Judgment:
1. The Revenue has come in appeal against the order of the Collector of Central Excise (Appeals), HV-537/PN-133/86, dated 22-10-1986.
2. The issue pertains to repacking of products. The respondents bring duty paid synthetic resin and Hardener in bulk. They repack them in dual packs of small quantities and market the same under their own brand name. The appellants contend that the dual pack marketed with brand name brings into existence a different and distinct marketable product. The respondents have accepted the excisability of this product and had filed classification list for assessment under Tariff Item 68.
The question pertains to the correct classification of the final product marketed in a dual pack at a much higher value and assessable under T.I. 15A(1) of CET. In his order, the Collector of Central Excise (Appeals) has held that the classification under Tariff Item 15A as a new product is incorrect and set aside the order of classification under Tariff Item 15A CET. The case of the appellant is that the goods are sold as "Resin along with Hardener, and the resin is the main item and its classification under Tariff Item 15A(1) is correct.
3. The respondents have filed a memo of cross objection, holding that the activity of repacking and affixing brand name of the product undertaken by the respondent does not fall within the purview of manufacture under the Central Excise Law and consequential amount of duty paid by mistake is to be refunded. They state that process of repacking and affixing brand name is neither specified in the Tariff Item 15A(1) or under Tariff Item 68. That the resin and hardener remains in the same form at the time of clearance after repacking, as they were when purchased by the respondent on payment of duty. So as per tariff classification the activity of repacking of duty paid goods into retail packs does not fall within the ambit of manufacture.
4. The learned JDR, Shri L. Narasimha Murthy reiterated the department's appeal.
5. Shri V. Sridharan, the learned advocate reiterated the points referred to in the cross objection and cited the following case laws in his favour;Hindustan Petroleum Corporation Ltd. v. Collector of Central Excise, Bombay.Collector of Central Excise v. Lakaki Works (P) Limited. 1988 (37) E.L.T. 392Collector of Central Excise v. Harrison Synthetic Bristles Company.Union of India and Others v. Cibatul Limited. 1985 (22) E.L.T. 302 (SC) 6. We have considered the submissions, the appellants have raised the issue on classification, whether the product in the dual packing will come under Tariff Item 15A or Tariff Item 68 and claim that the Collector (Appeals) order, relying on the case M/s. Indian Paint Colours and Varnish Company Limited, Calcutta reported in 1983 (13) E.L.T. 998 actually supports their view point and classification under Tariff Item 15A(1) is urged. The respondents on the other hand have shifted the grounds on which the appellant has filed the appeal and adduced a fresh ground that the process of dual packing does not amount to manufacture. On perusing the case laws cited by them, the relevant case law is that of Hindustan Petroleum Corporation Limited, v.Collector of Central Excise, reported in 1985 (19) E.L.T. 425, the relevant paragraph of which is reproduced below; "The question is whether in the case of the instant goods, which were repacked in the factory of Hindustan Petroleum, duty would again be leviable. The appellants contend that duty could not be levied again because of the same having once been paid on the goods under the same description and the same Tariff Item at the place of manufacture, namely the premises of Balmer Lawrie. It is settled law that repacking of goods is not a process of manufacture. Packing from bigger containers into smaller containers, if part of a continuous process of manufacture, could be regarded as contributing to the manufacture. Where, however, the process of manufacture has already reached a final stage, resulting in excisable goods, and those goods have been cleared on payment of duty, and it is contended that by virtue of subjecting the goods to this particular process at a subsequent stage, the goods again become liable to duty, such a claim has to be scrutinised with great circumspection.
So judged, it is quite clear that the goods in the instant case had not undergone any such process as could render them liable to duty again, under the same commercial description (compounded greases)".
There the products that were repacked were of the same Tariff description. This is not the case here. The two items fall under different tariff items and they are sold under a brand name with a different product emerging on being mixed. This being an entirely fresh ground entitling them to payment of the excise duty paid, the proper course for the respondents should have been to obtain the sanction of the Tribunal for urging this fresh ground as per Rule 10 of the CEGAT Procedure Rules. The following case laws are relevant; (i) Gaurav Paper Mills v. Collector,Lohia Machines Ltd. v.Collector.
7. Taking up the appeal of the appellant, it is seen that the dual packing consists of Resin and Hardeners. The Collector of Central Excise (Appeals) has relied on M/s. India Paints Colour & Varnish Company. The ratio of this judgment is as follows; "The lower authorities' interpretation is not sustainable because the words in Tariff Item 15A(1) refer not to change of a duty paid resin from one form to another but to the form in which they are excised. Thus, a resin may be solid or liquid or pasty or any other form, but whatever the form, it must be charged to duty under Tariff. The form does not matter as far as the question of chargeability to duty (when it has not paid the duty) is concerned.
But this is not the same thing as saying that a duty paid resin must pay duty afresh if its form is changed from the form in which it suffered duty. The law merely recognises that resins can be made in various forms, some being solid, while others are not removed and sold except as powder or paste. The excise authorities must levy and collect duty when duty has not been collected, regardless of the form in which the resin is cleared. To charge duty on a duty paid resin is not what the law envisages. And if we are to take the department's reasoning to its logical conclusion, all resins must be pursued wherever they go to see if their form is changed during use and application. This might be possible where the resin goes to a licensee but is clearly beyond the resources of the Department when the resin is in turn sold to users who buy and use only small quantities. We cannot agree that the catalyst solution which contains duty paid polyamide/amino resin is a new product for the purpose of Item 15A and needs to be charged to duty. There is no evidence that the resin polyamide underwent a change in character such as might happen by co-polymerisation or some such chemical modification when it entered into solutions in the organic solvent e.g. isoprophyl alcohol or toluene; nor have the Central Excise authorities made such a finding. Furthermore, the Excise authorities have not challenged the assessee's claim that the two substances epoxy and the catalyst, in separate packs, are used together to make zinc rich epoxy primer. There is good reason for saying that the two should, for assessment, form one common substance meant to be used as one and actually used so (a primer/paint)." In the said judgment, the usages as a common substance has been taken to be the criteria for assessment as a paint under Tariff Item 14-I-(5) of the Central Excise Tariff.
The appellants claim that the resin gives the main characteristics and the Hardener is an aid in effective performance and hence assessable under Tariff Item 15A(1). The description of Tariff Item 15A is specifically for artificial and synthetic resins and plastic materials; and other materials and articles. The tariff item speaks of no percentage or main characteristics which would be the criterion for classification under the tariff. The product which is packed in a dual container, when mixed is to be an adhesive. The separate packing is to retain the properties of a resin and a hardener till they are mixed together to serve the purpose of adhesives as the product after mixture has a limited life. Obviously, this mixture cannot be kept stored for a long time. Therefore, going by the ratio of the decision cited supra 1983 (13) E.L.T. 998, the end use is relevant for classification and an adhesive would be classifiable under Tariff item 68. The appeal filed by the Revenue has no merits and is dismissed. The cross objection filed by the respondents are also disposed of.