TaxTMI 
TaxTMI 
1998 (3) TMI 221
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....ding powder and resins. Some of the resins are called Prescol Glue. Production of this product was commenced in 1964-65 from which time, they had been classified and cleared on payment of Central Excise duty under Tariff Item 15A(1) until the present dispute arose in August, 1978 when the assessees changed their stand and wrote to the Jurisdictional Assistant Collector stating that their product was a commercially modified synthetic resin which could not be used as raw material in the plastic industry and was exempted from duty in terms of Notification dated 28-11-1962. 3. A show cause notice was issued to the assessees on 30-9-1978 proposing rejection of Form 1 dated 10-8-1978 and 21-8-1978 describing Prescol Glue as `other goods' with the remark that "they do not attract duty under Tariff Item 68 vide Board's letter dated 28-11-1962." The Assistant Collector adjudicated the notice vide his order dated 8-11-1985 holding that the product in question was Aminoplasts covered by the definition of Aminoplasts resin falling for classification under Tariff Item 15(A). The lower appellate authority held that the product was not a synthetic resin and not a condensation product of t....
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....s and water. Summing up, he supports classification of the product as a synthetic resin under Tariff Item 15A(1) during the entire period in question and urges that the impugned order may be set aside and the appeal of the Revenue allowed. 6. On behalf of the respondents, it is contended mainly by Shri N.K. Bajpai, learned Advocate that although admittedly some condensation takes place in the manufacture of the product, further condensation is stopped and the product is only a pre-condensate with low molecular weight and product is soluble in water, as contrasted with resins which are of high molecular weight and insoluble in water. He submits that the product in question is not a synthetic resin. On a specific query from the Bench as to whether the product could be considered as a `resol' convered by Explanation II to Tariff Item 15A(1) (after its amendment with effect from 1-3-1982) the learned Counsel states that there is no finding that this product is a resol. He invites attention to the order dated 31-10-1988 passed by the Principal Collector of Central Excise, Delhi wherein classification of the same product has been upheld as adhesive under sub-heading 3501.90 of th....
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....-1982 :- "15A. ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIAL AND OTHER MATERIALS AND ARTICLES SPECIFIED BELOW:- (1) Condensation, Polycondensation and polyaddition products, whether or not modified or polymerised and whether or not linear (for example phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, sillicones); polymerisation and co-polymerisation products (for example, polyethylene, polytetrahalaoethylene, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl, acetate, polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and polymethacrylic derivatives, coumaroneindene resins); regenerated cellulose; cellulose nitrate, cellulose acetate and other cellulose esters, cellulose ethers and other chemical derivatives of cellulose, plasticised or not ( for example collodions, celluloid); vulcanised fibre; hardened proteins (for example, hardened easters in and hardened gelatin); natural resins modified by fusion (run gums); artificial resins or resinic acids (ester gums); chemical derivatives of natural rubber (for example chlorinated rubber, rubber hydrochloride, exidised rubber, cyclised rubber); other high polymers....
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.... other specifically added chemicals making it suitable for specific purposes of plywood industry, paper industry or Textile industry. This is to bring to your notice that till now we have been illegally made to pay excise duty in respect of our goods namely, Synthetic Resins, which were manufactured and then modify by specifically added to them certain chemicals so that the same become suitable for specific purpose as mentioned hereunder. For your information, we may further add here that the following chemicals are added to the Synthetic Resins which we manufacture and which are made by us suitable for specific purposes as mentioned below : 1. Plywood Resins - Grade : Prescol G * Prescol L Chemicals used - (a) Starch and its derivatives. (b) Plyvinyl Alcohol. (c) Sodium Lauryl Sulfonate. (d) Paraffin oil. (e) Magnesium and/or calcium carbonate. After the addition of the said chemicals to our products of Synthetic Resins, they become suitable for specific purpose, namely: plywood bonding. We add the following chemicals to the Synthetic Resin manufactured by us in order to make them suitable for specific purposes, namely :- II....
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....ts, Aminoplasts etc.)". During this period also, condensation products were not restricted to any degree of condensation or molecular weight nor was this sub-item restricted to poly-condensation products only. Condensation products which have attained the stage of polymersation are specifically covered by this sub-item of the Tariff item. As in the earlier period, Aminoplast is also specifically included in this sub-item without any qualification. 10. Clause (c) of Explanation II to Tariff Item 15A as it stood during the period from 1-3-1982 to 27-2-1986, clarifies that for the purpose of sub-item (1) of Tariff Item 15A, condensation products are to be taken to apply only to goods of a kind produced by Chemical synthesis answering inter alia to the description of resols, liquid polyisobutylene and similar artificial polycondensation or polymerisation products. Resoles are polymerisation products. The products of the respondents are produced by chemical synthesis of urea and formaldehyde. The definition of Aminoplasts and Amino resin in the Six-Language Dictionary of Plastics and Rubber Technology, compiled by A.F. Dorian is as under :- "(1) Amino Plastics - Plastics base....
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....Graw-Hill Dictionary of Scientific and Technical Terms by Daniel N. Lapedes define resin as "any of a class of solid or semi-solid organic products of natural or synthetic origin with no definite melting point, generally of high melecular weight; most resins are polymers". It does not say that the resin should always be of high molecular weight or all resins are polymers. Although according to the definition in Hawley's Condensed Chemical Dictionary, the definition of synthetic resin excludes modified and water soluble polymers (often called resins), Tariff Item 15A(1) covers condensation products whether or not modified or polymerised. Further, it is not correct to contend that all synthetic resins necessarily have to be insoluble in water. As noted in para 24 of the Tribunal's final Order No 466/90-C, dated 8-5-1990 from the Hand Book of Water Soluble Gums and Resins, edited by Robert L. Davidson, various water soluble resins have been discussed. It states that Chapter 24 of the Handbook deals with polyvinyl Alcohol and states that polyvinyl Alcohols are water soluble synthetic polymers with excellent film-forming, adhesives and emulsifying properties. It cannot therefore be said....
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.... The various stages of resin have also been noted by the Hon'ble Supreme Court in the case of Moti Laminates Ltd. v. Collector of Central Excise, Ahmedabad reported in [1995 (76) E.L.T. 241 (S.C.)]. In response to a specific query from the Bench as to whether the product in dispute had reached the stage of A stage resin or not, the learned Counsel for the respondents was not able to give a definite answer. In other words, the learned Counsel was not in a position to contend that the product in question was not resol. 17. The respondents relied upon the report prepared by one Dr. A.K. Mukherjee, Assistant Professor, Indian Institute of Technology, Delhi on the nature of their product. In that report, the following conclusions have been drawn : (i) Prescol Glue which is water soluble is not polymeric. Hence it does not belong to either synthetic resin or plastic material, but belong to a class known as oligomers. (ii) The condensation Oligomeric product thus produced is water-soluble and made into a complex formulation by the addition of essential ingredients which serves the purpose of an adhesive. (iii) The water soluble urea-formaldehyde conden....
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....c materials and articles thereof', the Court held that the term `synthetic resin, is a term used in plastic industry and possibly in other industries but not in the textile industry and polyamides of textile grade would not fall either under the description of artificial or synthetic resin or plastic material and would be outside the ambit of entry 15A. The Supreme Court therefore, held that polymer chips manufactured by the assessees could not come under the category of artificial or synthetic resins. The test laid down by the Supreme Court for determination as to whether the product was covered by Tariff Item 15A was that it should answer the basic description of `artificial or synthetic resin and plastic material'. Applying this test to the present case, we have already set out in the earlier paragraphs of this order our reasons for holding that the disputed products in this case are synthetic resins. It is also relevant to note that the judgment of Hon'ble Supreme Court also notes that synthetic resins are used chiefly as plastics in varnishes and adhesives (defined in Webster's Dictionary). The Court has also noted that most of the application of the term `resin' is those line....
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....contention that the products are not classifiable under Tariff Item 15A(1). In the said case, the goods in dispute were adhesives prepared by mechanical mixing of duty paid synthetic resin viz polyvinyl acetate dispersions with water solution of imported polyvinyl alcohol on which countervailing duty was paid at the time of import. In that case, adhesive was not the result of condensation process or chemical synthetic but the result of mechanical mixing of two types of resin on which duty was already paid as resin. In the present case however, the respondents' resin is the result of condensation process and no duty was paid thereon earlier under Tariff Item 15A(1). The facts of the earlier case are thus entirely different and the decision therein is not applicable to the case in question. The respondents also relied upon the order dated 31-10-1988 by the Principal Collector of Customs and Central Excise, Delhi classifying the products under Chapter heading 35 as adhesives, ruling out the classification under Chapter 39. 21. We have carefully perused and analysed that order. In that case, the charge of the department that the respondents were manufacturing and clearing amino....