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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, CALCUTTA
P.C. Jain, ARCHANA WADHWA, JJ.
Commissioner of Central Excise, Calcutta-II -Appellant
Versus
Berger Paints India Ltd. -Respondent
Order No. A-1435/Cal/97 Appeal No. E-1692/90-C, A-1435 of 1997, E-1692 of 1990
Decided On : 04-11-1997
Per Shri P.C. Jain, Member (T) :
Short question involved in this matter is whether conversion of duty paid "araldite" in cake-form under erstwhile Central Excise Tariff Item 15A (1) and purchased from outside into a solution by dissolving it in petroleum-based solvents make the latter again liable to duty under the same tariff entry 15A (1).
2. Original authority, namely Collector of Central Excise, Calcutta-II has held that the solution of "Araldite", in the above circumstances is not liable to duty again. It held that the process does not amount to manufacture of another commodity. "Araldite" resin in cake-form is converted to another form i.e. solution without bringing into existence another commodity known to the trade having a different name, character and use. The said authority, in coming to the aforesaid conclusion, has relied on several judgements of Courts and the Tribunal which are as follows:-
(1) M/s. Coromandal Prodorite (P) Ltd. Vs. Government of India [1985 (20) ELT 257 (MAD)]
(2) State of Tamil Nadu Vs. Pyarelal Malhotra [1983 ELT 1582 (S.C.)]
(3) M/s. Swadeshi Mills Co. Vs. Union of India 1982 ELT 237 (Bom)]
(4) Golden Paper Udyog (P) Ltd. Vs. Collector of Central Excise [1983 ELT 1123 (Trib)]
(5) Burn Standard Co. Ltd. Vs. Collector of Central Excise [1987 (28) ELT 513]
(6) Vijay Textiles Vs. Union of India [1979 ELT J181 (Guj-DB)]
(7) Empire Dyeing & Mfg. Co. Ltd. Vs. V.P. Bhide [1977 ELT J34 (Bom)]
(8) Union of India Vs. HUF Ramlal Mansukh Rai [1978 ELT J389]
(9) Swastik Packaging Vs. Collector of Central Excise [1986 (23) ELT 217 (Trib)]
3.1 On the other hand, Revenue in its application under section 35E of the Central Excises and Salt Act, 1944 (to be treated as an appeal) has urged the following grounds against the Collector's impugned order :-
(a) The assessees' contention that epoxy resin remains as epoxy resin even after diluted with solvents is not correct. It is noticed that epoxy medium (resin solution) was manufacture by them by dissolving 66.3% Araldite (Solid Regin) in the cake for in the mixture of S.4% Butanol and 25.3% Xylone. The said solvent, solvent mixture is taken in a tank fitted with mechanical stirrer. Crushed Resin is gradually added under stirring. The time taken for complete resin solution is on an average 1.5 to 2 hours. In the said resin solution, the percentage of solvents are 33.7%. The whole process brings about a new resin solution which is different from Araldite in cake form. Such process amounts to manufacture under Sec. 2 (f) of Central Excises & Salt Act, 1944.
(b) Epoxy medium (Resin Solution), before use in the manufacture of paints, is tested at the Research Development Laboratory to certify its quality for use in the paints industry.
(c) The argument that the product is not known in the market is not substantiated. It is obviously a product which have been manufactured as a distinct commercial value.
(d) The processes of manufacture of Araldite and the Resin Solution are different. When the processes of manufacture are different which result in bringing into existence of different and distinct articles each of the processes will amount to manufacture. Duty is to be paid at each stage of manufacture.
(e) The assessees had not maintained any RG-I register for the Epoxy medium (Resin Solution). They also did not filed classification list and price list nor determined duty. They also did not file any RT-12 return. In view of this it is clear that the assessees had violated the provisions of these rules with a view to evade payment of duty.
3.2 In support of the above submissions that the process undertaken by the respondent brings a new product into existence with a different name "resin solution (epoxy medium), character and use (in paints industry)", Revenue relies on the following judgements :-
(a) Commissioner of Sales Tax Vs. Indian Oil Corporation [1978 (41) STC 471].
(It held, according to Revenue, that mixing methanol with distilled water amounts to manufacture)
(b) Agra Metal
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