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TMI Blog2024 (10) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to all goods except those specified in Annexure-1 (Negative List). The appellants filed a declaration as required under the aforesaid notification on 05.02.2010. The declaration duly contained the details of finished goods as well as raw materials including Melamine & Formaldehyde & Phenol etc. For the manufacturing of Decorative Laminates and Paper Based Laminated Sheets, a mixture of Melamine& Formaldehyde and Phenol & Formaldehyde is required to be prepared in house, to be used as glue/adhesive in the manufacture of aforesaid laminated sheets. All the manufacturers of these products prepare their own mixture, as per the requirement of their final product. 2.2 That after a period of almost 3 years, on the basis of the investigation carried out by DGCEI, the Department issued show cause notices to all the manufacturers of Decorative Laminates and Paper Based Laminated Sheets, including the present appellant, who were availing exemption under Notification No. 50/2003, asking them to pay duty on the mixtures of Melamine & Formaldehyde, and Phenol & Formaldehyde which were being prepared in house and were being used within the factory, on the ground that these products fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order. 6. After considering the submissions of both the parties and perusal of the material on record, we find that this issue is no more res integra and this Bench of the Tribunal in the case of Samrat Plywood Ltd. cited (Supra) decided the same issue involved in the present appeal vide its Final Order No. 60367/2024 in E/53540/2014, this Bench of the Tribunal in the case of Samrat Plywood Ltd. has considered this issue in detail and after considering the various judgments of the Tribunal has held that the mixture of aforesaid items used as glue/adhesive in the manufacture of laminates is classifiable under Chapter Heading 35.06 and not under Chapter 3909 and hence the exemption cannot be denied to them. The relevant extracts of the said decision is reproduced here in below: 8. After considering the submissions, we find that the appellant were manufacturing paper based decorative laminates and opted for area based exemption under Notification No. 50/03-CE dated 10.06.2006 giving details of finished goods as well as raw material including Melamine Formaldehyde Resin (MFR) and Cardanol Phenolic Formaldehyde etc and the jurisdictional authorities after thorough scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 10-6-2003; therefore, we hold that the appellants are entitled to exemption under Notification No. 50/2003-C.E., dated 10-6- 2003 for the items in question which have been captively consumed by the appellants to manufacture laminates, plywood, boards etc. Therefore, no duty is payable by the appellants. 8. In view of the above, we do not find any merit in the impugned orders, the same are set aside. 10. Further, we find that the Delhi Tribunal in the case of Shirdi Industries Ltd. Vs. Commissioner of C.Ex. Meerut reported in 2018 (359) E.L.T. 513 (Tri.-Del.) wherein the same issue was involved and the Tribunal relied upon the earlier decisions in the case of Shirdi Industries vide Final Order No. 70520/2017 dated 19.05.2017 CESTAT, Allahabad and held as under : 4. We have heard both the sides and perused the appeal record. We note that the Tribunal, Allahabad Bench have dealt with the very same issue for the earlier period in the appellant's own case. Vide the Final Order dated 19-5-2017, the Tribunal recorded the following findings :- 10. Having considered the rival contentions and on perusal of the records, we find that the impugned order is vitiated on the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment, including the respondent Commissioner. We further find that admittedly wax is used by the appellant in manufacturing of glue, which is clear from the chart reproduced at para 5.1 of the SCN and para 5 of the impugned Order-in-Original. Admittedly, such glue is based on PF, UF and MF. Thus, in view of the aforesaid admit- ted facts, as per HSN explanatory notes to Chapter 39, glue manufactured by appellant for use as adhesive is outside the preview of Chapter 39. Admittedly, the glue in question is curried glue to which hardener and other substances are added and therefore, glue manufactured by the appellant is not covered by clause 1 to note 6 of Chapter 39, such glue being not in the form of block, lump or powder. We further find that the preceding decision of this Tribunal in the case of Balaji Action Viltwell v. CCE, Merrut reported in 2016 (332) ELT. 367 (Tri-Delhi) is squarely applicable in the facts of the present case. Similar issue was considered by this Tribunal and after considering the scope of heading 3909 with Chapter Note 6 to Chapter 39 and HSN, it have been held that glue is not in primary form and therefore not classifiable under Heading 39.09. We further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nol urea or cresol (with formaldehyde) as the main component - Pre- pared 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 which is the processes adopted and emerging product from the reactors/kettles, sent directly to kitchen nor 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 men thon 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 pli value has been indicated. They have also contested the findings in the test as they were not allowed cross- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the impugned goods are prepared for specific need and requirement of bonding of wood fibers/wood particles/coating of papers during the manufacture of final product like MDF Board, Particle Board, etc. The fact is that the preparation of impugned goods is in one stage process under controlled temperature and pH and addition of Ammonium Gloride Formic Acid in the processes, the enderging product being transferred to glue kitchen area for final use in bonding. We find that the classification of the product as primary resin is not sustainable. This is supported by Note-6 of Chapter 39 and HSN Explanation of such note. As such denial of exemption is not sustainable. Considering the above discussion and finding, we allow the appeal by setting aside the impugned relief. 12. Further, We find that the Department has accepted the classification of the main items under Chapter 3506 as no appeal against any of the four judgments cited (Supra) has been filed by the Department before any Higher Court which means that the issue has attained finality. Further, we note that in the instant case, identical question arises for consideration as was involved in the above decisions cited (Supra). We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captively consumed, are not chargeable to excise duty, owing to their short shelf life provided that they are not marketed or sold commercially as such. 5. All pending disputes/assessments on the issue may be settled in the light of these guidelines. 6. Field formations and Trade may suitably be informed 7. Receipt of this Circular may please be acknowledged. 8. Hindi version will follow." 14. We also find that the impugned order is bad in law being violative of the principle of natural justice as the same has been passed on the basis of preliminary hearing wherein the Ld. Counsel for the appellant has requested the Department to provide them the copy of test report and also allowed them to cross examine the witnesses whose statements have been relied upon in the show cause notices but the same was not done and even the copy of the test report was not given to the appellant and was produced before the Bench only at the time of arguments by the Department. 15. Further, we find that no market inquiry was conducted with reference to the goods in question in order to establish as to whether the mixture is capable of being bought and sold. Further, we find that Revenue has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant to avail the exemption under Notification No. 50/03-CE. Further, it has been consistently held by various High Courts and Supreme Court, there is no question of suppression when the activity has been duly reflected in the statutory/provide records and the activity has been done after duly intimating the Department. In this regard, the decisions relied upon by the appellant cited (Supra) are squarely applicable and hence we hold that substantial part of the demand upto December, 2010 is barred by limitation. 18. Keeping in view of our discussion above, we are of the considered view that the issue involved is no more res integra as held in the decisions relied upon by the appellant cited (Supra) and by following the ratio of the said decisions, we are of the considered opinion that the impugned order is not sustainable in law and therefore we set aside the same by allowing the appeal of the appellant, with consequential relief, if any, as per law. 7. By following the ratio of the above said decisions, we are of the considered opinion that the impugned orders are not sustainable in law and therefore we set aside the same by allowing both the appeals of the appellants, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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