellate Collector against the order of the Assistant Collector classifying Katrang AF 150 under 15AA. The assessee then filed a classification list on 3-1-1981 for assessment of Katrang AF 150 under Item 15AA in which they claimed exemption under Sl. No. 4 of Notification No. 101/66-C.E. This appears to have aggrieved the Assistant Collector because he says (1-10-1982) that M/s. Hico instead of filing a classification list under Item 68, filed a classification list under 15AA under protest. It is not understood how the Assistant Collector can bring himself to say this when he himself had rejected Item 68 on the ground that Katrang AF 150 was classifiable under 15AA. It seems that M/s. Hico filed a classification list under 15AA for exemption under Sl. No. 3 of Notification No. 101/66-C.E. dated 17-6-1966 and this had been rejected by the Assistant Collector because according to him the chemical analytical report of the sample disqualified Katrang AF 150 from concession under Sl. No. 3 of the notification, because it appears to have been the finding that the product contained more than 5% emulsifying agent. The factory thereupon filed thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. He further said that item 15A is an Item designed to cover only artificial or synthetic resins and plastic materials. These substances are or were at some time capable of being formed, shaped, cast, extruded in various ways with external influence such as heat, pressure etc. He said that the word other materials in the heading refers to other materials of a like and similar nature and not substances so dissimilar to artificial or synthetic resins and plastic materials that they would not, by any comparison, be likened to the other goods which fall in the heading. He referred in support to the Tribunal decision in 1983 E.L.T. 2517. This Item 15A would cover silicone which is an artificial/synthetic resin, a polymer. Silicone finds various uses as grease, a rubber, anti-foamers, mould release agents; it is used in adhesives, cosmetics etc. etc. The product they made does contain silicones, but is not susceptible to formation, shaping, working in the way that artificial or synthetic resin are. The Tribunal has decided in 1983 E.L.T. 184 that a substance must have plasticity to fall under Item 15A. The Katrang AF 150 which they prepare is not capable of shaping or foaming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item 68 and later they switched over to Notification No. 101/66-C.E. beginning with Sl. No. 3. and then changing to Sl. No. 4. Then they switched over to Notification No. 208/66-C.E. But the attempt to justify that their goods fell either under Sl. No. 3 or Sl. No. 4 proves that the goods fell under item 15AA. They have not said why they did not agree with the test report. The item 15AA covers clearly surface active preparations also. Sl. No. 4, Notification No. 101/66-C.E. covers emulsifiers when the goods are only an emulsion of silicone. Therefore, the notification does not cover Katrang AF 150 , which is an emulsion. The product is not a foaming, but an anti-foaming agent, and therefore, is not similar to emulsifiers, wetting agents or softeners. They have failed to show how the product falls under Sl. No. 4 of Notification No. 101/66-C.E. Item 68 is a residuary item and a product can be assessed under this heading only when it has no other heading suitable to cover it. This is not the case with Katrang AF 150 . At the beginning, 15A was not relevant for the purpose of assessment because the definition given in explanation II of item 15A was entered only in March, 1982. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi, the department held that the product merited classification under tariff item 15AA. Katrang AF 150 is said to be used as a defoamer or anti-foaming agent in the manufacture of pharmaceuticals. This claim has not been disputed by the department. In fact, silicone oils and greases find uses as lubricants, water repellent products and as foam preventing products as well as mould release agents. They are organic-silicone compounds and have the characteristics of artificial resins. Silicone resins also find use in coating, varnishes; they are products of polymerisation. They come in various forms such as emulsions, powders, solutions, resins, and pastes. They have high thermal stability and are not easily affected by hydrocarbons. One of the chief characteristics of silicones is their low surface tension which makes them ideally suited in applications such as wetting or defoaming/anti-foaming agents. Their assessment under item 15AA is, therefore, the most suitable as this heading covers products of the kind like Katrang AF 150 . It will be noted that mixtures, containing silicone greases and oils, like the one we have here are classed in the CCCN under heading 34.03. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng AF 150 is an anti-foamer/anti-foaming agents used in an industrial process viz. manufacture of pharmaceuticals. Noting the properties of silicones, there can be little doubt about its eligibility to this serial number of the notification and we have no trouble in holding that an anti-foaming agent/defoamer is a preparation like emulsifier, wetting agents and softeners. An anti-foaming agent inhibits the formation of bubbles in a liquid during its agitation by reducing its surface tension, a process essential in many manufacturing activity when mixing penetration and fluid consistency is necessary for the best results. We, therefore, hold that the exemption under Sl. No. 4 of the notification should be extended to Hico from 3-1-1981 when they filed its classification list claiming this exemption. The assessment before that date would likewise be under 15AA but without the exemption under Sl. No. 4 as this claim was not made till 3-1-1981. 11. The central excise then changed its assessment of Katrang AF 150 saying that from 1-3-1982, the product should fall under 15A. We have reproduced the headings of this at the relevant time both before and after 1-3-1982. The reason for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our order in respect of these appeals. 12. We will discuss briefly the learned representative for the department s argument that Order No. 368/83-C of M/s. Hico decides this matter also in respect of the assessment after 1-3-1982. That matter concerned the emulsification of imported silicone oil. The department held that the emulsification gave rise to a silicone oil in emulsion form, and therefore, since item 15A of central excise tariff covered resins in various forms including emulsions, the silicone oil in emulsion should be subjected to duty once again having changed its form. M/s. Hico disputed this saying that there had been no manufacture when they emulsified the silicone oil, countervailing duty on which had been paid on import. The Bench held by a majority that emulsification required fresh duty to be levied on the silicone oil in emulsion. We are concerned here not with silicone oil in emulsion but with a preparation containing silicone, and which is used as defoamer/anti-foaming agent. The learned representative also said that M/s. Hico had been changing its stand from time to time but we can see no help for this since the department itself had been changing its sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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