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TMI Blog2018 (10) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture PU Foam and the manufacturing process adopted by them clearly show that what is being manufactured is Waste Foam Sheet. The Original Adjudicating Authority has also examined the raw materials required for the manufacture of PU Foam and has clearly come to a finding that no such material was purchased by the appellant from the market. Such evidences adopted by the Joint Commissioner, has not been considered by Commissioner (Appeals) and there is neither any finding on the same nor any rebuttal. The order of Original Adjudicating Authority restored - appeal allowed - decided in favor of appellant. - APPEAL No. E/70168/2015-EX[DB] - A/72240/2018-EX[DB] - Dated:- 18-9-2018 - Smt. Archana Wadhwa, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Rajesh Chhibber, Advocate for Appellant Shri Gyanendra Kr. Tripathi, Asstt. Commissioner (AR), for Respondent ORDER Per: Archana Wadhwa The dispute in the present appeal relates to the classification of the product being manufactured by the assessee. Whereas the revenue has classified the appellants final product as PU Foam Sheets classifiable under Chapter Heading No.39211310 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CE stands rightly availed by them. However, the visiting officers seized the physically available stock of sheets and blocks under a panchnama dated 11.01.2013. Samples from the seized material were drawn under the test memo dated 22.01.2013 and were sent to the Chemical Examiner, Center Revenue Control Laboratory, New Delhi under the cover of letter dated 31.01.2013. The Chemical Examiner vide his report dated 18.02.2013 informed that the sample sent to the laboratory, was in the form of rectangular cut piece of sheet and it comprised of varying shapes and sizes of different colours of foam (made of polyurethane) along with plastic material bonded with adhesive. The percentage composition of the samples as reported by CRCL, New Delhi was as under:- PU Foam = 91.3% Plastic material = 4.9% Adhesive material = balance 3. On the basis of the process of manufacture as also report of CRCL, a view was formed that the goods manufactured by the appellant was PU Foam sheets and not waste scrap foam sheets inasmuch as the same consisted of 91.30 PU Foam. Inasmuch as, the goods falling under Heading 39211310 were excluded from the benefit of Small Scale Notification, the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and plastic etc., which is re-bonded with the help of 3.8% adhesives. The demand was also contested on the point of limitation by submitting that there was no malafide on their part so as to justifiably invoke the longer period of limitation. 5. The said show cause notice was adjudicated by the Joint Commissioner who held in their favour by observing as under:- 8.6 On appreciation of the case record, I observe that the Un-disputed fact of the case are (i) that raw materials of the product being manufactured by the party are old and used waste of plastic, cotton foam; (ii) that party's manufacturing process involved (a) processing of old and used waste of plastic, cotton, foam mud etc. In the factory by way of shredding; (b) mixing of the same by putting the same into mixer; (c) blending of the mixture with Arandi Oil, TDI and waste Poly chemical; (d) pressing of resultant mixture in a chamber to manufacture Big Blocks, and slicing of Block into sheets of different sizes, and (iii) that party's manufactured product consists of approximately 91.30% PU Foam (in shredded form duly bonded by chemical adhesive) and remaining 4.90% plastic 3.80% adhesive materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired length. The foam bun is then conveyored, to the final processing steps that include packing and shipping. Further, to ensure the quality of the polyurethane material, producers monitor the product during all phases of production. These inspections being with an evaluation of the incoming raw materials by quality control chemists. They test various chemical and physical characteristics using established methods. Some of characteristics that are tested include the pH, specific gravity, and viscosity or thickness. Additionally, appearance, colour, and odor may also be examined. Manufacturers have found that only by strictly controlling the quality at the start of production can they ensure that a consistent finished product will be achieved. After production, the polyurethane product is tested. Polyurethane coating products are evaluated in the same way the initial raw materials are checked. Also, characteristics like dry time, film thickness, and hardness are tested. Polyurethane fibers are tested for things such as elasticity, resilience, and absorbency. Polyurethane foams are checked to ensure they have the proper density, resistance, and flexibility. Flexible foams are the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of different colours of foam (made of polyurethane) along with plastic material bonded with adhesive. Although, the report has shown the availability of 91.30% PU Foam in the sample but in fact it was in the form of various shapes sizes of different colours of PU Foam pieces, which also goes in favour of the party's contention that they purchase waste scrap of PU Foam mixed cloth, cotton plastic scrap which shredded and bonded by chemical adhesive. These materials put into chamber for pressing to make blocks and later sliced into sheets of desired sizes. Thus, the resultant final product in this case, is not a new and distinct product totally different from its raw materials as alleged in the show cause notice. In fact the pieces of PU Foam waste including plastic, simply converted into a sheet by the above process. Therefore, I do not find any merit in the allegation made in the SCN to the effect that the product i.e. 'Waste Scrap Foam Sheets' manufactured and sold by the party was exactly in the nature and shape of PU Foam Sheet. 8.10 On a careful consideration of facts of the case including composition of raw materials; manufacturing process of party' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty's manufactured product consists of approximately 91.30% PU Foam comprises of varying shapes and sizes of different colours of foam pieces bonded with adhesive and remaining 4.90% plastic and balance adhesive material as reported by the Chemical Examiner, CRCL, New Delhi; (iv) that polyurethane Foam is produced through a chemical reaction between a Diisocyanate and a polyol in large, stainless steel tanks which are equipped with agitators to keep the materials fluid. The PU Foam or Article of PU Foam cannot be made with existing installed and working machineries of the party; (v) that there is nothing on record that the party has produced their product by reacting chemicals like Diisocyanate and a polyol which are necessarily required to manufacture fiexible polyurethane Foam (PU Foam in short) or they are having plant machineries to react such raw materials in large stainless steel tanks equipped with agitators to keep the material fluid; (vi) that there is also nothing on record that the party had ever purchased chemicals like Diisocyanate and a polyol necessarily required to manufacture flexible PU Foam @. The party in their purchased or used any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PU Foam rather than article of PU Foam, as alleged clearly in Para 17 (i) of the impugned SCN. When 3921 is not disputed, then question of manufacture of PU Foam does not arise as 3921 starts with 'Other plates, sheets, film, foil and strip, of plastics-cellular'; here the words sheets and cellular are important. There is no doubt that sheets were being manufactured by the respondent and as per CRCL report in these sheets, the dominating material was of PU Foam, therefore the goods manufactured by respondent are nothing but articles of PU Foam squarely falling under CSH 39211310. 7. He also rejected the assessee's plea on invocation of extended period by simply observing that said vital facts/ permission was suppressed by the assessee from their factory, thus justifying invocation of longer period. The said order of Commissioner (Appeals) is impugned before the Tribunal. 8. On going through both the orders of the Original Adjudicating Authority and as also of Commissioner (Appeals), we note that the Appellate authority has simplicitor gone by the facts of pre dominance of PU polyurethane in the product as reported by Chemical Examiner. He has not gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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