Customs, Excise and Gold Tribunal - Delhi
S.R.F. Industrial Fabrics vs Collector Of Central Excise on 17 May, 1994
Equivalent citations: 1994(73)ELT146(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. This is an appeal against the order dated 22-2-1988 passed by the Collector of Central Excise (Appeals), Madras. The respondents have also filed cross-objections. The appellants are engaged in the manufacture of dipped man-made fabrics which are produced by dipping Nylon or Rayon Cord fabrics in a solution of Resorcinol Fomaldehyde and Latex. The solution that is used for this purpose is generally known as Resourcinol Formaldehyde Latex mix or 'dip solution' (hereinafter called RFL Solution). The RFL solution is manufactured by the appellants in cheir factory and captively consumed for the purpose of dipping. The appellants filed a classification list classifying RFL solution under sub-heading No. 4002.00 as "Synthetic Rubber in Primary Form". The Assistant Collector after hearing the appellants passed an order approving the Classification of the product under sub-heading 4002.00. The appellants filed an appeal before the Collector, Central Excise (Appeals), Madrasion the grounds that the Assistant Collector had failed to deal with the point that RFL solution was not excisable since it could not be deemed as 'goods' on account of its short shelf life. The appeal was, rejected by the Collector (Appeals) on the grounds that order passed by the Assistant Collector was only on the question of correct classification of the product whereas the appeal filed by the appellants was on an altogether new ground and the classification as decided by the Collector (Appeals) had not been challenged
2. On behalf of the appellants we heard Shri R. Sashidharan, Ld. Advocate. He stated that the appellants had filed a Classification List claiming classification of RFL Solution under sub-heading No. 4002.00 under the mistaken belief that it was excisable. He added that even though the Assistant Collector had referred to the finding of the Chemical Examiner that RFL Solution has a short life, he had failed to consider whether it could at all be treated as 'goods' for the purpose of attracting excise duty. He contended that the Collector (Appeals) order was not sustainable since he had failed to consider the question whether the product in question fell in the category of 'goods' attracting Central Excise duty. He contended that it was permissible for the appellants to raise the said point before the Collector (Appeals) since it was purely a question of law. In support of his contentions he placed reliance on the following case law :
Diamond Cements Ltd. v. Collector of Customs - 1990 (50) E.L.T. 190 Collector of Central Excise v. Navdeep Chemicals (P) Ltd. -1988 (37) E.L.T. 62 Cynamid India Ltd. v. Collector of Central Excise, Bombay -1984 (15) E.L.T. 86 Associated Matters Pvt. Ltd. v. Collector of Customs -1990 (50) E.L.T: 633 Continuing his submission the Ld. Counsel submitted that in the case of CEAT Tyres of India Ltd. v. Union of India and Ors., reported in 1987 (30) E.L.T. 857, the Bombay High Court has held that Dip Solution is not excisable since it is not marketable on account of its short shelf life. He added that in the case of Madura Coats Ltd. v. Asstt. Collector of Central Excise, reported in 1990 (48) E.L.T. 321, the Madras High Court has also held that dipping solution is not liable to excise duty since it is neither sold not consumed in the market.
3. On behalf of the Revenue, Shri Somesh Arora, Ld. JDR stated that the dispute before the Assistant Collector related to only classification and the order of the Assistant Collector on the question of classification being in favour of the appellants they could not be aggrieved by the said order. He contended that under these circumstances, it was not permissible for them to file an appeal on entirely fresh ground of excisability. In support of his contention he placed reliance on the Tribunal's decision in the case of Hyderabad Plywood Ltd. v. Collector of Central Excise, reported in 1991 (55) E.L.T. 62. He submitted that even on the question of excisability the appellants cannot have a case since in the case of Dunlop India Ltd. v. Collector of Central Excise, reported in 1981 (41) E.L.T. 504 on the basis of the relevant technical literature, the Tribunal has arrived at the finding that the mixture of fomaldehyde, caustic soda and resorcenol or resorcinol formaldehyde aqueous solution is a resorcenol resin which serves the same purpose as resorcenol resin available in the market and therefore, the marketability of the product could not be doubted. He added that on these grounds the Tribunal had held 'resorcinol resin' as classifiable under Tariff Item 15 A of the Central Excise Tariff. He pointed out that in arriving at this finding the Tribunal had taken into account the Bombay High Court Judgment in the case of CEAT Tyres and observed that it did not have direct bearing on the issue since the product under consideration in that case was dip solution which inter alia included rubber latex. Shri Arora also referred to the Tribunal's order C-2/85 in the case of Flat-o-VCC Traders v. Collector of Central Excise, Madurai, wherein it was held that in preparation of dipping solution, resorcinol formaldehyde resin is formed which is excisable. He submitted that it is now well settled that while examining the question of marketability each product has to be considered separately. In support of his contention, he cited the judgment of the Supreme Court in the case of A.P. State Electricity Board v. Collector of Central Excise, Hyderabad, reported in 1994 (70) E.L.T. 3 (SC).
4. In his reply Shri Shashidharan referred to the Order No. 64/90(AC), dated 25-9-1990 passed in their own case by the Assistant Collector of Central Excise, Tiruchirapalli and stated in this order it was held that RF Solution is not excisable since it cannot be deemed as 'goods'. He submitted that this order was passed in de novo proceedings in terms of the order pased by the Tribunal directing the Assistant Collector to examine the excisability of the product in the light of the various points in regard to marketability raised by the appellants on the basis of the judgments of the Supreme Court on that subject.
5. We have examined the records of the case and considered the submissions made on behalf of both sides. We find that the main point that arises for consideration in this case is whether the appeal urging an entirely new ground filed by the appellants before the Collector (Appeals) was maintainable when the order passed by the Assistant Collector was entirely in their favour. It is seen that the appellants had filed a classification List No. 72/85-86 seeking the Classification of Resorcinol Formaldehyde Latex Solution under sub-heading No. 4002.00. The department was of the view that the appellants' product was correctly classifiable under sub-heading No. 3909 since it had the essential character of plastics. The appellants were therefore served with a notice requiring them to show cause as to why the said RF Latex Solution should not be classified under sub-heading No. 3909.50. In their written reply to the Show Cause Notice and also during the personal hearing the appellants claimed that the major content of the product in question being 'synthetic rubber' it was correctly classifiable under sub-heading 4002.00. In his order dated 26-8-1987 the Assistant Collector accepted the appellants' stand and held that the disputed "RF Latex Solution" was classifiable under sub-heading 4002.00. Even though the order passed by the Assistant Collector was entirely in the appellants' favour and they had no cause at all to be aggrieved by the said order, they preferred an appeal before the Collector, Central Excise (Appeals) on an entirely new ground that the Asstt. Collector had not dealt with the question whether 'RFL Solution' could at all be deemed as 'goods' so as to attract Central Excise duty. However, the Collector (Appeals) rejected the appeal on the ground that the Assistant Collector's order was only on the question of classification which the appellants had not challenged.
6. The appellants' case is that the Collector (Appeals) had erred in rejecting their appeal as not maintainable since the point which is purely a legal point can be urged in appeal even though it might not have been raised before the lower authority. In this regard it is seen that the point of dispute before the Assistant Collector related only to classification and in the matter of classification, the order of the Assistant Collector was entirely in their favour and no point relating to classification was urged by the appellants in their appeal. We are, therefore, inclined to agree with the Collector (Appeals) that the appeal was not maintainable. In this regard we find that in the case of Hyderabad Plywood Ltd. v. Collector of Central Excise, reported in 1991 (55) ELT 62, the Tribunal has held that Collector (Appeals) acquires jurisdiction under Section 35 to hear an appeal by any person aggrieved by any decision or order passed under the Act by a Central Excise Officer lower in rank than a Collector of Central Excise and when the classification claimed by the appellant was accepted by the Assistant Collector he could have no cause for feeling aggrieved and an appeal to Collector (Appeals) against such an order under Section 35 would not be maintainable. Para 16 of the said decision being relevant is reproduced below :-
"16. The entire effort in the appeal before the Collector (Appeals), has been to persuade him to reopen the classification of flush doors in the classification lists filed from 1972 onwards which Collector (Appeals) has refused to do. Collector (Appeals) acquires jurisdiction under Section 35 to hear an appeal by any person aggrieved by any decision or order passed under the Act by a Central Excise Officer lower in rank than a Collector of Central Excise. The view taken in the impugned order that there was no cause for the appellant to feel aggrieved with the approval accorded to a particular classification claimed by the appellant in the classification list is quite correct. Before approaching the Appellate Authority, the appellant must show that he is aggrieved with an order which adversely affects his interests and gives rise to the cause for feeling aggrieved with that order. Since the classification claimed by the appellant was consistently accepted by the Assistant Collector, there could be no cause for feeling aggrieved and if he felt aggrieved with that order, the appellant could have filed an appeal within the prescribed time limits. Such a claim could have been filed either for refund of duty or for revision of the classification lists soon after the appellant came to know that the Delhi High Court had decided in March, 1980 that flush doors are not covered under Item 16B. Apparently, the appellant did not choose to take recourse to this remedy, because in that case, he would have been bound by the time limits prescribed under the law. It thus, appears that the appellant's primary objective is to press his claim for refund of duty of Rs. 10,93,969.32 by referring to the orders of the Andhra Pradesh High Court. The further effort seems to be to interpret this order to mean that the Appellate Authority was duty bound to grant relief to the appellant and that this could be the only consequence of considering his appeal on merits. If the appellant had taken note of the averments of the Collector about the claim for refund, which could be considered by the authorities under Section 11B any refund would have been restricted to the period of six month. It is interesting that even though Collector (Appeals) had himself recorded, while disposing of the appeal as not maintainable, the appellant could lodge a claim for refund of duty before the appropriate authority. This a pears to have been the second advice to the appellant of which he has taken no notice. During the reply, Shri Sridharan stated that the rejection of the averments in para 5 of the counter affidavit by the High Court, meant that the High Court had apparently considered it and decided that an appeal should be filed to the appropriate Appellate Authority. Carefully looking into paragraph 6 of the counter affidavit, we find that the relevant sentence is as under :
"Their action is approaching this Hon'ble Court without first exhausting the remedies open to them departmentally by way of appeal etc. is not correct and the writ petition is liable to be dismissed on this short ground alone"."
7. On the ratio of the decision of the Tribunal, quoted above, we hold that there was no infirmity in the order of the Collector (Appeals) that the appeal filed by the appellant against the order of the Assistant Collector which was in the appellants favour was not maintainable.
8. In view of the above discussion, it is not necessary for us to examine the submissions made by the learned Counsel on behalf of the appellants on the question of excisability of their product.
9. The appeal is therefore, rejected. The cross-objection is also disposed of in the above terms.