Bhagsons Paints Ind. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. by the captioned appeal, the appellants has assailed the order of the collector (appeals). the collector (appeals) had held that trimethylbenzene can neither be considered as a chemical nor a chemical formulation and, therefore, he upheld the order of the assistant collector and rejected the appeal of the appellants herein.2. the facts of the case are that the appellants received c-ix solvent under chapter x procedure and converted it into a product which they called trimethylbenzene and claimed that the new product was a chemical formulation and, therefore, was entitled to the benefit of notification no. 276/67 dated 21-12-1967. the department took a sample of the product and sent it to its laboratory for chemical examination; that the laboratory of the revenue department reported after conducting tests on trimethylbenzene and solvent c-ix; that the material trimethylbenzene obtained by fractional distillation of solvent c-ix can neither be considered as a chemical nor a chemical formulation.accordingly, the lower authorities held that trimethylbenzene was neither a chemical nor a chemical formulation and was, therefore, not entitled to the benefit of notification 276/67 dated 21-12-1967.3. shri j.s. agarwal, learned advocate appearing for the appellants submits that in the process of distillation of solvent c-ix, a new product by distinct name as trimethylbenzene came into existence. he submits that the chemical change means a rearrangement of atoms, ions, or radicals of one or more substances resulting in the formation of new substance and in the instant case solvent c-ix was subjected to further distillation, a new product appeared and, therefore, since a distinct new commodity came into existence the process undertaken by the appellants amounted to the process of manufacture under section 2(f) of the central excises act, 1944. learned counsel submitted that trimethylbenzene figures in the chemical dictionary, both hawley's condensed chemical dictionary as well as me graw hill dictionary of chemistry. he, therefore, submits that solvent c-ix was a different product from the new product which is known as trimethylbenzene. he also submits that no doubt, the central revenue chemical laboratory reported after testing the material, trimethylbenzene is neither a chemical nor a chemical formulation; but he submits that no reasons for chemical authoritative literature has been sheet in support of this finding. he, therefore, submits that the benefit of notification 276/67 may be allowed to the appellants.4. shri j.m. sharma, learned dr submits that the decision of the lower authorities is based on a chemical report. he submits that when chemical examination of the samples was undertaken, the appellants had left it to the department to assess the goods on the basis of the chemical test of the samples. he submits that the product according to the chemical test undertaken by the laboratory was nothing new; that the decision of the laboratory was based on elaborate test conducted on the samples of solvent c-ix and trimethylbenzene. he submits that these tests really showed nothing new viz. no new product with distinct name character and use came into existence after distillation of the product solvent c-ix. he submits that in view of the definite and positive finding of the laboratory, the lower authorities rightly held that no new product came into existence and, therefore, the benefit of notification 276/67 was not admissible to the product described by the appellant as trimethylben-zene, as the solvent c-ix remained as solvent c-ix. he, therefore, submits that the demand of duty on solvent c-ix has rightly been confirmed by the lower authorities. in support of his contention, learned dr cited and relied upon the decision of the tribunal in the case of ganga rasayanie p. ltd. v. cce, baroda reported in 1996 (81) e.l.t. 176.5. heard the submissions of both sides. the short point for determination is whether after the distillation of solvent c-ix, a new product came into existence and, therefore, whether the demand raised on solvent c-ix was valid or not. the appellants have relied that a chemical change did take place and that the literature on chemical usage of words describes the item trimethylben-zene as a distinct commodity in chemical literature, as against this, the revenue has relied on the test report conducted on the samples of both solvent c-ix and trimethylbeneze. we observe that the results of the test report showed that there was no material difference and, therefore, the authorities undertaking the test held that trimethylbenzene was neither a chemical nor a chemical formulation. we find that before the lower authorities, the appellant at one point agreed that they will be paying duty on the basis of test results. they did not agitate the findings of the test. since the findings are unambiguous and clear and were not agitated by the appellants, we do not see any reason to disagree with the findings. in the result, we hold that since solvent c-ix came to the appellants under chapter x procedure therefore, duty has rightly been demanded on this product. in the result, the impugned order is upheld and the appeal is rejected.

Judgment:
1. By the captioned appeal, the appellants has assailed the order of the Collector (Appeals). The Collector (Appeals) had held that Trimethylbenzene can neither be considered as a chemical nor a chemical formulation and, therefore, he upheld the order of the Assistant Collector and rejected the appeal of the appellants herein.

2. The facts of the case are that the appellants received C-IX solvent under Chapter X procedure and converted it into a product which they called trimethylbenzene and claimed that the new product was a chemical formulation and, therefore, was entitled to the benefit of Notification No. 276/67 dated 21-12-1967. The Department took a sample of the product and sent it to its Laboratory for chemical examination; that the laboratory of the Revenue Department reported after conducting tests on trimethylbenzene and solvent C-IX; that the material trimethylbenzene obtained by fractional distillation of solvent C-IX can neither be considered as a chemical nor a chemical formulation.

Accordingly, the lower authorities held that trimethylbenzene was neither a chemical nor a chemical formulation and was, therefore, not entitled to the benefit of Notification 276/67 dated 21-12-1967.

3. Shri J.S. Agarwal, learned Advocate appearing for the appellants submits that in the process of distillation of solvent C-IX, a new product by distinct name as trimethylbenzene came into existence. He submits that the chemical change means a rearrangement of atoms, ions, or radicals of one or more substances resulting in the formation of new substance and in the instant case solvent C-IX was subjected to further distillation, a new product appeared and, therefore, since a distinct new commodity came into existence the process undertaken by the appellants amounted to the process of manufacture under Section 2(f) of the Central Excises Act, 1944. Learned Counsel submitted that Trimethylbenzene figures in the Chemical Dictionary, both Hawley's Condensed Chemical Dictionary as well as Me Graw Hill Dictionary of Chemistry. He, therefore, submits that solvent C-IX was a different product from the new product which is known as Trimethylbenzene. He also submits that no doubt, the Central Revenue Chemical Laboratory reported after testing the material, Trimethylbenzene is neither a chemical nor a chemical formulation; but he submits that no reasons for chemical authoritative literature has been sheet in support of this finding. He, therefore, submits that the benefit of Notification 276/67 may be allowed to the appellants.

4. Shri J.M. Sharma, learned DR submits that the decision of the lower authorities is based on a chemical report. He submits that when chemical examination of the samples was undertaken, the appellants had left it to the Department to assess the goods on the basis of the chemical test of the samples. He submits that the product according to the chemical test undertaken by the Laboratory was nothing new; that the decision of the Laboratory was based on elaborate test conducted on the samples of solvent C-IX and trimethylbenzene. He submits that these tests really showed nothing new viz. no new product with distinct name character and use came into existence after distillation of the product Solvent C-IX. He submits that in view of the definite and positive finding of the Laboratory, the lower authorities rightly held that no new product came into existence and, therefore, the benefit of Notification 276/67 was not admissible to the product described by the appellant as Trimethylben-zene, as the solvent C-IX remained as solvent C-IX. He, therefore, submits that the demand of duty on solvent C-IX has rightly been confirmed by the lower authorities. In support of his contention, learned DR cited and relied upon the decision of the Tribunal in the case of Ganga Rasayanie P. Ltd. v. CCE, Baroda reported in 1996 (81) E.L.T. 176.

5. Heard the submissions of both sides. The short point for determination is whether after the distillation of solvent C-IX, a new product came into existence and, therefore, whether the demand raised on solvent C-IX was valid or not. The appellants have relied that a chemical change did take place and that the literature on chemical usage of words describes the item Trimethylben-zene as a distinct commodity in Chemical Literature, as against this, the Revenue has relied on the test report conducted on the samples of both solvent C-IX and Trimethylbeneze. We observe that the results of the test report showed that there was no material difference and, therefore, the authorities undertaking the test held that Trimethylbenzene was neither a chemical nor a chemical formulation. We find that before the lower authorities, the appellant at one point agreed that they will be paying duty on the basis of test results. They did not agitate the findings of the test. Since the findings are unambiguous and clear and were not agitated by the appellants, we do not see any reason to disagree with the findings. In the result, we hold that since solvent C-IX came to the appellants under Chapter X procedure therefore, duty has rightly been demanded on this product. In the result, the impugned order is upheld and the appeal is rejected.