Full Judgment
2. We heard Shri Satnam Singh, ld. SDR and Shri Gopal Prasad, ld.Advocate. We have considered their submissions in respect of each products and the decision is as under : 3.1. In respect of product Winall glue, Commissioner (Appeals) has classified it under Heading 35.06 since the said heading expressly covers prepared glue, it is more specific to heading 3905.20 as a polymers of vinyl. The ld. SDR submitted that the impugned product is a solution of Polyvinyl Alcohol (PVA) and is used as a prepared adhesive in sugar and paper industry; that the product coating solution which is also a solution of Poly Vinyl Alcohol has been classified by the Collector (Appeals) under sub-heading 3905.20; that the product "Winall Glue" is not much different from "coating solution" and should be classified under Heading 3905.20. The ld. Counsel on behalf of the Respondents submitted that coating solution is also a glue and is classifiable only under Heading 35.06.
However, as the assessee had not preferred any appeal against the impugned order, he cannot challenge the classification of "coating solution" as ordered by the Commissioner (Appeals). He also relied upon the decision in the case of Nevichem Synthetic Industries v. C.C.E. -1984 (17) E.L.T. 460 (Tribunal) in which the Tribunal held that the adhesive prepared by mechanical mixing of Polyvinyl acetate dispersions with water solution of imported Polyvinyl alcohol would be classifiable under Item 68 and not 15A of the erstwhile Central Excise Tariff observing that according to explanatory notes to the Customs Cooperation Council Nomenclature (CCN) preparations specially formulated for use as glues were not classified in Chapter 39 but under Chapter 35 in Heading 35.06 ("prepared Glues not elsewhere specified or included...").
3.2. We find that it is not disputed by the Revenue that "Winall glue" is a glue and the Heading 35.06 applies to prepared glues and according to Rule 3(a) of the rules for the interpretation of the Schedule, the heading which provides the most specific description shall be preferred to headings providing a more general description.
Further, according to explanatory note of HSN below Heading 35.06 it clearly provides that "Preparations specifically formulated for use as adhesive, consisting either of a mixture of several plastics falling individually in different headings of Chapter 39 or of plastics which, apart from any permitted additions to the product of Chapter 39 (fillers, plasti-cisers, solvents, pigments, etc.), contain other added substance not falling in that Chapter (e.g.
waxes)". We also "t)serve from the impugned order that the Commissioner (Appeals) classified "coating solution" under Heading 3905.20 as he observed that the appellants had not claimed the product to be glue. Accordingly we do not find any infirmity in the impugned order and hold that "winall glue" is classifiable under Heading 35.06 of the Central Excise Tariff.
4. Products Sensitizer Winall and Sensitizer (G & W). The Commissioner (Appeals) has hold both these products not to be dutiable since these products were obtained by mere diluting Ammonium Bichromate and the adjudicating authority had not brought out any new chemical properties or interaction undergone by the products. The ld. SDR submitted that by adding water to Ammonium Bichromate, two products were coming into existence; that by changing the concentration of water two distinct products having distinct names were being produced which showed that a chemical reaction was taking place; that addition of water does not necessarily mean dilution; that the chemical reaction Hydrolysis is carried out by just adding water controlling the factors like temperature and pressure; that for manufacturing Sensitizer (G & W).
Sensitizer Winall was an intermediate product which further showed that a chemical reaction was taking place. The ld. Advocate, countering the arguments, submitted that as per Dy. Chief Chemist report Sensitizer winall was an aqueous solution of Ammonium Bichromate classified under sub-heading 2841.90. Mere dissolving of chemical falling under Chapter 28 in water does not amount to a process of manufacture; that the resultant aqueous solution could not be again charged to duty under the very same sub-heading. He also referred to Hawley's condensed chemical Dictionary according to which Ammonium Dichromate (Ammonium Bichromate) is used for Photography, process/engraving and lithography (sensitizer for Photo chemical insolubilization of albumin etc.) and contended that Ammonium Bichromate is itself sensitizer and addition of water does not bring any new commodity in substance.
4.2. We find force in the submission of the ld. Counsel and the findings of the Commissioner (Appeals) that no new product has come into existence by adding water in Ammonium Bichromate. It has been held by the Supreme Court in the Union of India v. D.CM. -1977 (1) E.L.T. (J 199) that "manufacture" is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance". A new and different article must emerge having a distinctive name, character, or use. The Revenue has not adduced any evidence or technical literature to show that a new and different article has emerged having a distinctive name, character or use by adding water to Ammonium Bichromate. In view of this, we find no infirmity in the impugned order in respect of these two products also and uphold the same.
5.1. In respect of product "Stensil Remover", phosphoric acid is mixed with water in the proportion of 3% to 97%. The Commissioner (Appeals) held stensil remover to be non-dutiable as mere dilution with water does not amount to manufacture. The ld. SDR submitted that the main input for the manufacture of stensil remover is phosphoric acid, falling under Heading 28.09 whereas Stencil remover is classifiable under sub-heading 38.23 as per Explanatory Notes of HSN; that since a totally new product having totally different sub-heading of Excise Tariff and altogether an unique end use, is coming into existence, the process involved is very much within the meaning of manufacture as given in Section 2(f) of the Central Excise Act. The ld. Counsel mentioned that the stensil remover is used to remove the marks left by stensil and is like ink remover. He submitted that mere addition of water will not amount to manufacture.
5.2. We observe that the Revenue has succeded in showing that after addition of water in phosphoric acid a new commodity having distinct name, character or use emerges. Thus the activity will amount to manufacture under Section 2(f) of the Central Excise Act. It is not the case of the respondents that the phosphoric acid without the process of addition of water would act as stensil remover. The ld. Advocate has clearly mentioned that the impugned product acts as ink remover which is classifiable under Heading 38.23 as per Explanatory Note of H.S.N.In view of this, we hold that stensil remover is classifiable under Heading 38.23 of the Schedule to the Central Excise Tariff Act and set aside the impugned order as far as classification of stencil remover is concerned.