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TMI Blog1984 (4) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Rule 8(1) of the Central Excise Rule (hereinafter referred to as the Rules) :- (a) Notification No. 156/65, dated 23-9-1965 : GSR. In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts artificial or synthetic resins specified in column (2) of the Table below, falling under Item No. 15A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty excise leviable thereon as is in excess of the amount specified in the corresponding entry in column (3) of the said Table : TABLE Sl. No. Description Amount 1. Alkyd Resin Nil 2. Maleic Resin Eighty paise per kilogram 3. Phenolic Resin Eighty paise per kilogram Provided that any manufacturer of maleic resin or phenolic resin availing himself of the benefit of exemption under this notification shall not be permitted to pay the duty leviable on such resin ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication, in the explanation, in clause (ii) after the words Maleic anhydride , the words and/or fumaric acid shall be inserted. 3. The Appellants, as seen from the records of the case, were manufacturing, inter alia , synthetic resins (viz. Alresat 201C, 224C, 313C and 400C, later termed Hindresat 2001, 2024, 3013 and 4000) since long. In 1964, these resins were brought under excise control and charged to duty at 20% ad valorem +%, of the basic duty as special duty. On the issue of Notification No. 156/65 on 23-9-1965, these products were accorded full duty exemption on the declaration that they were alkyd resins. Samples were drawn on two occasions, on 19-10-1965 and again on 14-11-1967. On both the occasions, the Deputy Chief Chemist opined that the products were alkyd resins. The goods were allowed to be cleared duty-free. It, however, appears that, on 6-8-1968, during the course of audit, it was observed that the appellants were advertising these products as maleic resins in sales literature of their collaborators M/s. Chemische-Werke-Albert. Samples were again drawn on 25-8-1969. On test, the Deputy Chief Chemist opined that these products were other than phthali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, I do not see any justification to interfere with the order passed by the Assistant Collector. The appeal petition is, therefore, rejected. 7. It is this Order-in-Appeal dated 23-2-1976 that is now under challenge before us. 8. We have heard Shri R.K. Habbu, Advocate for the appellants and Smt. Vijay Zutshi, Senior Departmental Representative for the Respondents. We have also perused the record. 9. The period of the dispute before us is from 14-11-1968 to 31-5-1971 when there was no definition of the expressions Alkyd resin and Maleic resin occurring in Notification No. 156/65. The appellants claim is that their products in dispute were alkyd resins eligible for duty exemption. The learned Counsel for the appellants drew our attention to the Department s communications dated 23-11-1965 and 6-1-1966, both confirming the classification of the products as Alkyd resins eligible for clearance without payment of duty. Even after the investigation consequent to audit inspection, the Deputy Chief Chemist had categorised the products as other than phthalic alkyds . Shri Habbu submitted that this finding clearly showed that the products were alkyd resins bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-Appeal, it was submitted that it was a cryptic and non-speaking order. 12. Replying on behalf of the Respondent, the learned Sr. Deptt. Representative stated that the technical literature produced before the Assistant Collector was not on record. The definitions of the expressions alkyd , maleic and phenolic resins in Notification Nos. 122/71 and 127/73 were artificial ones and these could not be read into Notification 156/65. Relying on extracts from the Condensed Chemical Dictionary by G. Hawley and Encyclopaedia of Chemistry by Hampel and Hawley, it was submitted that alkyd, maleic and fumaric resins had different connotations. The affidavits filed with the revision application - a belated stage in the proceedings - should not be relied upon : no affidavits had been filed before the lower authorities. The test report of the Alipore Test House did not clinch the issue since there is no indication whether presence of fumaric acid was tested for. The report of the Pune Laboratory was not based on any test: it was only an opinion. 13. On the subject of demands, while agreeing that a show cause notice should have been issued, Smt. Zutshi contended that proper opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts of polybasic acid and polyhydric alcohol. Item (It ?) is seen from the copy of letter dated 20-7-1970 of M/s. Chowgule Co., that the polybasic acid component in the resins is maleic anhydrides in case of Alresat 201C and Alresat 313C and Pentaery-thritol in Alresat 224C and 400C. In all these four products resin is also a component. Based on the above and information furnished in Technical books on Maleic Resin, sample of Alresat 201C, is Maleic Resin. It will also be seen from the party s printed pamphlet on HINDRESAT 2001, which according to the party is the same as Alresat 201C, that the party has advertised this as Maleic Resin. In the manufacture of Alresat 224C, Alresat 313C and Alresat 400C fumaric acid has been used instead of Malic Anhydride and as fumaric resins are known to the Trade as distinct from Maleic resins, the Chief Chemist, Delhi, is of the opinion that the above three products are fumaric resins, that is to say, each as an Artificial or synthetic resin, other than that of Alkyd Maleic or Phenolic although the party has advertised identical products as Maleic Resins in their printed Pamphlet. 16. It appears from the record (the Supdt s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we may now examine the appellant s claim. We have already noted that Notification 155/65, dated 23-9-1965, which was in force during the material period, did not have any in-built definitions of the expressions alkyd, maleic and phenolic resins . These are scientific or technical terms and are to be construed in the scientific or technical sense of the terms. It is not similar to say, the commodity covered by Item No. 15-CET. ( Soap means all varieties of the product known commercially as soap) where trade or popular sense of the term is relevant. In this view of the matter, the affidavits filed at the revision stage - apart from the SDR s objection that they were not produced before the lower authorities - are of no help to ascertain the true nature of the products. Though the reports of the Alipore Test House and the National Chemical Laboratory are entitled to the highest consideration, there must be sound reason to discard the cumulative effect of the Chief Chemist s report and the Technical write-up of the appellants themselves on the products. It is well to remember that the Chief Chemist s report, besides being more detailed, was a contemporaneous document unlike the Alipo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These definitions were modified by Notification No. 127/73, dated 9-6-1973 whereby maleic resin took in reaction products of not only maleic acid and/or maleic anhydride but also furmaric acid with one or more of the specified components. Alkyd resins were re-defined to mean synthetic resins manufactured by the interaction of polybasic acids and/or anhydrides (excluding maleic acid/anhydride and fumaric acid except when used to the extent not exceeding 2% calculated on the quantity of main polybasic acid/anhydride ingredient in the resin, to reduce cooking time and improve the colour of the resin) with the specified components. In our opinion, the revised definitions cannot be of any help in so far as the present dispute pertaining to a prior period is concerned. Nor is the submission that the disputed products are being assessed as maleic resins since 1973. 21. We are, however, not clear how the Chief Chemist came to the conclusion that Alresat 224C, 313C and 400C are not covered by the term alkyd resins. Notification No. 156/65 did not contain any definition of the terms : alkyd , maleic and phenolic resins. If the aforementioned 3 products were not maleic - no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The period of the dispute before us is 14-11-1968 to 31-5-1971. (see Annexure A to the Assistant Collectors order dated 1-3-1975). The demand in Form DD2 No. 112886, dated 14-11-1969 (for ₹ 2,55,820.80) was issued citing Rule 173-J. Evidently, this Rule has to be read with Rule 10. This demand was modified by the Superintendents communication dated 1-9-1971 in pursuance of his order of 18-5-1971. The amount was revised to ₹ 27,59,304.19. This communication dated 1-9-1971 talks of the DD 2 dated 14-11-1969 and issued under Rule 9-B of the Central Excise Rules, though the DD2 itself makes no such reference. The Councel for the appellant has contended that the mandatory requirement of Rule 10, namely, issue of show cause notice had not been compiled with prior to the issue of the DD2 demand dated 14-11-1969 and, therefore, the said demand was bad in law. Because of this, the subsequent demand dated 1-9-1971 was also bad in law. The SDR has agreed that a show cause notice should have been issued, but contended that due opportunity was afforded to the appellant in the adjudication proceedings and, therefore, there was no breach of the principles of natural justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Alkyd Resins which were done provisionally as excisable or exempted are now hereby finalised as Exempted. Similarly all the classification lists of Modified Alkyd Resins which were approved provisionally as exempted or excisable are now hereby approved finally as exempted. It is not clear from the aforesaid letter whether the modified alkyd resins referred to therein are the very products which form the subject-matter of the dispute before us. No material has been placed before us by either side to throw light on this aspect of the matter. Having regard to the overall picture emerging from the narration of facts and events, we are inclined to think that this letter dated 18-1-1971 has no relation to the products in dispute which have all along been designated as maleic resins or other than alkyd, maleic or phenolic resins and not as modified alkyd resins. 27. We notice from the details of the calculations given in Annexure A to the Assistant Collector s order dated 1-3-1975 that the demand for duty created as a result of the said order in respect of Alresat 201C (Hindresat 2001) is in respect of the period 14-11-1968 to 25-5-1970. We have already set aside the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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