TaxTMI 
TaxTMI 
2006 (8) TMI 18
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....to IS: 401/1982 read with IS: 10013 of 1981. It is made of chemicals namely, Arsenic Pentoxide, Copper Sulphate and Sodium Dichromate. All the said three chemicals are inorganic chemicals soluble in water. No plastic or metal is used for making the said preservative. The said preservative is water soluble and is applied on timber for its protection from wood destroying elements. The said wood preservative was classified by the Central Excise Authorities under Heading No. 38.08 as insecticides/fungicides/weedicides/pesticides and there is no dispute about the same. The said wood preservatives manufactured by the Respondent Company are sold by it and it also itself undertakes treatment of timber with such pre servatives. Such treatment is mostly undertaken by the Respondent Company in respect of wood supplied to it for this purpose by its various customers. The preservative treatment of wood is made by the Respondent Company as per IS: 401-1982. For this purpose the timber is kept in cylindrical vessel. Air and moisture is extracted from the vessel by applying vacuum and thereafter wood preservative (in the form of water containing 5% preservative) is flooded in the vessel and ....
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....tance to chemical or electrical agencies. As per the appellant, as a result of treatment given by them to the wood with the preservatives in question, the same neither acquires increase density or hardness nor such treatment results in improvement of its mechanical strength or resistance to chemical or electrical agencies. In support of their above arguments they have referred to Indian Standards Institution Specifications as contained in IS: 401-1982. In particular para 2.3.2 relating to Water-Soluble Type preservatives and para 3.4.2 of the said ISI Specifications have been relied upon. For better appreciation we reproduce the relevant paras of the said specifications "2.3.2 3B-Water-Soluble (Fixed Type-Copper-chrome-arsenic composition, acid-cupric-chromate composition, chromated zinc Chloride, copper- chrome-boric composition and zinc meta-arsenite" "The preservative shall conform to IS: 10013 (Part II-1981). The preservative is specially recommended in heavy termite and marine borers infected areas and in cooling tower timbers when soft rot is the chief deteriorating factor" As such it is the appellants contention that in terms of the said specifications preservatives....
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....regnating resins or by compression under heat or by both Such wood is utilized for specialized uses such as rail fish plates, bobbins, filter presses etc. where high strength and resistance to chemicals/electricity is required. The wood preservatives manufactured by M/s. ASCU India Limited, are internationally known and dealt with in the market only as preservatives for, protecting wood against attacks of fungus, borers, termites etc. Treatment with such preservatives does not result in increasing the density or hardness of wood, neither its mechanical strength nor resistance to chemical or electrical agencies is improved in any way". [c] Certificate dated 19-2-1992 from Tamilnadu Housing Board: "This is to certify that various ASCU Wood Preservatives are being purchased by us to treat the wood for protecting it from attacks of destructive elements, such as fungus, borers, termites etc. Due to such treatment by using ASCU Wood Preservatives the wood in question neither acquire any increased density or hardness nor such treatment has the effect of improving mechanical strength of the wood or its resistance to chemical or electrical agencies". [d] Communication dated 17-3....
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....rnishing or impregnation with wood preservatives, such as creosote, coal tar, pentachlorophenol, chromated copper arsenate or ammoniacal copper arsenate", (emphasis provided) Explanatory Notes to heading 44.13 relating to Densified Wood- "Densified wood covered by this heading has been chemically or physically treated to increase its density or hardness and improve its mechanical strength or resistance to chemical or electrical agencies. Such wood may be solid or consist of several layers bonded together, in the latter case the treatment applied being in excess of that required merely to produce a good bond between the layers. Two main processes, impregnation and densification, are use to produce the products of this heading. These processes may be used separately or together In impregnation the wood is deeply impregnated, usually width thermosetting plastics or molten metal. Impregnation with thermosetting plastics (e.g. aminoresins or phenolic resins) is more often applied to very thin veneers built up into laminated wood than to solid wood, since penetration is thereby facilitated. Metallised wood is obtained by plunging pieces of solid wood, previously heated,....
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....osetting plastics under heavy pressure at a high temperature so that wood is deeply impregnated and compressed as well as bonded. Timber is treated with wood preservative as per IS: 401. Sawn timber is loaded inside the treatment cylinder. After extracting air and moisture from the cylinder, the wood preservative solution is flooded in the cylinder and timber gets soaked in the solution. (2) Material Impregnated into the wood Thermosetting plastics like aminoresins or phenolic resins and also molten metals like tin, lead, antimony bismuth or their alloys Wood Preservative Chemicals as per IS:10013 (3) Purpose for which processing is done To increase the density or hard ness of the timber together with improvement in its mechanical strength or resistance to chemical or electrical agencies To protect the from termites, from termites, borers, fungi and other wood destroying agencies ....
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....e samples described as processed are found to have been subjected to impregnation with chemicals, for making them immune to insect attack (i.e. that they are said to be dipped in ASCU-Arsenic Pentoxide and Copper Sulphate). It is also observed that there is no practical difference in the densities of the two materials, i.e. the ordinary wood, and the chemical impregnated wood. Regarding, the query whether the samples of processed wood fall under the scope of the term "improved wood", my views are as follows: In the general explanation under Chapter 44 of the CCCN (BTN), it is mentioned that for the purpose of the nomenclature, the classification of wood is not affected by the treatment necessary for its preservation such as seasoning, superficial charring, priming and stopping of impregnation with creosote. The term "improved wood" has been defined vide the explanation to Item No. 16B, as amended in the Finance Bill, 1982. From the aforesaid explanation it appears that improved wood are those which have been treated chemically or physically to increase the density or hardness of wood or make the wood resistant to chemical or electrical agencies. Processes like impregnation....
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....d from them. The Revenue has not initiated any action against them alleging that such treatment of wood converts the same into densified wood. The assessee also disclosed the name by such organization in their reply, which was not controverted by the Commissioner. Even the test report of the samples of the wood preservative manufactured and cleared by the assessee was got tested and as per the report of the chemical examiner, the same was found to be simply wood preservative/insecticides/regicides. 10. Even referring to the appellants literature, we find that physical properties of the treated timbers were mentioned as under- "ASC treatment does not reduce timber strength, weight for weight timber is stronger than steel or concrete. Its resilience is better than mild steel, concrete or aluminium. The timber is good thermal insulator, it does not corrode and it has high electrical resistance ASCUED timber is protected from biodegradation and needs no paint protection" Revenue's reliance on the above literature does not advance their case inasmuch as, it is nowhere claimed in the said literature that the treatment given by the assessee increases the strength or density of the w....
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....ities. In fact, in the year 1978, their Jurisdictional authorities directed them to take out a licence but proceedings were subsequently dropped. During the said period lot of correspondence was exchanged and vide their letter dt. 20-12-1978, the entire relevant facts as also the process of treatment of wood with wood preservatives was placed before Collector of Central Excise, Kolkata. Similarly, in the year 1979, proceedings were initiated as regards the classification of the wood preservatives being manufactured and cleared by them to outsidepar ties as also being used captively for treatment of wood. Such proceedings were ultimately dropped by the Commissioner vide his order dt. 30-11-1979 It has further been argued that the appellant as also Revenue was of the bona fide belief that by reason of preservative treatment of wood, "densified wood" within the meaning of Note-2 of Chapter 44 does not come into existence. The said bona fide belief was based upon the fact that neither the Revenue has ever asked them to pay duty on the same in spite of having knowledge of the treatment nor the other organizations, who were purchasing the said preservative from them and using the same fo....