G. Sankaran, J.

1. The captioned appeal was initially filed as a Revision Application before the Central Government which under Section 35-P of the Central Excises Salt Act, 1944 has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.

2. The appellants are manufacturers of wires and cables. They also produce, among other things, a substance which they describe as "PVC Compound" from out of duty-paid PVC resin. During the material time, namely, 18-6-1977 to 28-6-1977 they manufactured 31 M.Ts. of PVC compound and removed the same for captive consumption within the factory. On 15-12-1977, the Supdt. of Central Excise issued a Show Cause Notice to the appellants to show cause why the duty leviable on the goods-Rs. 1,21,768.00-should not be demanded from them in terms of Rule 10 of the Central Excise Rules (hereinafter referred to as the Rules.). In reply, the appellants submitted that they were manufacturing "granule" (PVC Compound) from duty-paid PVC resin, that these granules were a modified form of PVC resin, that they were not polymerisation or co-polymerisation products, that the process of conversion of duty-paid PVC resin into granules did not amount to "manufacture" within the meaning of Section 2(f) of the Central Excises Salt Act (hereinafter referred to as the Act), and so, they did not attract excise duty. After hearing the party, the Assistant Collector of Central Excise, Jamshedpur passed an order on 28-7-1978 demanding duty under Rule 10 on the said quantity of PVC compound at the appropriate rate. However, he allowed the appellants to avail set-off of the duty paid on the duty-paid PVC resin used in the manufacture of the said PVC compound. The appeal against this order was rejected by the Appellate Collector of Central Excise, Calcutta. Against this order, the appellants filed a revision application before the Central Government which, in terms of Section 35-P of the Act, has come to this Tribunal as transferred proceedings for disposal as if it were an appeal filed before us.

3. In the appeal before us, and during the hearing on 18-8-1983 when Shri Mukherjee, Advocate, appeared on behalf of the appellants, it has been contended that the appellants buy duty-paid PVC resin and that they only add fillers, plasticisers, stabiliser and lubricant in required quantities and the mixture is converted into granules. The resultant substance is modified PVC resin and is not really a compound. No polymerisation or co-polymerisation takes place. In fact, no chemical reaction takes place. The conversion of PVC resin into modified resin does not result in production of a new product and does not amount to "manufacture" within the meaning of Section 2(f) of the Act. It is further contended that modified PVC resin does not attract further duty under item 15A(1)(ii) of the Central Excise Tariff Schedule (CET) even after the amendment in the wording of the item as a result of the 1977 Budget changes. The absence of the words "whether or not modified" [occurring in item 15A(1)(i) ] in item 15A(1)(ii) is significant. Further, Notification No. 206/77 dated 29-6-1977 exempting plastic material, commonly known as PVC compound, from excise duty was really unnecessary since PVC compound was not covered by item 15A(1)(ii).

4. Earlier, the Central Government had granted a hearing to the appellants on 16-8-1982 when the Revision Application was pending before the Government. A copy of the note of submissions dated 26-8-1982 made before the Revisional Authority on 16-8-1982 (as submitted to the Authority) has been submitted before us. In this note, there is reference to and reliance on a tour note issued by the Chemical Examiner, Custom House, Calcutta, on his visit to the factory of the appellants. A copy of this tour note has also been submitted before us. This note gives details of the manufacturing process adopted by the appellants and we shall refer to it shortly.

5. During the heari