ASSAM HARD BOARDS LTD. Vs. UNION OF INDIA (UOI) AND ORS.
LAWS(GAU)-1975-1-2
HIGH COURT OF GAUHATI
Decided on January 10,1975

Assam Hard Boards Ltd. Appellant
VERSUS
UNION OF INDIA (UOI) AND ORS. Respondents

JUDGEMENT

D. M. Sen, J. - (1.) IN this application under Article 226 of the Constitution of India, the petitioner has prayed for a writ in the nature of Certiorari or Mandamus to direct that he be not required to pay duty on the water content of the synthetic resins that is being manufactured, by him and also for a declaration that the Notification No. 156/65 dated 23rd September, 1965 (Annexure -A, P. 25) issued under Rule 8 of the Central Excise Rules is ultra vires of said rules and the Central Excises and Salt Act.
(2.) THE article, on which duty has been sought to be levied, is Phenol Formaldehyde Resins. As shown against item No. 15A in the First Schedule to the Central Excise and Salt Act (hereinafter referred to as "the said Act"), thirty per cent ad valorem duty is liable to be paid on the synthetic resins in any form, whether solid, liquid, or pasty or as powder, granules or flakes or in the form of moulding powders. However, by virtue of powers conferred under Rule 8 of the Act, the Central Government had exempted from excise duty any sum that may exceed 80 paise per kg. of such phenol, i. e. Resin, as per its order dated, 23 September, 1965. Mr. S. K. Sen, the learned counsel appearing for the petitioner, submits that, after the petitioner has opted for the concessional rates, as granted under the aforesaid Notification dated 23rd September, 1965, the petitioner finds that he has, in fact, to pay more duty thereunder than what was leviable in accordance with the provisions against item No. ISA in the First Schedule to the Act. He further states that the Department was in error in subjecting the Phenol Resin, together with its water content, to duty, instead of levying duty only on the solid content thereof, after excluding its water content.
(3.) HE also drew our attention to a Circular (pp. 71 -72) stated to have been issued by the Central Board of Revenue, an extract of which reads as follows : "However, solution of any of the products mentioned in item 15A(I) in volatile organic solvents are excluded from the scope of this item when the weight of the solvent exceeds 50% of the weight of the solution. The underlying idea is to exclude varnishes which contain less than 50% of synthetic/artificial resins (basic plastic material) and which are specifically mentioned as Tariff item No. 1411. In the case of factories manufacturing synthetic resins directly, for example for making varnishes by adding the solvents, etc. they would be liable to pay duty on the resin content of the solution if such solutions contain more than 50% by weight of volatile organic solvents, since the fact remains that the synthetic/artificial resin is actually first manufactured in the factory, and on the entire products in case it contains not more than 50% by weight of volatile organic solvents at the time of clearance/use within the factory".;


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