2019 (12) TMI 714 - AT - Central Excise

Tribunal classifies captively consumed resins for duty exemption /2003CE

Virgo Industries, Wood Stock Laminates Pvt Ltd, Punjab Laminates Pvt Ltd Versus Commissioner of C.E., Chandigarh-I

The Tribunal ruled in favor of the appellants, holding that the captively consumed resins should be classified under Tariff Heading 3506, making them ... Area based exemption - Classification of goods - resins - resins are 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 - whether classifiable under Tariff Heading 3909 or 3506 of the Central Excise Tariff Act or not? - benefit of N/N. 50/2003- CE dt. 10.06.2003. HELD THAT:- As it has been clarified by Ministry of Chemicals & Fertilizers, the said resins do qualify under Tariff Heading 3506 of the Central Excise Tariff Act; therefore, 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-CE dt. 10.06.2003; therefore, the appellants are entitled to exemption under Notification No. 50/2003- CE dt. 10.06.2003 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. Appeal allowed - decided in favor of appellant. Issues involved: Classification of captively consumed resins under Tariff Heading, eligibility for exemption under Notification No. 50/2003-CE, liability to pay duty on captively consumed goods.Analysis:1. Classification of captively consumed resins: The appellants, manufacturers of Plywood and other products in Himachal Pradesh, used resins like Melamine Formaldehyde Resin (MFR) and Cardanol Phenolic Formaldehyde Resin (CPF) captively in their manufacturing process. The Department contended that duty was payable on these resins as they fell under Chapter Heading 39.90, not eligible for exemption under Notification No. 67/95-CE. The issue was whether these resins should be classified under Tariff Heading 3909 or 3506 of the Central Excise Tariff Act. The Ministry of Chemicals & Fertilizers clarified that these resins qualify under Tariff Heading 3506, making the appellants entitled to exemption under Notification No. 50/2003-CE.2. Eligibility for exemption under Notification No. 50/2003-CE: The appellants argued that based on the clarification from the Ministry of Chemicals & Fertilizers, the resins used for captive consumption in manufacturing laminates, plywood, etc., should be classified under Tariff Heading 3506, making them eligible for exemption under Notification No. 50/2003-CE. The Tribunal agreed with this interpretation, holding that the appellants were entitled to the exemption, and no duty was payable on the captively consumed resins.3. Liability to pay duty on captively consumed goods: The Department contended that the appellants were liable to pay duty on the captively consumed goods, arguing that the facts of the case were not similar to previous decisions cited by the appellants. However, the Tribunal, after considering the submissions from both sides, relied on the clarification from the Ministry of Chemicals & Fertilizers and held that the resins in question qualified under Tariff Heading 3506, entitling the appellants to the exemption under Notification No. 50/2003-CE.In conclusion, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief. The decision was based on the classification of the captively consumed resins under Tariff Heading 3506, making the appellants eligible for exemption under Notification No. 50/2003-CE.