1. This is an appeal filed by the Revenue against the Order-in-Appeal dated 30-09-1988 passed by the Collector of Central Excise (Appeals), Madras. The respondent are M/s. Sri Ram Chemical Complex, Chingleput.
Tamil Nadu.
2. The matter relates to the classification of animal glue commercially known as technical gelatine and glue flakes manufactured from the tannery waste products-hides and skins. The respondent had classified their product under Item No. 68 of the erstwhile first schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Tariff). Under show cause notice dated 9-7-1985, the Department sought to classify the said goods under item No. 15 A(l) of the Tariff as high polymer, and demanded Central Excise duty for the proceeding six months. Without going into the question of classification, the Asstt.
Collector of Central Excise, Madras under his Order-in-Original dated 31-01-1986 dropped the proceedings on the ground of the eligibility of the manufacturer to small scale exemption. This order of the Asstt.
Collector of Central Excise, Madras, was reviewed by the Principal Collector of Central Excise and Customs, Madras and the Asstt.
Collector of Central Excise, Madras was directed to file an application to the Collector of Central Excise (Appeals), Madras for determination of the points mentioned in his review order dated 20.01-1987. The Collector of Central Excise (Appeals), Madras, under his order dated 15-04-1987 set aside the order of the Asstt. Collector of Central Excise and directed him to classify the goods after allowing the respondent an opportunity to make representation against the proposal, and to be heard in person, if they so desired. A revised show cause notice dated 28-5-1987 was issued by the Asstt. Collector of Central Excise, Madras. Under his Order-in-Original dated 9-3-1988, the Asstt.
Collector of Central Excise, Madras held that the animal glue made by the assesse was classifiable under item No. 15A(1) as high polymer resins. The benefit of Section-11C was however, extended for the period from 1-4-1985 to 8-7-1985. On appeal, the Collector of Central Excise (Appeals), Madras set aside the order of the Asstt. Collector, Central Excise, Madras and allowed the appeal of M/s. Sri Ram Chemical Complex on the ground that the Madras Central Excise Collectorate Trade Notice No. 55/85, dated 6-4-1985 had clearly stated that technical gelatine and glue flakes obtained from bones were properly classifiable under Tariff Item No. 15A(1) of the Tariff as other high polymers after the amendment of tariff in the 1982 Budget, and that as in the case before him the glue flakes were manufactured from the bones, the product in question was not covered by the aforesaid Trade Notice.
3. The matter was posted for hearing on 2-8-1995 when Shri A.K. Madan, JDR appeared for the appellant - Revenue. Shri M.A. Rangaswamy, Advocate represented the respondent M/s. Sri Ram Chemical Complex.
4. Shri M.A. Rangaswamy the learned Advocate raised a preliminary objection that there was no proper sanction by the Collector and that what was on record was a bald sanction in cyclostyle form filling up blanks without reference to the requirements of Section 35 B (2) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act'). He referred to the Tribunal's decision in the case of Collector of Central Excise, Madras v. Sundaram Fasteners Ltd., Madras -1985 (20) E.L.T. 323 (Tribunal).
5. Shri A.K. Madan, the ld. JDR stated that there was a proper sanction on record which meet the requirement of Section 35B of the Act. He produced the Collectorate File for inspection of the Bench from which it was seen that the Collector had granted her sanction on the note sheet. He referred to the Supreme Court's decision in the case of Collector of Central Excise v. Berger Paints India Ltd. - 1990 (47) E.L.T. 210 (S.C.) wherein the Hon'ble Supreme Court had held that enclosing of general authorisation or note sheet order by the Collector authorising filing of appeal was a sufficient compliance of Rule 9(2) of the CEGAT (Procedure) Rules, 1982.
6. After perusing the file and going through the Supreme Court's decision relied upon by the learned JDR, we are satisfied that the sanction by the Collector on record meets the requirements of Section 35B of the Act, and allowed the learned JDR to advance his arguments on merit of the case.
7. On merits, the ld. JDR stated that the respondent were engaged in the manufacture of technical glue and that after the Budget changes in the year 1982, the goods in question were properly classified under Item No. 15A(1) of the Act. He referred to the tariff entries and referred to the Trade Notice on the subject. He also referred to Notification No. 157/85-C.E., dated, 9-7-1985 wherein partial exemption had been extended in favour of gelatine and glue flakes falling under Item No. 15A of the Tariff. Attention of the Bench was also invited to the Notification No. 115/87-C.E., dated 13-4-1987 under Section 11C wherein as a matter of general practice exemption had been provided to gelatine and glue flakes during the period from 1-3-1982 to 8-7-1985.
The ld. JDR submitted that there were two periods involved in the case one from 1-4-1985 to 8-7-1985 and the other from 9-7-1985 to 31-3-1985 and submitted that even for the period prior to 9-7-1985 the goods in question were correctly classifiable under Item No. 15A(1) of the Tariff. In this connection, he referred to the relevant tariff entries.
8. The learned Advocate referred to the show cause notice and submitted that the Notification No. 157/85-C.E., dated 9-7-1985 could not determine the classification; he submitted that the goods in question were correctly classifiable under Item No. 68 and that the order of the Collector of Central Excise (Appeals), Madras was correct and pleaded for rejection of the appeal by the Revenue.
9. We have carefully considered the matter. The respondent were engaged in the manufacture of animal glue comercially known as technical gelatine and glue flakes, from animal hides, skins and tendons. We find that the process of manufacture of the goods in question and the technical information relating thereto had been given by the Asstt.
Collector of Central Excise, Madras in his Order-in-Original dated 9-3-1988. He had also referred to the Chemical Examiner's Report in his order. From the technical data given in his order, he had come to the following conclusions:- (1) that the glatine made from hides, tendons and bones are categorized in the same category and not separately.
(2) the condensed Chemical Dictionary has stated that the molecular weight of the gelatine will be as high as 1 lakh. It has been further stated that the high polymers will have a molecular weight around 5 thousand from which it is evident that gelatine will merit classification as high polymers.
10. In the Finance Bill, 1982 (Bill No. 14 of 1982) introduced in Lok Sabha on 27th Feb., 1982, Item No. 15A of the Tariff was substituted.
In the sub-item No. (1) of Item No. 15A of the Tariff, with which alone we are concerned, there was a specific inclusion of "other high polymers". In the Bombay Collectorate Trade Notice No. 47/82, dated 22-3-1982 at page T-58 of 1982 (9) E.L.T., it was clarified that the effect of the changes brought out in sub-item No. (1) of Item No. 15A was to align it with the Heading No. 39.01/06 of the Customs Tariff. In the Brussels Tariff Nomenclature Explanatory Notes, it was commented that the artificial resin and plastic materials of Chapter 39 of the Customs Tariff are obtained by the chemical transformation of natural organic substances or by chemical synthesis. It is seen from the Guntur Collectorate Trade Notice No. 62/85, dated 30-3-1985 at page T-5 of 1985 (20) E.L.T. that technical gelatine and glue flakes obtained from bones were considered classifiable under Item No. 15A(1) of the Tariff as "other high polymers", after the amendment of the Tariff Item No.15A in the Budget of 1982. In the Notification No. 157/85-C.E., dated 9-7-1985 gelatine and glue flakes falling under Item No. 15A of the Tariff were exempted from so much of the duty of excise leviable thereon under the Act as was in excess of the amount calculated at the rate of 12% Adv. For the period prior to the date of this Notification No. 115/85-C.E., dated 9-7-1985 the Central Government issued directions under Notification No. 115/87-C.E., dated 13-4-1987 issued under Section 11C of the Act, for not recovering duty of excise not levied or short-levied as a result of general practice on gelatine and glue flakes during the period from 1-3-1982 to 8-7-1985.
11. In the Indian Standard Specifications, 'gelatine' has been described as a "purified product obtained by partial hydrolysis of collagen derived from skin, white connective tissues and bones of animals". In chemical process industries, gelatine has been defined as "derived by hydrolysis from collagen-the white fibres of the connective tissues of the animal body, particularly in the skin, (Corium), bones (OSSEIN) and tendons". In the case of Collector of Central Excise, Coimbatore v. Protein Products of India -1988 (2) SCALE 216 at page 1404 the Hon'ble Supreme Court had noted that gelatine can be manufactured from sources other than bones, such as skin, hides and tissues of animals.
12. The Collector of Central Excise (Appeals) had referred to the Madras Central Excise Collectorate Trade Notice No. 55/85, dated 6-4-1985 wherein it had been stated that technical gelatine and glue flakes obtained from bones are properly classifiable under Item No.15A(1) of the Tariff as "other high polymers" after amendment of Item No. 15A(1) in the 1982 Budget . He had held that as in the case before him glue flakes were not manufactured from the bones, they could not be classified under the said sub-item No. (1) of Item No. 15A of the Tariff. He observed that the Trade Notice was to be strictly interpreted. This reasoning of the Collector of Central Excise, Madras does not appear to be correct. The animal glue under consideration could be made not only from the bones but as well from the hides and skins. In the case of Collector of Central Excise, Coimbatore v.Protein Products of India -1988 (2) SCALE 216 at page 1404 the Hon'ble Supreme Court had observed that gelatine could also be manufactured from sources other than bones, sources such as skins and hides and tissues of animals. Paras 3 and 6 of the Supreme Court's decision are relevant. We also do not agree with the learned Collector of Central Excise (Appeals) that Trade Notice had to be construed strictly. The Trade Notice is clarificatory and for proper classification all relevant considerations have to be taken into account. In the circumstances, we do not consider that view taken by the learned Collector of Central Excise (Appeals) was valid.
13. The benefit of Notification No. 115/87 CE, dated 13-04-1987 issued by the Central Government under Section 11C of the Act, had already been extended to the respondent.
14. Taking all the relevant considerations into account, we accept the appeal filed by the Revenue, vacate the impugned order of the Collector of Central Excise (Appeals), Madras, and confirm the order passed by the Asstt. Collector of Central Excise, Madras in these proceedings.
Ordered accordingly.