Customs, Excise and Gold Tribunal - Delhi
Super Cassettes Industries Ltd. vs Collector Of Customs on 18 September, 1991
Equivalent citations: 1992(37)ECC132, 1992(58)ELT105(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. The appellants, herein, imported a consignment of polystyrene moulding powder for which Bill of Entry was filed on 9-9-1987 and goods cleared on payment of basic and auxiliary customs duty and additional duty of customs (CVD) was also paid @ 40% under Heading 39.07 CETA'85. Subsequently, the appellants filed a refund claim dated 9-11-1987 claiming refund of CVD on the ground that classification should be under sub-heading 3903.10 CETA read with Notification 133/86 dated 1-3-1986 as amended by Notification 239/87 dated 26-10-1987 and covered by the Explanation to the Notification 133/86 added by the amendment Notification of 239/87. The Assistant Collector of Customs, Appraising Refund Section, Calcutta Customs House by his order dated 29-6-1990 rejected the claim holding that the goods are not covered by Explanation to Notification 133/86 added by amending Notification 239/87 dated 26-10-1987 which was issued subsequent to the clearance of the goods. The appeal against the Assistant Collector's order was also rejected by the Collector of Customs (Appeals), Calcutta by the impugned order dated 26-10-1990 by observing that the goods had been cleared on payment of duty on 28-9-1987 when the Notification covering polystyrene moulding powder came into effect only on 26-10-1987 and the Notification cannot be given retrospective effect.
2. Appearing for the appellants, the Ld. Consultant, Sh. N. Ramanathan, submitted that the Notification 239/87 only added on Explanation to Notification 133/86 to say that for the purpose of that Notification, the term 'resins' shall be taken to include moulding powder of such resins also. The Ld. Consultant urged that the amendment was only clarificatory of the existing position and hence should be applied to the goods imported for which proposition be relied on the Cegat decision in the case of Collector of Customs, Calcutta v. Shaw Wallace reported in 1990 (50) ELT 143 (Tri.). He also relied upon Cegat decision in the case of New Polymer Industries v. Collector of Central Excise reported in 1991 (52) ELT 145 to say that phenolic moulding powder is nothing but phenolic resin in a modified form as found by the Department, itself, and referred to in that decision. Sh. Narasimha Murthy, Ld. D.R. contended that exemption notification is to be strictly construed and as at the time of import the Notification 133/86 covered only polysterene resins, and did not cover moulding powder, the appellants have rightly be hold to be ineligible to claim exemption under a notification issued subsequent to clearance of the goods.
3. The submissions made by both the parties, herein, have been carefully considered. The goods imported are described in the invoice and Bill of Entry as Polystyrene Moulding Powder. The claim for refund is under Notification 239/87 which added the Explanation to Notification 133/86. The relevant portions are extracted below :
"Notification No. 133/86-C.E., dated 1-3-1986:
In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (3) of the table hereto annexed and falling under the heading Nos. of the schedule to the Central Excise Tariff Act, 1985, specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon, which is specified in the said schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table.
Sl. No. Heading No. or subheading No. Description of goods Rate
1. 3903.10 Polystyrene Resins Twenty per cent
2. ad valorem
3.
etc. 16
2. This notification shall be in force upto & inclusive of 30th June, 1988.
Notification No. 239/87-C.E., dated 26-10-1987 :
In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following further amendment in the Notification of the Govt. of India in the Ministry of Finance No. 133/86 C.E., dated 1-3-1986, namely:-
In the said Notification, the following "Explanation" shall be inserted at the end, namely :
"Explanation - For the purpose of this Notification, the expression 'Resins', wherever it occurs shall be taken to include moulding powders of such resins also."
No doubt the Revenue have urged that the Notification issued subsequent to the clearance of the goods cannot be applied. However, in this context, the nature of the amending notification has to be seen. A reading of the Explanation shows that it is clarificatory of the scope of the expression 'resins' occurring in Notification 133/86. It is not adding any fresh condition or in any other manner disturbing the object which the original notification seeks to achieve. In fact, it is noticed that in respect of the scope of exemption under the very same Notification 133/86 relating to Sl. No. 15, in the Table to that notification, which covers "Phenol Formaldehyde resins", the Department itself, had examined the issue whether it will be justified in denying the exemption to phenol formaldehyde moulding powder and the Department had concluded that there may not be justification to hold that while the expression 'phenol formaldehyde resins' appearing in sub-heading 3909.51 CETA may cover phenol formaldehyde moulding powder also, but the same description appearing in 133/86 would not cover phenol formaldehyde moulding powder. Para 2 of the Calcutta II Central Excise Collectorate Trade Notice 274/87 dated 9-11-87 appearing in 1988 (33) ELT - T23 is reproduced below :
"On a re-examination of the matter, was noted that in the relevant tariff Heading 39.09 of C.E.T., there is no specific reference to moulding powder and unless it is held that the description of 'phenol formaldehyde resins' relating to sub-heading 3909.51 covers moulding powders thereof as well, it may not be possible to cover moulding powders under any of the sub-headings of the Tariff. The Board also observed that there may not be strong justification to conclude that while the expression 'phenol formaldehyde resins' appearing in sub-heading 3909.51 may cover phenol formaldehyde moulding powders also, nut the same description appearing in Notification No. 133/86-C.E. would not cover phenol formaldehyde moulding powders. It has taken into consideration the fact that, as per note 6 of Chapter 39, conversion of one primary form of plastic material into another amounts to 'manufacture'. It was noted that the decision to bring conversion of one primary form into another within the extended definition of 'manufacture' was primarily intended to put it beyond doubt that excise duty would be leviable on the added value which takes place in the conversion of one primary form into another. In the instant case a view could thus be taken that both phenol formaldehyde resins and phenol formaldehyde moulding powders would be classifiable under sub-heading 3909.51 and because conversion of resin into moulding powder amounts to manufacture, the effective duty of 25% prescribed in terms of Notification No. 133/86-C.E. would be applicable on the added value at the stage of moulding powder after allowing for MODVAT of the duty paid at the stage of phenol formaldehyde resins. The fact that conversion of resin into moulding powder amounts to manufacture may not, therefore, be a bar to the applicability of the effetive rates prescribed for various resins under Notification No. 133/86-C.E. to their moulding powders also. In other words, it may not be necessary to apply the general effective rate of duty of 40% on such moulding powders."
In the present case, the Notification 133/86 covers sub-heading 3903.10 Polystyrene and Heading 39.03 is Polymers of styrene in primary form. Chapter Note 6 (a) (ii) to Chapter 39 CETA says that in the Heading Nos. 39.01 to 39.14 the expression "primary forms" applies, inter alia, to material in the form of moulding powder. Hence Polystyrene Moulding Powder will also fall under sub-heading 3903.10 CETA. Therefore, the reliance placed by the appellants on the ratio of CEGAT decision in the Shaw Wallace Case (supra) is well founded to say that what was implicit in the original Notification 133/86 has been made explicit by the amending Notification 239/87 which added the Explanation to Notification 133/86. Since it is found that Notification 239/87 is only clarificatory, the appellants are justified in claiming it for the consignments cleared prior to its issue. In this view of the matter, there is a lot of force in the contentions of the appellants which are accordingly accepted and the appeal allowed.