Resorcinol formaldehyde resin classification upheld; captive use did not defeat excisability, and limitation challenge failed.

Resorcinol formaldehyde aqueous solution was treated as an A stage resin (resol) prepared in situ, and technical material showed it had the recognised resin character and function used in tyre cord adhesion. On that basis, it was classifiable as resin under Tariff Item 15-A and liable to excise duty, even though it was used for captive consumption and not marketed. The later show cause notice was held to be only a correction of the description in the earlier notice, not a fresh notice creating a new cause. Limitation therefore was not barred, and the duty demand was sustained.

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Issues: (i) Whether the resorcinol formaldehyde aqueous solution manufactured by the appellants was an A stage resin (resol) classifiable under Tariff Item 15-A of the Central Excise Tariff and liable to duty. (ii) Whether the duty demand was barred by limitation on the footing that the later show cause notice was a fresh notice and not a mere correction of the earlier one.

Issue (i): Whether the resorcinol formaldehyde aqueous solution manufactured by the appellants was an A stage resin (resol) classifiable under Tariff Item 15-A of the Central Excise Tariff and liable to duty.

Analysis: The product was held to be a resorcinol formaldehyde resin prepared in situ and corresponding to A stage resin. The technical material on record and the earlier tribunal decisions relied upon showed that the mixture had the characteristics and function of resol used in tyre cord adhesion. The fact that it was prepared for captive consumption or was not actually marketed did not exclude excisability, because marketability was established by its recognised resin character and comparable use.

Conclusion: The product was correctly classified as resin under Tariff Item 15-A and was liable to excise duty.

Issue (ii): Whether the duty demand was barred by limitation on the footing that the later show cause notice was a fresh notice and not a mere correction of the earlier one.

Analysis: The earlier notice, read as a whole, was held to relate to resorcinol formaldehyde solution itself and not to the later dipping solution. The subsequent notice only corrected the description of the manufacturing process. Since both notices concerned the same excisability issue, the plea that limitation had to be computed only from the later notice was rejected.

Conclusion: The demand was not time-barred and the limitation plea failed.

Final Conclusion: The impugned order confirming classification and duty demand was upheld, and both appeals failed.

Ratio Decidendi: A resorcinol formaldehyde aqueous solution which is shown by technical material to be a pre-condensed resin having the recognised function of a resol is excisable as resin, and a later notice that merely corrects the description of the same product does not create a new cause so as to alter limitation.

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