TaxTMI 
TaxTMI 
1987 (1) TMI 254
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....mperature is increased to 60° to 80°C, as required and thereafter the same is brought down to 60°C. At that time some quantity of caustic soda or methanol, as the case may be, is being added. In some cases the water is separated from formaldehyde and in remaining cases water is not taken out." The chemistry of reaction for the formation of phenolic resins as given by the respondents as Annexure 'B' of the Appeal Memorandum is reproduced as Annexure 'A' to this Order. The Phenol Formaldehyde resin is formed in three forms and there are three reactive stages for formation of the respective forms. Here we are concerned with first stage of reaction which has been abstracted by the appellants from Reference Book - Material and Technology - Volume VI - page numbers 587 to 593. For the formation of 'A' Stage it has been stated in the same Reference Book as under :- "Resol resins. - In the presence of alkalis the condensation to polynuclear compounds take place much more slowly compared with the acid state. A higher formaldehyde concentration can therefore be used e.g. P/F = 1/1.1 - 1/1.5 (for moulding and laminating); P/F = , 1/1.5 - 1/2.5 (for casting resins and adhesiv....
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.... held that merely because solutions are not stable did not mean that the resins produced were not goods and that if some stabiliser was used to lower down the continuous reaction with the addition of retarder or stabiliser, the same could be put in the market for the purpose of sale. The Collector (Appeals) relying on these findings of the Assistant Collector has observed as under :- "That, therefore, an intermediate production order to be excisable as a product, must be a product known to the market or commercial community; of course, the manufacturing process of that product must be complete. In other words, if the intermediate product which comes into existence is as such a complete product known to the market it is excisable. But if something more is to be done on the product or with reference to the product to bring it into a form known to the commercial community, it cannot be treated as excisable. The appellants also aver that the intermediate reacting mixtures are not fully manufactured goods and that the chemical reaction therein is complete only when the treated papers are in hydraulic press under high pressure and temperature and that the same are not marketable and f....
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....ot be held to be marketable. He stated that levy of duty has to be on goods in the condition in which these have been manufactured and that no evidence had been produced by the Department that these are resols as such and that these are understood in the commercial parlance as resols. He was specifically asked to state, notwithstanding the fact whether the Department had called the goods as resols in the proceedings before the lower authorities, as to whether technically the goods manufactured by the respondents are resols or not. He pleaded ignorance and stated that he is not aware as to whether the goods manufactured were resols or not. He, however, stated even if these are considered to be resols in as much as these are not marketable, no duty can be charged on the same. He cited the following case law in support of his this plea :- 1. 1986 E.L.T. 169 (S.C.) in the case of M/s. Union Carbide India Limited v. Union of India and Other; 2. 1983 E.L.T. 1566 in the case of Dunlop India Limited & Madras Rubber Factory Limited v. Union of India & Others; 3. 1982 E.L.T. W (Ker.) in the case of The Western Indian Plywood Limited v. Union of India and Others; 4. 1983 E.L.T. 25....
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....e notice of the respondents that their product was resol. 8. We observe that the lower authorities in their Order have described the respondents product as phenol formaldehyde reacting mixture. The respondents, as is seen from the order of the Assistant Collector, had requested the Assistant Collector to supply them the grounds in detail as to how reacting mixtures are covered under 15A(1). The Assistant Collector, however, maintained that there was no dispute about the product used in the manufacture of laminated sheets. The goods manufactured have not been termed as 'resol' as stated before us by the learned JDR for the Department. The respondent's Advocate also could not tell us from his knowledge as to what was manufactured was resol or not. Notwithstanding the above, we observe that in the appeal filed, the appellants have given details of the manufacturing process and the chemistry of the reaction and use to which the manufactured goods in question are put. These submissions have not been challenged by the respondents. The appellants in this regard have given extracts from the Standard Reference Books. We find that the phenolic resin occurs in three stages as mentione....
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....natural resins. Thus, the term synthetic resin, though still wide used, is strictly inappropriate, since the substances are polymeric compounds rather than mixtures of simple substances, Characteristic properties of such polymers are insolubility in water, resistance to attack by chemicals, high electrical resistivity and a smooth hard finish. Most types can be readily extrude, machine and molded, and some can be ex- truded into filaments and woven into fabrics. There is definite line of demarcation between thermoplastic (heat-softening) and thermo setting (cross-linked, heat stable) resins. One major group having rubber like properties is called elastomers." The term Resinoid has been set out in the Reference Book as under :- "Resinoid - A term used by materials engineers to denote a liquid, semisolid, or solid thermosetting resin or plastic, especially those used for bonding agents in such composites as abrasive wheels, plywood etc. It also includes semi-polymerized (heat-bodied) linseed oil and A-Stage phenol formaldehyde resins (Also called resols)." From what has been stated before us which has not been controverted is that out of the raw material inputs after the rea....
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.... character for a specific use and is technically recognised as resol. No where we find in the technical literature placed before us nor has any evidence been produced by the respondents that the product resol is unstable and not capable of storage even for a short time. What has been pleaded is that the product has a short shelf life. It is a well known fact that in the case of resins there are so many varieties and these have wide-ranging shelf lives ranging from a few days to a couple of months or even more. It has not been made out before us that the product is required to be taken into immediate use or otherwise it would be rendered useless or it will cease to be a resin. In fact, it has been pleaded that the product has a short shelf life and has been conceded by the learned Advocate for the respondents that it can be kept for as long as 15 days. This would suggest that at that stage itself, it could be sold to a consumer or a buyer if he required the same. The laminates manufactured by the respondents is not manufactured in a single stream operation and the resin mixture as stated earlier is manufactured in reaction vessels in batches. In the nature of things the goods have t....
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....mer chips are actually brought to the market to be bought or sold. We have held that the product manufactured by respondents falls under 15A(1) and the fact that these are in the- case of the respondents not marketed or sold makes no difference for the purpose of levy of duty as held by the Hon'ble Courts. In view of the above, we hold the Order of the Collector (Appeals) is not maintainable and we set aside the same and uphold the levy of duty under 15A(1). The appeal is allowed in above terms. ANNEXURE - 'A' Phenolic resins are thermosetting condensation products which arise in the reaction of phenols and aldehydes under the catalytic influence of either basic or acids. 2. The manufacture of phenolic resins from phenol and formaldehyde in an aqueous medium, with acid or basic catalysts, rests, in the first instance on a primary addition reaction of formaldehyde with the active ortho and para points of the phenol molecule. Reactive methylol pehnols are thus formed. If phenol is added in excess monomethylol phenol (reaction I) is mainly formed and this, in a secondary condensation or resinification reaction, is converted into polynuclear methylene phenols (e.g. reaction II....
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....g free formaldehyde. 8. Phenol resins evolve in three stages, which are connected with the degree of condensation :- 1. Rosol or A-Stage (beginning of condensation); the resin as fluid, soluble, and still contains much water. 2. Resitol or B-Stage (continued condensation, slight cross-linking) insoluble, rubbery. 3. Resite or C-Stage (final condition of the cured product); infusible and insoluble. There are no sharp boundaries between these stages, which merge one into the other. The mechanical and physical properties of the resite, or and stage, depend greatly on the degree of hardening and the manner, in which this hardening has taken place. The. Chemical structure of the resite stage can be described as a compact network of phenol nuclei,. which are linked together by CH2 and CH2 - O - CH2 groups (isogel structure). The properties of the resite depend greatly on its microstructure. Hardening to the resite stage should naturally, take place only after the final shape of the end product has been obtained. 9. A useful intermediate product (pre-condensate) can be obtained by one of the following two methods. 1. By using phenol in excess, which will stop the reac....
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.... making plate, hardboard, safety glass etc. The properties of laminated materials depend greatly on the quality and type of the reinforcement used. The most important applications of resol resin laminates are for electrical insulation and as structural and decorative sheet. Trade Marks are Fiberite, Micarta, Farlite, Durestos and Phenolite. 13. The primary stage in the production of amino plastics is the formation of methylol groups by the reaction of formaldehyde with amide and amine groups : RNH2 + CH2O - R - NH - CH2HO For instance, for urea, carried out in aqueous solution : NH2 - C - NH2 + CH2O - NH2 - C - NH - CH2OH    O           O The reaction product is monomethylol urea. The second amino groups can also be converted. With large excess of formaldehyde even trimethylol urea is indicated. These methylol compounds generally have a very good solubility in water. Aqueous solutions in which the hydrogen of the amino groups in the urea is replaced to varying degrees by CH2OH groups are thus obtained, depending on concentration ratio, acidity, and temperature. Even in weakly acid solutions the ....