9911796707
TMI Blog1997 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellants, by the impugned judgment, were further directed to refund the excise duty of Rs. 8,70,710.40p. to the respondents. 2.The respondents in the writ petition had challenged the levy of excise duty on the aqueous solution of Phenolic Resin. The learned Single Judge after considering the literature and material produced on record and rival submissions of the parties reached the finding and conclusion that the product of the respondents in appeal and petitioners in the writ petition, was only an intermediary product and was not resin manufactured in liquid form and did not fall within the Tariff Item 15A and, hence, was not exigible to excise duty. The learned Single Judge, as noted above, has accordingly quashed the orders pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty @ 20% of basic excise duty was payable. By Notification No. 156/65 issued by the Central Government under Rule 8 of the Central Excise Rules, certain exemptions were granted in respect of three types of synthetic resin, including phenolic resin. The effect of the notification was that phenolic resins were exempted from so much of the duty of excise leviable thereon as was in excess of 80 paise per kilogram. The Notification provided that the manufacturer claiming benefit under the Notification would not be permitted to pay duty leviable on the resins manufactured by him at the ad valorem rate. (iii) The respondents on the strength of the Notification No. 156/65 submitted a Classification List for payment of duty in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The percentage of resin found was 41%. In the meanwhile, the Excise Authorities confirmed the demands raised on final assessment. Appeal before the Collector of Central Excise was dismissed as also the revision petition before the Government of India. The respondents claim that the result of the samples taken showed the resin content as varying between 41% to 43%. 5.The appellants in the appeal have inter alia contended that the learned Single Judge erred in holding that the aqueous solution of phenolic resin was an intermediary product and would not fall within Item 15A. It is contended that the learned Single Judge should have held that it was a finished product and a liquid solution of resin used by the respondents themselves. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in content was 40% to 43% and less than 45%. 7.We find considerable merit in the submission of Mr. Haksar, as found by the learned Single Judge. The process of manufacture of phenolic resin may be noted as under : "Phenol and Formaldehyde solution in water are mixed in kettle with further water and a small quantity of a catalyst (Caustic Soda in this case). Formaldehyde is used as Formaline which is a solution of Formaldehyde, Phenolic Resin is formed but remains in solution in water. By subsequent processes the phenolic resin is separated and made into solid and pasty form. These processes are further cooking, followed by separation from solution by any of the three processes namely vacuum distillation, by evaporation of water or spray d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown to be marketable. The Tribunal had held that once the product answered the chemical description in the tariff item, it was assessable to duty. The Apex Court reversed this finding holding that the same was not well founded. The Apex Court held that the goods so produced must also satisfy the test of marketability. The Apex Court further held that even though the goods were excisable goods mentioned in the schedule but they could not be subjected to duty since either they were not produced or manufactured or if they had been produced or manufactured, they were not marketed or capable of being marketed. Thus, the test of marketability or capability of being marketed of the goods in addition to manufacture was approved. Learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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