Paripoornan, J. - (1.) This is an appeal filed by an assessee against the order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, dated 11-11-1983, under Section 35-L(b) of the Central Excises and Salt Act, 1944, (hereinafter referred to as 'the Act'). The respondents represent the revenue. The short question that arises for consideration in this appeal is, whether a duty of excise was validly levied on "PVC compound" produced by the appellant from out of the duty paid PVC resin. The levy of duty relates to the period from 18-6-1977 to 28-6-1977. The Assistant Collector of Central Excise, by his order dated 28-7-1978, held that the PVC compound in the form of granules produced by the assessee were eligible to duty for the period from 18-6-1977 to 28-6-1977, under Rule 10 of Central Excise Rules, 1944. He allowed set off in respect of the duty paid on PVC resins and used in the production of PVC compound. In appeal, the Appellate Collector of Central Excise, by his order dated 28-8-1979, held that the appellant manufactured PVC compound (granule) for insulation of their products, electric wires and cables, and the resultant PVC compound is a new product having different use than that of PVC resins and the processes undertaken by the appellant amounts to manufacture within the meaning of Section 2(f) of the Act. He held that PVC compound would fall under sub-item(ii) of item 15A(1) and excise duty is accordingly leviable. In Second Appeal, filed by the assessee, the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, by a majority held that the appellant purchased PVC resins and what they produced is PVC compound or moulding granules, and though, no polymerisation or co-polymerisation results nor any changes in the structural identity of the polymer molecules, the conversion of PVC resins into PVC compound by the process employed by the appellant amounts to 'manufacture" within the meaning of Section 2(f) of the Act. It was further held that goods so manufactured by the appellant will fall for classification under item 15A(1) (ii) of the Act. The Judicial Member in his dissenting order took the view that the change in form from PVC resins to PVC compound or moulding granules, does not amount to "manufacture" and the process employed is of no significance, and there is no legislative intent to bring to levy the product every time, when there is a change in form. The appeal filed by the assessee was dismissed in view of the majority decision. It is from the aforesaid order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, the assessee has filed this appeal to this Court.
(2.) We heard Sri A. K. Ganguli, Senior Counsel, who appeared for the appellant (assessee) and also Sri Joseph Vellapalli, Senior Counsel, who appeared for the respondents - revenue. The arguments advanced before us covered a wide field. Sri A. K. Ganguli argued that the appellants are manufacturers of electric wires and cables and they produce among other things a substance known as PVC compound (granule) out of duty paid PVC resins. During the material time, namely, 13-6-1977 to 28-6-1977, they manufactured 31 M.Ts. of PVC compound and removed the same for captive consumption within the factory. The PVC compound or granules produced out of duty paid PVC resins is only a modified form of PVC resins and the same cannot be called different goods commercially. The PVC compound in the form of granules, is not a marketable commodity, and that there is no finding of any statutory authority that it is otherwise. Even if the finding of the statutory authorities to the effect that the PVC compound in the form of granules produced by the appellants is a distinct and different commodity and the process employed by the assessee amounts to "manufacture" within the meaning of Section 2(f) of the Act is justified, it will not attract "excise duty", unless it is further found that the commodity namely, PVC compound in the form of granules, is a "marketable commodity". In the absence of such a finding, the statutory authorities were in error in holding that PVC compound in the form of granules produced out of duty paid PVC resins is exigible to excise duty. On the other hand, counsel for the revenue Sri Vellapally contended that the PVC compound in the form of granules produced from out of the duty paid PVC resins, is a distinct and different product in the commercial world and since it is a different commercial product, it is implicit therefrom that it is "marketable". It was further argued that the goods produced by the appellant, namely, PVC compound (granules) cannot be said to be the same goods as the PVC resins purchased by the assessee on which duty was paid. It is a distinct and different product in the commercial world and is exigible to excise duty as found by the statutory authorities.
(3.) We were referred to a few standard books to highlight what is meant and understood by "Plastics" and "resins" in the commercial world and whether the PVC compound (granules) in the instant case, after having undergone the process as found by the Appellate Tribunal, is or is not a distinct and different product in the commercial world attracting levy of excise duty though removed for captive consumption. Our attention was invited to the New Encyclopaedia Britannica Vol. 21, pp. 290-292 and McGraw-Hill Encyclopaedia of Science and Technology, 7th Edn., pp. 182-184, to understand the nature, quality, uses and characteristics of " plastics" and "resins" in general, the various components of the said products, and the technology employed in them. The Appellate Tribunal in its order has referred to Hawley's Condensed Chemical Dictionary to illustrate what is meant by "modification" (10th Edn. p. 699), to ascertain whether "PVC compound" is a chemically modified PVC resin. We do not think that we should go into the technical aspects in detail in the light of the conclusion reached by us, on another vital aspect in this case, which requires further probe. In this case, the Appellate Tribunal after adverting to the facts that the appellants produced PVC compound (granules) from duty paid PVC resins and that they were not polymerisation and co-polymerisation products, referred to the detailed tour note of Chemical Examiner, in para 11 of its order, wherein it was concluded to the following effect: "It may be seen that the manufacture process adopted for the production of PVC compound from PVC resin-powder does not involve any polymerisation and co-polymerisation reaction of the initial resin molecules. By compounding PVC resins with various ingredients like plasticizers, stabilizer, filler and lubricants, some of the physical and mechanical properties of the initial polymer/ resin are greatly modified, the PVC compound or modified form of PVC resin is obtained without bringing a change in the structural identity of the polymer molecules." In the light of the above, the majority members of the Appellate Tribunal came to the conclusion that the conversion of PVC resin into PVC compound by the processes employed by the assessee, amounts to "manufacture" within the meaning of Section 2(f) of the Act. The Tribunal stated thus in paragraphs 12 and 13 of its Order: "It is clear that a good deal of processing is involved and what emerges is a homogeneously mixed material which is first formed into a sheet and then broken into granules or chips. Evidently, it is not a case of a simple loose mixture such as sand and pebble capable of being separated by simple physical means. It is also clear that the processing results in some of the physical and mechanical properties of the original PVC polymer or resin being modified though the structural identity of the polymer molecules does not undergo change. We are of the opinion that there is a definite process of manufacture involved in the subject process........ It is not disputed that PVC resin and PVC compound or moulding granules are not one and the same thing. We have seen that the conversion of PVC resin into PVC compound involves the addition of fillers, plasticizers, stabilizer and lubricant, the ingredients being intimately and homogeneously mixed with the aid of heat and machines into a sheet which is then broken up to into granules or chips. Again, the two products are known by different names. What the appellants purchase is PVC resin and what they manufacture is PVC compound or moulding granules. It is in evidence, as seen from the Chemical Examiner's Notes, which have been referred to by the appellants, that some of the physical and mechanical properties of PVC resin are greatly modified by its conversion to PVC compound though, admittedly, no polymerisation or co-polymerisation results nor any changes in the structural identity of the polymer molecules." It is on the basis of the aforesaid finding the Tribunal held that the PVC compound produced by the appellants, out of the duty paid PVC resins, was liable to be charged with excise duty under item No. 68, from 18-6-1977 to 28-6-1977.;