Classification of intermediate glue in particle board manufacture excluded from Chapter 39, preserving the area-based exemption.

Intermediate products arising in the manufacture of particle boards were held to be prepared glue meant for direct use in bonding, not primary resin classifiable under Chapter 39. The Tribunal applied its earlier view on identical facts, relying on the manufacturing process, controlled production, addition of hardener, and Chapter Note 6 with the HSN explanatory material. On that basis, the product was found outside the Chapter 39 negative list, and denial of the area-based exemption under Notification No. 50/2003-CE was unsustainable. The duty demand on the intermediate product was therefore not maintainable.

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Issues: Whether the intermediate products emerging in the manufacture of particle boards were classifiable as primary resin falling under Chapter 39 and, if not, whether duty could be demanded by denying the area-based exemption under Notification No. 50/2003-CE.

Analysis: The Tribunal followed its earlier decision in the appellant's own case on the identical facts and applied the same reasoning that the product emerging from the process was prepared glue meant for direct use in bonding, and not resin in primary form. It relied on the process adopted, the controlled manufacture, the addition of hardener, and Chapter Note 6 read with the HSN explanatory material to hold that the product could not be placed in the negative list under Chapter 39. On that basis, denial of the area-based exemption was found unsustainable.

Conclusion: The demand of duty on the intermediate products was not sustainable and the appeal succeeded in favour of the assessee.

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