Per J.H. Joglekar:

The assessees were manufacturing LDPE coated HDPE products. The process of lamination is shown in paragraph 4 of the show cause notice which reads as under:-

"4. The Officers in the course of their checks, studied the process of manufacture of HDPE coated fabrics with LDPE, the main raw material used which was found/observed as under:-

"The LDPE granules are fed to the hopper of extruder. The granules are melted by heater attached to barrel, the melted LDPE extruded through a slit die in form of film of molten LDPE which crops on moving HDPE fabrics and pressed between two calender rolls to proper bending. The laminated/coated fabric is continuously wound into rolls on the winder.

From the above process of manufacture, the officers observed that (a) the flexible plastics film is emerging during the manufacturing of the above said products (b) the said film is visible (c) the film is coming out from extruder and falling on base material in the form of molten thin film which is a transparent film of polyethene.

Thus, it appears to the officer that fully manufactured LDPE film takes place when the same comes into contact with chilled roll simultaneously with the formation of composite products.

It, therefore, appears to the officers that the "Shankar" have not mentioned/classified at any point that in the manufacture of their various products flexible LDPE film comes into existence, simultaneously with the formation of the composite products."

2. Before the Adjudicating Authority, the claim was made that film comes into existence in liquid form, is transient in nature and is physically and chemically unstable. The film exists at the temperature of 300oC and if not bonded at that stage it cannot come into existence. It was claimed that at this stage and at this temperature the product does not separately come into existence and is, therefore, not capable of being marketed at all. The law relating to marketability as a pre-requisite to excisability was cited before the Adjudicating Authority. The Adjudicating Authority sought to interpret the term 'marketability' as capable of being marketed and not actually marketed.

3. He observed that main point to be taken into consideration was that the goods in question emerged as a separate entity during the entire process of manufacture and ultimately they formed an integral part of the finished product and to put it in another way, the final product would not come into existence into its present form had the goods in question not been emerging at an intermediate stage."

4. On this observation, he confirmed the duty allegedly evaded on this product and also imposed penalty.

5. We find that this issue has been covered in a number of judgments. In the case of Moti Laminates Pvt. Ltd. reported in 1995 (76) E.L.T. 241 (SC), the Supreme Court was examining the excisability of Phenol Formaldehyde. The Court observed that it resembled Resol but further observed that it was unstable and could survive for a limited period under specifically regulated or controlled condition. On this observation, the Court observed that the product was not excisable. In the case of Bhor Industries Ltd., (1989-40-ELT-280-SC), the Supreme Court held that Crude PVC sheets used for the manufacture of adhesive tapes, insulating tapes and jute laminates were not excisable goods.

6. To ourmind, in the face of very high temperature, the judgement of the Tribunal in the case of TISCO Vs. CCE, Jamshedpur, reported in 1995 (76) ELT 602 is more applicable. In that case, the Tribunal examining excisability of molten iron held that the goods having temperature of 1300o - 1400oC were not marketable even if the Tariff specifically mentioned them.

7. In the present case, it was immaterial that film was visible to the naked eye. It was admitted by the Adjudicating Authority in clear terms that it lasted in that state only momentarily before it merged with the fabrics. In such a situation, applying the ratio of the cited j