Commercial parlance classification and non-reliance on a chemist's report defeated the excise exemption challenge.

Classification of the goods under Notification No. 53/88-C.E. depended on their composition, manufacturing process and commercial parlance. On the evidence, the products were treated as acrylic polymer resin in primary form rather than resin emulsions, so they fell under Serial No. 42 and not Serial No. 9. The challenge based on natural justice also failed because the Deputy Chief Chemist's report was not relied upon in the adjudication order; the authority could seek expert assistance, and non-supply of that report caused no prejudice or breach of Rule 56. The exemption claim was therefore rejected and the departmental classification upheld.

---

---

Issues: (i) Whether the appellants' products were classifiable under Serial No. 9 of Notification No. 53/88-C.E. or under Serial No. 42 of the said notification; (ii) Whether non-supply of the Deputy Chief Chemist's report and the manner of obtaining technical opinion violated the principles of natural justice and Rule 56 of the Central Excise Rules, 1944.

Issue (i): Whether the appellants' products were classifiable under Serial No. 9 of Notification No. 53/88-C.E. or under Serial No. 42 of the said notification.

Analysis: The classification turned on the nature of the products and the evidence regarding their composition, manufacture and understanding in commercial parlance. The adjudicating authority and the Tribunal relied on the material showing that the products were acrylic polymer resin in primary form and not resin emulsions. The appellants' technical opinions were found insufficient to displace the Department's case, and the revised classification was treated as an afterthought. The commercial parlance test was applied to determine the proper exemption entry.

Conclusion: The products were not covered by Serial No. 9 and were correctly held to fall under Serial No. 42; this issue was decided against the assessee.

Issue (ii): Whether non-supply of the Deputy Chief Chemist's report and the manner of obtaining technical opinion violated the principles of natural justice and Rule 56 of the Central Excise Rules, 1944.

Analysis: The Collector was entitled to seek expert assistance and obtain clarifications from the Deputy Chief Chemist while adjudicating the dispute. The report obtained was not relied upon in the adjudication order, and the findings were based independently on other material. In these circumstances, non-supply of the report did not cause prejudice or amount to denial of a fair hearing, and Rule 56 was not attracted in the absence of reliance on the test report.

Conclusion: There was no violation of natural justice or Rule 56; this issue was decided against the assessee.

Final Conclusion: The exemption claim failed, the classification adopted by the Department was upheld, and the challenge to the adjudication on procedural grounds also failed.

Ratio Decidendi: Where the adjudicating authority does not rely on a chemical test report in reaching its finding, non-supply of that report does not by itself violate natural justice or Rule 56; classification of excisable goods is to be determined on the relevant evidence and their commercial understanding.

---