PHOENIX MILLS Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Phoenix Mills Ltd. Is whether the Printing Paste made by them is an excisable goods or not chargeable to Central Excise duty.

(2.) THE facts in brief are that the appellants manufacture printing paste which was used by them for printing of fabrics captively without payment of duty. The Collector, Central Excise, under the impugned order dated 29 -5 -1992, confirmed the demand of Central Excise duty for the period of six months classifying the product under sub -heading 3204.39 of the schedule to the Central Excise Tariff Act and holding that the mixing of ingredients brought into existence a product known as printing paste; that printing paste is known differently from the raw materials like urea, emulsifier, water, binder, etc. used in its manufacture; that the process employed is covered by the scope of manufacture under Central Excise law. Reliance was placed on the decision in the case of Empire Industry -1985 (20) E.L.T. 179 (S.C.). The Collector also did not agree with the contention that the printing paste had a very little shelf life as the sample of the printing paste was sent to Chemical Examiner who analysed the same after 2 weeks from the date of drawal of sample and reported that the "sample is in a good stable condition and has not undergone any physical deterioration"; that this clearly shows that printing paste had shelf life. The Collector also mentioned in his findings that a reading of Heading 32.04 makes it very clear that unformulated or unstandardized or unprepared forms are also liable to duty and no evidence had been produced to show that the manufacturers had manufactured printing paste from out of standardized, formulated and prepared forms.

(3.) SHRI R. Sudhinder, ld. Advocate, submitted that the show cause notice dated 30 -4 -1991 alleged that the printing paste is classifiable under sub -heading 3215.00, but the Collector has classified the impugned product under sub -heading 3204.29; that the appellants were not given any opportunity to explain as to why the product was not classifiable under sub -heading 3204.29 and as such the impugned order is beyond the show cause notice and is liable to be quashed. Reliance was placed on Rajasthan Spg. & Wvg. Mills Ltd. v. C.C.E. -1989 (41) E.L.T. 450 (T) and Tata Mills Ltd. v. C.C.E. -1988 (37) E.L.T. 284 (T). He further submitted that the rate of duty was 15% in respect of Heading 32.15 whereas the duty payable in respect of sub -heading 3204.29 was 30% and as such duty confirmed has exceeded the amount specified in the Notice; that the duty demanded in adjudication order cannot exceed the amount specified in the notice as held in the case of J.B.A. Printing Inks v. U.O.I. - 1980 (6) E.L.T. 121 (Bombay) and Khan Spinning Mills v. C.C.E. - 1989 (40) E.L.T. 385 (T). He also mentioned that the printing paste is prepared for instant and ready captive use and is not a marketable commodity; that the main use of the printing paste depends on its shade for printing; that the shade of the printing paste diminishes as compared to the previous day as is apparent from the analytical report dated 17 -2 -1992 from the department of Chemical Technology, University of Bombay; that the test of marketability is an essential ingredient for dutiability even if the goods are specified in a tariff schedule. Reliance was placed on the judgment in C.C.E. v. Ambalal Sarabhai Enterprises - 1989 (43) E.L.T. 214 (S.C.). He further contended that the Collector had not considered that the shade of the paste diminished from day to day. He further contended that printing paste is correctly classifiable under sub -heading 3204.19 as they were using pigment paste.