V.T. Raghavachari, Member (J)

1. The appellants M/s. National Organic Chemical Industries Limited used to receive chlorine from M/s. Calico Chemicals, Bombay for conversion into vinyl chloride by reacting the said chlorine with their own ethylene. They had filed classification list with reference to such work mentioning therein the fee charged by them for conversion, the same to be taken up for purposes of calculation of duty. They did so claiming that they were entitled to such benefit under Notification No. 119/75-C.E., dated 30-4-19)5. They claimed that the work of conversion of chlorine into vinyl chloride was job work and under the said notification duty could be assessed only on the charges collected for the said job work. The Asstt. Collector of Central Excise, Bombay-6 did not agree with the said contention and held that whereas the chlorine received by the appellants was only a raw material, the vinyl chloride handed over by the appellants to the customer was altogether a new product known by a different name and as such the process of conversion cannot be considered as job work entitling th e appellants to the benefit under Notification No. 119/75. On appeal to the Appellate Collector of Central Excise, Bombay, the said order of the Assistant Collector was confirmed and the appeal was dismissed. It is against the said order dated 6-3-1976 that the appellants preferred a revision petition to the Government of India which on transfer to this Tribunal under Section 35-P of the Central Excises and Salt Act is now being disposed of as an appeal.

2. The appeal was initially heard by a Special Bench consisting of three members who took into consideration the judgments of several High Courts as also an order of this Tribunal and in view of the conflict amongst the said several cases, placed the matter before the President for constituting a special bench of more than three members for a proper determination. In pursuance thereof the appeal was later heard by this Special Bench of 5 members.

3. Sri R.M. Parekh, Manager (Legal) of the appellants appeared for the appellants. Srimiti V. Zutshi, Senior Departmental Representative and Shri A.S. Sundar Rajan, Junior Departmental Representative appeared for the respondent.

4. During the course of the hearing of the above appeal, Sri V. Sridharan, authorised representative of M/s. Thirumalai Chemicals Limited made an application for being heard as an intervener since a similar question arises for determination in ED(SB)(T) Appeal No. 270/81-D and Appeal No. 490/81-D. Under order dated 19-9-1984 Sri Sridharan was permitted by the bench to make submissions as an intervener but without reference to the facts of his own appeal and confining himself to the arguments and submissions made in the present appeal to the extent to which he wished to supplement the arguments of the parties to this appeal.

5. The admitted facts are that the appellants manufacture ethylene and that the chlorine bought by the appellants as well as the chlorine made available to them by M/s. Calico Chemicals is reacted with the ethylene of the appellants for conversion into vinyl chloride. The quantity of vinyl chloride to be handed over to M/s. Calico Chemicals is calculated with reference to an agreed formula and after handing over the said quantity of vinyl chloride the balance is utilised by the appellants for further conversion into Poly Vinyl Chloride. The question for determination is whether with reference to the vinyl chloride that is handed over to M/s. Calico Chemicals, the appellants are to pay excise duty on the value of the said vinyl chloride or whether they are liable to pay duty only on the amount charged by them as conversion charges. The department contends that duty is payable on the value of the vinyl chloride while the appellants contend to the contrary relying upon Notification No. 119/75-C.E.

6. The said notification reads as follows :

"In exercise of the powers conferred by Sub-rule (1) of rul