V.S. Rama Devi, Member (J)

1. This is a revision application addressed to the Central Government (now transferred to the Appellate Tribunal under Section 35P) against the order-in-appeal No. 478-B of 1979 issued under F.No. 194/63/76-CX. V(A) dated 6-11-1979 passed by the Central Board of Excise Customs, New Delhi.

2. In this case, the appellants declared their goods Phenolic resins as falling under tariff item No. 15A1(i) of the Central Excise Tariff and claimed assessment at the concessional rate of 18% ad valorem in terms of notification No. 122/71 dated 1-6-1971, as amended.

3. Shri Mookherjee, on behalf of the appellants, straightway drew our attention to the aforesaid notification and stated that explanation (iii) of that notification entitles the appellants for the concessional rate of duty. For ready reference, he has quoted the relevant portions of the said notification as follows :

"...the Central Government hereby exempts artificial or synthetic resins specified in column (2) of the Table below, falling under item No. 15A of the First Schedule to the Central Excises Salt Act, 1944 (1 of 1944) from so much of the duty of excise leviable thereon as is in excess of the rate specified in the corresponding entry in column (3) of the said Table :

3. Phenolic resins...

Explanation : For the purposes of this notification :

. . .

(iii) the expression "phenolic resins" means synthetic resins manufactured by reacting any of the phenols with an aldehyde and includes chemically modified phenolic resins and liquid phenolic resins but does not include blends of the phenolic resins with other artificial or synthetic resins."

He had also drawn our attention to the Judgments of Gujarat High Court (1980 ELT 181) and Bombay High Court (1983 ELT 425) wherein it has been decided that moulding powder is chemically modified phenolic resin but not plastic material. Shri Mookherjee stated that the end product did not lose its character of being phenolic resin but remained the product manufactured out of phenolic resin mixed with inert materials and further no process of condensation, polyaddition or polycondensation where some chemical reaction could take place had occurred. His main contention was that product manufactured by the appellants is Phenolic resin which is known as phenolic moulding powder and is not blended with any artificial or synthetic resin.

4. Shri Mookherjee stated that even the Government, by its order No. 270 of 1982, had taken a view that "Phenol Formaldehyde Moulding Powder" which is obtained by chemical reaction of phenolic resins with fillers and other additives for making them fit for a particular use does not cease to be a phenolic resin. Further it was stated in that order that" the benefit of notification No. 122/71 is available to all phenolic resins (except blends of phenolic resin with other resins) and that the use of the word "including" in the aforesaid notification could only have the effect of enlarging the scope of the exemption notification so as to extend the benefit even to phenolic resins which are chemically modified and therefore this provision which has the effect on enlarging the scope of the exemption notification could not be interpreted so as to restrict the benefit of exemption notification only to so called pure resins". Shri Mookherjee lamented that though the High Court Judgments and even the Government is in the favour of the appellants, in the case before us, the appellants, namely, the Plastic Powders Pvt. Ltd., Calcutta were denied the benefit of the notification on the ground that it applies only to "pure resins". He also stated that the Government had withdrawn a case in a similar matter from the Orissa High Court on 13-11-1980.

5. Smt. Zutshi defended very vehemently the orders of the Asstt. Collector as well as the Appellate Collector. She argued interestingly that the condensation products obtained by reacting phenol with Formaldehyde in presence of other chemicals are physically m