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TMI Blog2016 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading 3909 to 3915 are in the negative list for exemption. Investigations were conducted by the officers; proceedings initiated which resulted in the impugned order. The ld. Commissioner confirmed a demand for Rs. 6,13,49,586/- on Urea Formaldehyde Resin, Phenol Formaldehyde Resin and Melanine Formaldehyde Resin manufactured by the appellant deciding classification under Tariff Heading 3909. Equal penalty was also imposed on the appellants. Cenvat credit of Rs. 2,30,43,200/- is found to be eligible to the appellant in discharging this demand. 3. In the appeal, the appellants strongly contested the findings in the impugned order. Their submission can be summarized as below:- a) Reliance placed on test report dated 19.03.2012 of IPRITI is not sustainable on various grounds viz : i) Report was made available after 89 days depriving the right of re-test. ii) No cross examination allowed of the officer, who conducted the test, iii) The methodology of sample drawal, testing parameters and communication of test results are not as per norms. b) The reliance placed on Purchase Order dated 4.8.2008 for supply of process equipments by M/s.Alex Engineering Works is misplaced. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ketability of the product and limitation were also stated in their appeal. We find that correct classification of the product is central issue of the dispute. 7. First, it is necessary to examine the processes carried out by the appellant which result in the impugned goods. We find that the comparisons and conclusions based on such comparisons will not be justifiable if processes and chemicals used by various manufacturers and resultant products are not similar. In the present case, we are concerned first with the processes carried out by the appellant in the reactor/kettle in Shed-B. The appellants submitted detailed step by step process, additions of chemicals till the emergence of impugned goods. Processes involved in one of the typical product - G-10 are as below:- "Process (a) Charge Formaldehyde in Reactor by opening the discharge valve of the measuring tank mounted on load cell. (b) Adjust pH to 8.5 by caustic soda solution which is alkaline nature. (c) Add Ammonia. (d) Add Poly vinyl Alcohol (e) Start heating (f) Add first urea (g) Continue heating till temperature reached to 80oC (h) Continue reaction and ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very much depends on this. 11. Examining the scope of CETH 3909, we find Note-6 of Chapter 39 states as below:- "In Heading 3901 to 3914, the expression "primary forms" applies only to the following forms: (a) Liquids and pastes, including dispersions (emulsions and suspensions) and solutions; (b) Blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms." 12. The Original Authority classified the product under CETH 3909 - "Amino Resins, Phenolic Resins and Polyurethane in Primary Forms". The meaning of expression " Primary Forms" is given in the above Note-6. 13. The scope of "Primary Forms" is further elaborated in HSN with reference to above Chapter Note. "Primary Forms Heading 39.01 to 39.14 cover goods in primary forms only. The expression primary forms is defined in Note 6 to this Chapter. It applies only to the following forms : (1) Liquids and Pastes. These may be the basic polymer which requires curring by heat or otherwise to form the finished material, or may be dispersions (emulsions and suspensions) or solutions of the uncured or partly cured materials. In addition to substances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formaldehyde) as the main component - Prepared glues and other Prepared adhesives. 15. Based on the above criteria for classification, we find that the appellant had made out strong case for classifying the product "as prepared glue". This is based on the facts like, the processes adopted and emerging product from the reactors/kettles, which is sent directly to glue kitchen for direct use in bonding of final product along with inputs. 16. The reliance placed by the Revenue on the test reports has been strongly contested by the appellants on various grounds. The test report was given to them after almost 3 months which deprived the chance for them to go for re-test. Further, the methodology followed by testing is not as per IS Standards relevant for synthetic resin additives. The test report of IPIRTI did not mention the pH value which is very relevant to arrive at the correct report. The appellant produced copies of different test reports done in 2011 as well as 2012 by the same Institute where pH values were indicated whereas in respect of their samples, no pH value has been indicated. They have also contested the findings in the test as they were not allowed cross examination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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