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TMI Blog1987 (6) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... hin a few hours of its manufacture as after some time the same becomes unusable. The said solution is prepared within the factory of the petitioner and it is consumed within the factory itself and it is at no time or stage removed from the said factory anywhere else. 3. Some time in June 1977 certain samples of the said dip solution were drawn by the Inspector of Central Excise and were sent to the Deputy Chief Chemist for test. For the purpose of the test the petitioner supplied the requisite information including the composition of the said dip solution. The Chemist gave his report on the basis of which the department informed the petitioner that the said dip solution fell under item No. 15A(1)(i) of the Tariff of the Central Excise and Salt Act. It appears that when the department passed the aforesaid order the petitioner had not been heard and, therefore, the petitioner had to file a writ petition in this Court being writ petition No. 525 of 1978. However, on April 25, 1978 the said petition was withdrawn on an assurance given by the respondents that no orders would be passed in the said matter without furnishing, to the petitioner, a copy of the said test report and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formaldehyde Resin in aqueous solution. This is then mixed with rubber latex which they called as dip solution. This dip solution is taken for the tyre cord dipping. Q.6. Whether at any stage any stabilisers were added to the solution or did it contain any? A.6. As per the factory's declaration and the process shown to me they do not add any stabilisers. Q.34. As far as processing of dip solution is concerned by the Ceat, there is no separation of the resin by precipitation or other means. Also the reaction is not arrested and it continues and therefore the material is to be used in the prescribed time. If the solution prepared by Ceat is kept for a long time, the reaction continues and what product comes out of it is not useful for any purpose. Keeping this factor in mind it can never be said that what Ceat processes is resin, but it is dip solution only? A.34. Dip solution is phenoplast in liquid form. If they do not arrest by putting stabilisers keeping it for a long time without proper care and preservation, just like any material gets spoiled, this will also get spoiled." Mr. Talyarkhan submitted, therefore, that without the addition of stabilisers the solution cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resin is in liquid form, but solution of resin which according to the Delhi High Court's Judgment in the case of Indian Plastics Chemicals Pvt. Ltd. 1981 E.L.T. 108(DEL) cannot be excisable under T.I.15A. Court also held that the resin in Item 15A refers to the resin as fully manufactured and not to any solution of resin. Thus, in any case dip solution is not liable to excise duty under T.I.15A." 8. Mr. Talyarkhan also relied upon the case of Indian Plastics Chemicals Pvt. Ltd. v. Union of India others, reported in 1981 E.L.T.108 (Del.), which is the case decided by the Delhi High Court. In this case the Delhi High Court considered the question as to whether the product, in that case, can be regarded as artificial or synthetic resin in liquid from after taking note of the fact that Item No. 15A refers to all types of artificial and synthetic resins. The Court said as follows: "To my mind this product cannot be regarded as artificial or synthetic resin in liquid form. It is, at best a solution of resin which is not covered by the aforesaid entry. Reference in this behalf may also usefully be made to the instructions which have been issued by the Central Board of Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be described as the goods for the purpose of Central Excises and Salt Act. It was also asserted that the preparation of aluminum cans out of aluminum slugs did not amount to manufacture, and that aluminum cans were merely an intermediate product in the manufacture of flashlights. These contentions did not find favour with the excise authorities. But the Supreme Court upheld these contentions. I may mention that while deciding this particular case, the Supreme Court referred to two earlier cases viz. one, the case of Union of India v. Delhi Cloth General Mills, [1963 Supp. 1 S.C.R. 586 = 1977 E.L.T. (3 -199) (S.C.)], and the other, the case of South Bihar Sugar Mills Ltd., etc. v. Union of India others, [19 78 E.L.T. J 336 (S.C.)]. The relevant observations of the Supreme Court at page 172 are as follows: "The question here is whether the aluminum cans manufactured by the appellant are capable of sale to a consumer. It appears on the facts before us that there are only two manufacturers of flashlights in India, and appellant being one of them. It appears, also that the aluminium cans prepared by the appellant are employed entirely by it in the manufacture of flashlights an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case. If that is so, the petitioner must succeed. 11. However, the department think otherwise. Mr. Pochkhanwalla, appearing for the department, firstly relied on the definition and the technical meaning of this dip solution as given in various text books and encyclopaedia of chemical technology. The relevant portions from the various books are as under: Rubber Technology and Manufacture (By C.M. Blow And C. Hepburn, at pages 333 and 334) (IInd Edition.) "One of the earliest systems for bonding rayon was based on resorcinol-formaldehyde resin and natural rubber latex, but the material suffered from a limited pot life. Butadiene-styrene and vinyl pyridine copolymer latices, in admixture with resorcinol-formaldehyde, followed. A later development was isocyanate adhesive. A modification of the latter was the formation of adducts, which were water soluble for easier application. With combinations of these systems, the range of fibres available can be pre-treated so that they will adhere to any rubber" Encyclopaedia of Chemical Technology (By Kirk-Othmer, at page 464) IIIrd Edition. "Tire cord (qv) is normally first treated with rubber latex to improve adhesion to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court is the case of S.B. Sugar Mills Ltd. v. Union of India, reported in 1978 E.L.T. (J 336). The relevant observations are in para 14 of the judgment. The question involved in this case was one relating to what is known as Kiln gas. However, in my view, I need not deal with this authority at all, inasmuch as the Supreme Court while deciding the case of Union Carbide India Ltd., referred to above, had taken into account this very case and, thereafter, laid down the proposition that for the purpose of chargeability the goods must be such as to have a market or must be saleable. 14. Mr. Pochkhanwalla has also relied upon a case decided by the CEGAT viz. the case of Collector v. Jay Enterprises and 5 others reported in 1987 (29) E.L.T. 288 (Tribunal). This is a case where the question was one relating to manufacture of resin. The judgment deals with the details of the product and points out that there are various stages in the manufacture. They are set out in para 8 of the judgment. After setting out these various stages the Tribunal goes to observe that in the case of resins there are so many varieties and these have wide-ranging shelf lives ranging from a few days to a cou ..... 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