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TMI Blog1980 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... d September, 1965 a notification was issued under Rule 8(1) of Central Excise Rules. By the said notification phenolic resins were exempted from so much of the duty of excise levied over thereon as was in excess of 0.30 paise per kg. 3. By letter dated 21 August, 1968 the petitioner asked Excise authorities for the approval of the price list for the purpose of excise duty. In this application it was stated that the petitioner would opt for payment of duty on the specific rate as per the aforesaid notification dated 23-9-1965, subject to the duty being on the plastic content of the solution. The specific rates stated therein was of duty of phenol-formaldehyde at 0.30 paise per kg. plus 20 per cent surcharge. If the excise duty was to be charged on the entire weight of the solution then the petitioner wanted that they should be asked to pay ad valorem duty. On 19th September, 1968 the excise officer granted provisional approval to the price list. 4. On the 14th September, 1968 the Excise authorities took a sample of the petitioner's product and sent it for analysis by the chemical examiner of the Government of India. The result of the said analysis was not communicated to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent the samples, which were with them when they had been drawn on 31st January, 1969, for being tested at Bhopal. It received a communication of the report which stated that the percentage of non-volatile matter determined after drying at 105 degree centigrade was 43.3 by weight. Copy of this was also sent by the petitioner to the Collector of Excise. 9. By order dated 30th July, 1969 the Collector of Excise rejected the appeal. In the said order the Collector of Central Excise had relied upon certain documents which, according to the petitioner, had never been disclosed to it. The petitioner accordingly wrote a letter dated 19th August, 1969 to the Collector asking for the test report dated 6th May, 1969, as well as other four documents which had been referred to in the said order. The said documents were, however, not supplied to the petitioner. The petitioner, without having the opportunity of seeing the report or the test report of the chemical examiner, filed a revision petition with the Government of India. A personal hearing was granted to the petitioner. By order dated 27th May, 1972 the revision application was rejected but with the following observations : "However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required reaction temperature and held at this value until the reaction has proceeded sufficiently. In some cases the catalyst is neutralised at this stage. The valves are then set for evaporation and vacuum is applied for the dehydration of the resin. The evaporation of resols has to be carried out under reduced pressure, so that the temperature does not rise sufficiently to cause rapid heat hardening. If evaporation is carried out at 10-150 mm Hg, and completed at less than 100 C, solid grindable resols may be obtained. When most of the water has been distilled from the resin, the temperature of the mixture in the still rises rapidly are samples and taken very few minutes, and tested for degree of polymerization, melting point, hardness, or any other property suitable for determining the end-point. As soon an end-point is reached, the resin is run out, and cooled rapidly if a solid resin is required. If a varnish or lacquer is required, alcohol or some other suitable solvent is added to the hot resol in the still, to bring it into solution " The reading of the aforesaid passage shows that manufactured phenolic resin is in solid form. For the purpose of using this resin, it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the product of the petitioner can only be categorised as an "aqueous solution of resin" where the solid content was less than 45%. 14. The next question which would arise for consideration is as to whether such a product can be regarded as resin in liquid form. Item No. 15-A refers to all types of artificial and synthetic resins. These resins may be in different forms. Whatever may be the form, the product must necessarily be a resin. Sh. Dewan, the learned Counsel for the petitioner has relied on A.l.R. 1963 SC 791 Union of India v. Delhi Cloth Mills - 1977 E.L.T. (J 177) and contended that unless the product manufactured by the petitioner is known as `resin' and unless the manufacture has been completed, it cannot be subjected to excise duty. In other words, the contention is that the product of the petitioner is not artificial or synthetic resin because an essential step, namely dehydration, has not taken place. It has not been denied by the learned Counsel for the respondents that liquid resins are different from solution of resins. A solution is a homogeneous mixture of the molonles, atoms or ions of two more different substances (See General College Chemistry by Leenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot more than 45 per cent. It is only when, initially, a report was given by the chemical examiner that it is not possible to find out the solid content, that the excise authorities sought to levy excise duty on the entire product. This clearly shows that the Excise authorities also were, initially, of the opinion that `solution of resin' is not rain and that the excise duty is leviable only on the solid content in the solution. The petitioner has also placed on record two affidavits, one of Dr. R C. Badami and the other of Dr. A. Purushotham. In both the affidavits it has been stated that the manufacture of phenolic resin is not completed till the water has been eliminated from the product. The following passage from the affidavit of Dr. Badami may usefully be referred to : "I further say that the two terms "liquid" and "solution" are not synonymous. The term "liquid" refers to one of the three fundamental states in which matter i.e., a substance can exist. These fundamental states are solid, liquid and gas. The term "solution" refers to a homogeneous mixture of two or more substances and it can be in solid form, liquid form or in gaseous form. The substance which is present in l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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