JUDGMENT- M.L. PENDSE, J.:---The petitioners are a Company registered under the provisions of the Companies Act, 1913 and are engaged in the manufacture of phenolic resins in the factory situated at Poisar Bridge, Kandivli. After manufacture of phenolic resin, certain fillers, pigments, plasticisers and other additives are added so as to modify the phenolic resins into what is popularly known as phenoli formaldehyde moulding powder. The Company also manufacture Urea Formaldehyde resin and Melamine Formaldehyde resin at the factory. After these resins are fully manufactured, certain fillers, pigments, plasticisers and other additives are added so as to modify the resins into what is known as Urea Formaldehyde moulding powders and Melamine Formaldehyde moulding powders.

Secion 3 of Central Excises and Salt Act, 1944 (hereafter referred to as the `Act) provides that there shall be levied and collected duties of excise on all excisable goods which are produced or manufactured at the rates set forth in the Schedule to the Act. Prior to January 1982, the Company paid excise duty on P.F. moulding powders in accordance with the rates prescribed under Item No. 15-A of the First Schedule. Item No. 15-A refers to artificial or synthetic resins and plastic materials and other materials and articles specified therein.

2. By circular dated May 5, 1982, the Government of India informed all the Collectors of Central Excise that the Chief Chemist of Central Government had opined that it would be difficult to, consider the transformation of phenolic resines into P.F. moulding powders as a process of manufacture. By another circular dated October 6, 1982, the Central Government referred to the earlier circular and also upon order passed on April 26, 1982 by Government of India in exercise of revisional powers holding that P.F. moulding powders obtained by modificaion of phenolic resins with fillers and other additives do not cease to be phenolic resins. The circular provides that since phenolic resins include phenolic moulding powders, the further modification of phenolic resins by fillers, additives, etc. does not amount to manufacture of any new or distinct product and, therefore, no further duty of excise can be levied on such modified phenolic resin. The fact that modification of phenolic resin by fillers, additives, etc., does not amount to manufacture is also decided by Division Bench of this Court and to which one of us (Pendse, J.) was a party in 1992(57) Excise Law Times 390, (Industrial Plastic Corporation Pvt. Ltd. v.Union of India)1.

3. The Company on realisation that excise duty on moulding powders made from phenolic resins was paid by mistake filed a fresh classification list showing P.F. moulding powder as non-excisable by letter dated January 27, 1983. The Company claimed that pending approval of the fresh classification list, the duty would be paid under protest. The classification list filed by the Company was approved by the Assistant Collector of Central Excise on August 1, 1983. Similar classification lists were filed in respect of Urea Formaldehyde moulding powders and Melamine Formaldehyde moulding powders. The Company filed the present petition under Article 226 of the Constitution of India on December 16, 1983 claiming that the respondents have wrongfully recovered the aggregate sum of Rs. 1,83,28,537.57 towards excise duty in respect of manufacture of P.F. moulding powders, U.F. moulding powders and M.F. moulding powders. The Company claimed that as the moulding powders were not assessable to duty, the recovery of the amounts from the Company under the guise of excise duty was without authority of law and in excess of respondents jurisdiction to levy and collect duty. The petitioners sought a writ of mandamus directing the respondents to forthwith refund Rs. 1,83,28,537.57 along with interest at the rate of 18% per annum from the date of recovery till the date of refund. The petition was duly admitted.

During

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