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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 ..... side - appeal allowed. - MR. S. S. GARG, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Sh. Sudeep Singh Bhangoo, Advocate for the Appellant Shri Aneesh Dewan and Shri Narinder Singh, ARs for the Respondent ORDER These two appeals were filed by the appellants against the impugned order dated 16.12.2013 27.03.2014. Since, the issue involved in both the appeals is identical, therefore, both the appeals are taken up for the purpose of discussion and decision. For the sake of convenience; the facts of the Appeal No. E/53448/2014 are taken up. 2. The appellant has setup a new unit for the manufacture of Paper Based Decorative Laminates and Paper Based Laminated Sheets falling under Heading 4823 and 4023 respectively. They opted for area based exemption under Notification 50/2003-CE dated 10-06-2003, which provides exemption from payment of duty 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 Lam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the classification of the aforesaid items under Chapter 35.06 as no appeal against the aforesaid judgments has been filed by the Revenue before any higher court. He further submits that the department cannot now take a different view in the present case as it will result in utter confusion. He also submits that the present case is covered by the CBEC Circular No. 464/30/99-CX dated 30.06.1999. 4.3 As regards the limitation, the major part of the demand is hit by the bar of limitation specially as the fact of use of Melamine and Formaldehyde had already been brought to the knowledge of the Department on 05.02.2010 by filing of the declaration and there is no suppression of facts or mis-statement with an intent to evade payment of duty on the part of the appellant. 5. On the other hand, Ld. AR reiterated the findings of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties has held as under: 6. On hearing both the sides, we find that of Controversy is that whether the resins captively consumed by the appellants namely Phenol Formaldehyde (PF), Urea Formaldehyde (UF), Melamine Formaldehyde (MF) used to manufacture plain and pre- laminated particle boards or laminates are classifiable under Tariff Heading 3909 or 3506 of the Central Excise Tariff Act or not? 7. As it has been clarified by Ministry of Chemicals Fertilizers, the Ad resins do qualify under Tariff Heading 3506 of the Central Excise Tariff Act; therefore, we hold that the resins in question, which are captively manufactured by the appellants having merit classification under Tariff Heading 3506. The items classified under Tariff Heading 3506 are entitled for benefit of exemption Notification No. 50/2003-C.E., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the new Central Excise Tariff, the product can merit classification under sub-heading 3909, in view of note 3(e) of Chapter 39. Once it is established that paper is quoted with certain resoles which have the essential characteristics of meriting classification under Chapter 39 and which according to Note-1 of Chapter 39 are to be called plastics. We find that learned Commissioner erred in relying on the said ruling in absence of comparison of chemical composition. We further find that the learned Commissioner have erred in ignoring the clarification given by the Government of India in OM No. 56016/41/2012/PC-II, dated Ist June, 2012, issued by the Ministry of Chemicals and Fertilizers as noticed hereinabove. We further observe that the said clarificatory circular is binding on the officers of the Government, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hure mentioned therein (requiring curing, etc.) is not to be classified under such heading. The exclusion note made in HSN adds support to the same. The Revenue's assertion that addition of hardening agent does not take away the basic property of the product being a resin is not sustainable in the present dispute. Addition of NH,CL. as hardening agent in the reactor/kettle before the resultant product is sent to glue kitchen for use in binding purpose has relevance to decide the issue. Prepared glue as it emerges is put into use in the binding section along with other inputs like wax, NH,CL and water for final binding. Chapter 35 covers glues. CETH covers Prepared glues and other prepared adhesives, not elsewhere specified or included. CETH Item No. 3506 99 91 covers synthetic glue with phenol 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 dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onding of their final products. Preparation of glue in Shed-B is a one stage process. They have also contended that the show cause notice itself admits that addition of hardener to the resin reduces the shelf life and brings into existence the glue with reduced shelf life. It is also admitted that use of hardener brings the quick bonding properties to serve as a glue. 19. As stated earlier before comparing the impugned product with the product of other manufacturers and also before applying case laws to the present facts, it is necessary that Original Authority should have examined the processes undertaken and the comparability of the goods in chemical nature. No such analysis or finding to that effect is available in the impugned order. The appellant have categorically submitted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for captive consumption and not for external sale. These binders have a very short self life of a few hours only and can neither be bottled nor transported nor stored for long. 2. A doubt has been raised regarding excisability of such binder/resin/glues. 3. In this context your attention is drawn to the Supreme Court judgment in the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad (1995 (76) ELT 241 (SC)) wherein it was held that intermediate goods produced and used for captive consumption were not liable to duty, if not marketable, notwithstanding the fact of their being specified in Tariff Schedule. 4. The matter has been examined. In view of the above judgment it appears that these intermediate products viz, binder/resin/glues which are 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 impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the present case. 17. As regards the issue of limitation, we find that substantial demand upto December, 2010 is beyond limitation specially the fact of used of Melamine Formaldehyde was already in the knowledge or Department on 24.11.2006 the show cause notice was issued after the expiry of normal period of limitation when all the facts were in the knowledge of Department in 2006, the declaration was filed on 24.011.2006 containing the details of finished goods as well as raw materials including Melamine Formaldehyde Phenol etc., as well as verification of units in the year 2006 itself. Further, the Department duly accepted the said declaration and never raised any objection till January, 2012, rather allowed the 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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