P.C. Jain, Member (T)

1. Short question involved in this appeal is whether the product described s "Modified Short Oil Linseed Oil Alkyd" for internal consumption inside their own factory by the respondent (hereinafter referred to as assessee) is covered by the expression Alkyd resins as defined in the notification 122/71-CE dated 1.6.71 (as amended). The assessee's contention is that it is covered by the said expression -and is in fact a chemically modified Alkyd resin as included within the scope of the said expression in the notification. On the other hand, the Revenue insists that it is not a chemically modified resin. The lower appellate authority has upheld the contention of the assessee.

2. As stated in the grounds of appeal on the authority of the Deputy Chief Chemist, Bombay, who tested the sample of the product drawn by the department, the product is "composed of synthetic resin based on poly basic acid, polyhydric alcohol, monobasic fatty acid, rosin and formaldehyde. The assessee has used about 1.5% of paraformaldehyde on phthalic anhydride content. It is contended that paraformaldehyde goes in the chemical reaction to reduce the functionality of polyol in the synthe