1993 (10) TMI 162

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....85 and a subsequent addendum dated 28-11-1985 to the said notice issued by the Superintendent of Central Excise, Calcutta to show cause to the Assistant Collector of Central Excise as to why they should not provide particulars in regard to the quantity of the goods, namely, Titanium Dioxide, Pigments, Aerosil Resin, Black Iron etc. manufactured and cleared for captive consumption without payment of duty and without filing a classification list during the period from November 1985 onwards and why they should not apply for a Central Excise licence for the manufacture of said goods under Section 6 of the Central Excises and Salt Act, 1944 read with Rule 174 of the Central Excise Rules, 1944 and why penalty should not be imposed on them under Rule 173Q of the Central Excise Rules, 1944. They were also asked to show cause why central excise duty amounting to Rs. 71,674.94 on the mixture of Kylok Polyester Resin, Styrene Monomer, M.E.K. Peroxide and BPO (Benzoyl Peroxide) weighing 82,449.90 Kgs valued collectively at Rs. 35,83,747.21 used in the manufacture of Glass Reinforced Polyester classifiable under, Tariff Item 15A(1) with the aid of power during the period November 1981 to 21-5-1....

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....-8-1976 by the Department in respect of the classification list of the said GRP product and in the order dated 28-1-1978 passed by the Collector imposing a penalty of Rs. 75,000/- under Rule 173Q of the Central Excise Rules, 1944 on account of the manufacture of GRP products was set aside by the Board by order dated 31-10-1980 and the matter was remanded to the Collector for de novo adjudication. They stated in the de novo proceedings before the Collector they contended that the Department was fully aware that they were preparing CL resin and MEKP Resin for captive consumption. They also pointed out that as required by Central Excise Revenue Audit they had submitted the necessary particulars in regard to these resins and GRP products vide their letter dated 18-12-1982 and their records of the period 18-10-1982 to 28-12-1984 were also checked by the Internal Audit. They contended that the notice to show cause and the Addendum thereto having been issued after expiry of six months from the relevant date were time barred since there was no fraud or any wilful misstatement or suppression of facts. They denied that MX Resin were goods classifiable under Tariff Item 15A(1) or that CL Resi....

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.... stated that in the other Resin Mix i.e. CL Resin which is used for coating the mould surface for getting the desired finish in colour of GRP products, the main duty paid ingredients are Polyester Resin, Pigments (Titanium Dioxide), Styrene (diluent). Cobalt Naphthenate (accelerator) and Aerosil. He submitted that both MX and CL Resins were hand-made mixtures of duty paid resin with other duty paid materials which are used in the lamination process and surface finishing process in the course of manufacture of GRP products in the appellants' factory. He contended that the products were not excisable since in mixing the ingredients there was no chemical transformation and MX resin is an unstable product which solidifies within a short period. He added that the same was the case with CL Resin to which MEKP is added just before application to the mould. He stated that it was expressly pleaded before the Collector that these products were not excisable since they were not marketable on account of their extremely short shelf life. He contended that the Collector had not given any finding in regard to the marketability of the product and his finding that mere non-marketability of the good....

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....was explained and finally the Department had held that no duty could be charged on GRP product. He contended that under these circumstances on the ratio of the Supreme Court's judgment in the case of Collector v. Chemphar Drugs reported in 1989 (40) E.L.T. 276 the extended period of 5 years was not invokable. He argued that the demand for a period of six months from the date of show cause notice would also be barred by limitation since the show cause notice dated 28-3-1985 issued by the Superintendent without mentioning either the period of demand or the amount sought to be recovered could not be deemed as a demand. He argued that under these circumstances the so-called Addendum dated 28-5-1985 to the show cause notice would have to be treated as the first and only demand and this being beyond a period of six months it has to be treated as time barred. In support of his contention that the demand dated 28-3-1985 without mentioning the period of demand and the amount demanded would not be treatable as a valid demand, he placed reliance on the decision of the Bombay High Court in the case of BA Printing Ink - 1980 (6) E.L.T. 121 and Tribunal's decision in the case of Sundaram Fastene....

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....that the main question which arises for consideration in this case is whether the MX Resin produced by mixing bought out duty paid Polyester Resin, Styrene, Cobalt Naphthenate and MEKP and CL Resin having Polyester Resin, Pigments (Titanium Dioxide) Styrene (diluent), Cobalt Naphthenate (accelerator) and Aerosil as the main constituents were excisable under Items 15A(1) and 14-1(5) respectively of the erstwhile Central Excise Tariff when they were used exclusively for captive consumption. The main point raised by the appellants is that both MX Resin and CL Resin being highly unstable products which solidify into a hard mass within a few hours of mixing of the ingredients could not be deemed as excisable since they are not marketable. They have contended that their plea in regard to non-marketability of the disputed product was not examined by the Collector who held that the taxable event was the manufacture of goods and mere non-marketability of the goods could not make them non-excisable. The appellants have contended that it is now well established that the test of marketability has to be satisfied for all goods in order to establish their excisability and particularly so in resp....