ORDER
H.R. Syiem, Member (J)
1. These are two appeals of M/s. Hico Products Limited, Khopoli. They are against the order-in-appeal No. C-477-479/BII-107-109/83 dated 11th March, 1983 passed by the Collector of Central Excise (Appeals), Bombay. They arose from three orders-in-original Nos. V(15AA) 17-49/CLVC/78/10189 dated 1-10-1982 passed by the A.C.C. Divn. XIII, Kalyan; V(15A) 4-28/82-4491 dated 13-7-1982 dated 15-7-1982, passed by the A.C.C. Divn. XII, Thane, and V(68) 17-503/CLVC/75/3986 dated 10-4-80 passed by the A.C.C. Divn. I, Kalyan. M/s. Hico’s appeal before this Tribunal are in respect of the problems raised by all the three orders-in-original, but no copy of the order dated 15-7-1982 passed by the Assistant Collector of Central Excise, Divn. XII, Thane has been enclosed. There is only a reference to this order in their appeal No. 1332/83-C [this order is in respect of the assessment of their product after 1-3-82 i.e. after the reform of Item No. 15A of the Central Excise Tariff. The appellants claimed that the silicone emulsions prepared are of duty paid silicone oil and would not be liable to duty a second time as the process of making the emulsions in the appellants’ factory did not amount to manufacture as defined in Section 2(f) of the Central Excises and Salt Act, 1944].
2. The product manufactured by Hico Products is named by them ‘Katrang AF 150’ and they sought classification under Tariff Item No. 68 of the Central Excise Tariff from the time they started its production in December, 1976. A good deal of correspondence went back and forth between the Assistant Collector and the factory. In their classification list of 21st December 1976, the manufacturers claimed assessment under Item 68 and this was approved by the Superintendent of Central Excise, Khopoli in January 1977. The Supdt. however said that the product would be assessed provisionally under Rule 9B of Central Excise Rules, 1944 pending chemical test by the Deputy Chief Chemist, Bombay. The Chemist reported in September, 1977 and this resulted in a notice to the factory on 4-10-1977 asking it to show cause why ‘Katrang AF 150’ should not be assessed under Tariff Item 15A. M/s. Hico countered by saying that their product did not merit classification under 15A either by the tariff description or by the products formulations although the factory accepted that the product was an organic silicone compound. The assessee declared that he wanted the sample to be retested by the Chief Chemist, New Delhi. Action was taken to have the sample retested in New Delhi and meanwhile the Bombay Chemist gave his opinion that the product was not a silicone resin. The Central Excise office, therefore, wrote to the factory on 4-9-1979 that the product was to be classified under Item No. 68 but soon thereafter the Chief Chemist, New Delhi reported the result of his test in which he held that the product was classifiable under Item No. 15AA. The factory was, therefore, informed by a letter dated 10-12-1979 that the product merited classification under Item 15AA. A hearing was held before the final decision, and the factory’s representative submitted that the product was an emulsifying agent and hence could not be an organic surfaceactive agents. The Assistant Collector held after the finding that Item No. 15AA did not cover only organic surface agent but also surfaceactive preparations. The assessee had not produced any evidence that ‘Katrang AF 150’ was not a surfaceactive preparation even though they had been saying that it could not be covered as an organic surfaceactive agent. The Assistant Collector, therefore, said that he would go by the report of the Chief Chemist and come to the conclusion that ‘Katrang AF 150’ was an organic surfaceactive preparation classifiable under Tariff Item 15AA. We wish the Assistant Collector had discussed the problem on his own and given a more reasoned and detailed finding instead of merely depending on the report of the Chief Chemist. Anyhow, he ordered that ‘Katrang AF 150’ manufactured by M/s. Hico Products was rightly classifiable under Item 15AA. He, therefore, ordered excise duty under the item to be recovered from Hico since the first celearance, within ten days.
3. After the communication of the test result by the Assistant Collector in his letter dated 10-12-1979, M/s. Hico Products then filed a classification list under Item 15AA under protest and also filed an appeal to the Appellate Collector against the order of the Assistant Collector classifying ‘Katrang AF 150’ under 15AA. The assessee then filed a classification list on 3-1-1981 for assessment of ‘Katrang AF 150’ under Item 15AA in which they claimed exemption under Sl. No. 4 of Notification No. 101/66-C.E. This appears to have aggrieved the Assistant Collector because he says (1-10-1982) that M/s. Hico instead of filing a classification list under Item 68, filed a classification list under 15AA under protest. It is not understood how the Assistant Collector can bring himself to say this when he himself had rejected Item 68 on the ground that ‘Katrang AF 150’ was classifiable under 15AA. It seems that M/s. Hico filed a classification list under 15 A A for exemption under Sl. No. 3 of Notification No. 101/66-C.E. dated 17-6-1966 and this had been rejected by the Assistant Collector because according to him the chemical analytical report of the sample disqualified ‘Katrang AF 150’ from concession under Sl. No. 3 of the notification, because it appears to have been the finding that the product contained more than 5% emulsifying agent. The factory thereupon filed their classification list (dated 3-1-1981) and claimed exemption under Sl. No. 4 of the same notification. This provoked the Assistant Collector into saying that the product cannot be covered under both Sl. No. 3 and Sl. No. 4 of the notification but he went on to say that if the factory felt that the product ‘Katrang AF 150’ fell under the Sl. No. 3 and Sl. No. 4 of the notification, they could have claimed the same in the first classification list. This is a somewhat surprising statement since Hico did claim concession under Sl. No. 3, but the Assistant Collector himself rejected it and this drove M/s. Hico to claiming the next concession under Sl. No. 4 which, of course, was also rejected. But even more surprising was that he gave the reason for saying that ‘Katrang AF 150’was not eligible to the exemption claimed by them because they could have claimed but did not claim the concession under Sl. No. 3 and Sl. No. 4 in the classification list filed in May 1980. He accordingly ordered that Hico should pay duty on ‘Katrang AF 150’ at appropriate rate under Item No. 15AA upto 28-2-1982 and under Tariff Item No. 15A from 1-3-1982 onwards as it was classifiable under that item from 1-3-1982. He also said that the provisional assessment of the product was to be finalised accordingly.
4. It was urged before the Tribunal on 20th January 1984 by the counsel for M/s. Hico that their claim was for assessment under Item 68 because this is the most suitable item for their product. All these ingredients used in the compound namely, the silicone compound and the surfaceactive agent were all duty paid under Item 15A and under Item 15AA, and the present product was not dutiable a second time under either Item 15A or 15AA. ‘Katrang AF 150’ was used as an antifoaming agent in the manufacture of Pharmaceuticals. The Assistant Collector was mistaken when he said that they had not claimed exemption under Sl. No. 3 and Sl. No. 4 of Notification No. 101/66-C.E. so they were not entitled to Sl. No. 4. He referred to trade notice No. 48(MP)/plastic/(3)/ 1978 dated 13th March, 1978 issued by the Collector of Central Excise, Bombay. According to this notice, silicone fluids including oils and emulsions and silicone greases being low polymerisation products physically and chemically distinguishable from silicone resins were not classifiable under Item 15A of the Central Excise Tariff.
5. He further said that item 15A is an Item designed to cover only artificial or synthetic resins and plastic materials. These substances are or were at some time capable of being formed, shaped, cast, extruded in various ways with external influence such as heat, pressure etc. He said that the word “other materials” in the heading refers to “other materials” of a like and similar nature and not substances so dissimilar to artificial or synthetic resins and plastic materials that they would not, by any comparison, be likened to the other goods which fall in the heading. He referred in support to the Tribunal decision in 1983 E.L.T. 2517. This item 15A would cover silicone which is an artificial/synthetic resin, a polymer. Silicone finds various uses as grease, a rubber, antifoamers, mould release agents; it is used in adhesives, cosmetics etc. etc. The product they made does contain silicones, but is not susceptible to formation, shaping, working in the way that artificial or synthetic resin are. The Tribunal has decided in 1983 E.L.T. 184 that a substance must have plasticity to fall under item 15A. The ‘Katrang AF 150’ which they prepare is not capable of shaping or foaming and has no use as an artificial or synthetic resin or for its plastic character of which it has none. It contains artificial synthetic resin, dimethyl polysiloxane on which duty had already been paid, as well as organic surface active agents on which also duty had been paid. Their preparation is used as an antifoaming agent in the manufacture of Pharmaceuticals. The Appellate Collector had not applied his mind to the problem but had merely agreed with the finding of the Assistant Collector. It was wrong on the part of the Central Excise to deny them the concession under both Sl. No. 3 and No. 4 of Notification No. 101/66-C.E., dt. 17-6-1966. It would be seen from the evidence on record that it was the Central Excise, who had classified the goods as an organic surface active agent under Item 15 A A contrary to their claim for assessment under Item 68. It was said that instead of contesting the Chemist’s finding that the product contained more than 5% emulsifier, M/s. Hico filed another classification on 3-1-1981 claiming exemption under Sl. No. 4 of the said notification. They had done so only because they had been denied exemption earlier under Sl. No. 3 of the same notification. The learned counsel for the appellant company quoted in support of his argument a judgment of Supreme Court, 1983 E.L.T. 1656 (S.C.). [This was a case under the U.P. Sales Tax Act, 1975; we are not clear about the applicability of this case to the present matter].
6. The learned counsel for the Department said that the word ‘and’ in item 15A in Central Excise Tariff is separated by a semicolon. This would mean “other material” can differ widely from the artificial synthetic resins. All explantions in item 15A are to be taken and read independently of each other. It would be seen from explanation III that subitem (1) of the item applies to materials in various forms, of which one is ’emulsions’, which this is. One can further read in explanation II that silicone is a substance to be considered as falling under subitem (1). A silicone emulsion will clearly, therefore, fall under item 15A (1), and explanation HI when read after explanation II clarifies the entire matter. He said that Order No. 368/83-C in the case of M/s. Hico decides the matter once and for all.
7. The appellants have been changing their grounds from time to time. First of all they claimed assessment under item 68 and later they switched over to Notification No. 101/66-C.E. beginning with Sl. No. 3, and then changing to Sl. No. 4. Then they switched over to Notification No. 208/66-C.E. But the attompt to justify that their goods fell either under Sl. No. 3 or Sl. No. 4 proves that the goods fell under item 15AA. They have not said why they did not agree with the test report. The item 15AA covers clearly surface active preparations also. Sl. No. 4, Notification No. 101/66-C.E. covers emulsifiers when the goods are only an emulsion of silicone. Therefore, the notification does not cover ‘Katrang AF 150’, which is an emulsion. The product is not a foaming, but an anti-foaming agent, and therefore, is not similar to emulsifiers, wetting agents or softeners. They have failed to show how the product falls under Sl. No. 4 of Notification No. 101/66-C.E. Item 68 is a residuary item and a product can be assessed under this heading only when it has no other heading suitable to cover it. This is not the case with ‘Katrang AF 150’. At the beginning, 15 A was not relevant for the purpose of assessment because the definition given in explanation II of item 15A was entered only in March, 1982. Therefore, the action of the Central Excise to assess the goods from 1-3-1982 under item 15A was correct as the product is a silicone emulsion containing silicone and is well covered by this item. He has already discussed that for a product to fall under 15A it need not really have plasticity as the words “and other materials” refer to the fact that even a substance that is not plastic and is not a synthetic resin, but only “other material”, that means, different from materials that have plasticity, can also be covered under this heading. And if there was any doubt about it, explanation II removes it by specifying silicones as one of the products that fall under sub-item (1). If they had claimed the benefit of Notification No. 101/66-C.E. they are prevented from asking for assessment under 68.
8. The trade notice dated 13th March, 1978 relied upon by M/s. Hico refers to silicone fluids including oils and emulsions, and not to silicone emulsifiers, and therefore, the notification has no help to offer to the appellants.
9. The learned counsel for M/s. Hico in reply said that there was nothing wrong if they ask for assessment under different headings and notifications, if such assessment was within the law. In any case, when they asked for benefit under Notification No. 101/66-C.E., they did so only because of the Department’s own action, when they were refused their claim to assessment under 68. They claimed for assessment under this item still stands today.
10. We have not been able to agree with M/s. Hico’s demand for assessment of the product under item 68 because there are items more suitable for this product. The true alternatives are only items 15A and 15AA. The first one covered-
“Artificial or synthetic resins and plastic materials and cellulose esters and ethers, and articles thereof.”
After 1-3-1982 it stands thus.
“Artificial or synthetic resins and plastic materials; and other materials and articles specified below-.”
The second covered and still covers-
“Organic surface active agents (other than soap); surface active preparations and washing preparations whether or not containing soap.”
The first test by the Dy. Chemist, Bombay resulted in the central excise proposing assessment of the goods under item 68 as they held that the product did not find use as silicone resins. After a retest of the product by the Chief: Chemist, in New Delhi, the department held that the product merited classifies tion under tariff item 15AA. ‘Katrang AF 150’ is said to be used as a defoamep or antifoaming agent in the manufacture of pharmaceutieals. This claim has not been disputed by the department. In fact, silicone oils and greases find uses as lubricants, water repellent products and as foam preventing products as well as mould release agents. They are organicsilicone compounds and have the characteristics of artificial resins. Silicone resins a/so find use in coating, varnishes; they are products of polymerisation. They come in various forms such as emulsions, powders, solutions, resins, and pastes. They have high thermal stability and are not easily affected by hydrocarbons. One of the chief characteristics of silicones is their low surface tension which makes them ideally suited in applications such as wetting or defoaming/antifoaming agents. Their assessment under item 15AA is, therefore, the most suitable as this heading covers products of the kind like ‘Katrang AF 150’. It will be noted that mixtures, containing silicone greases and oils, like the one we have here are classed in the CCCN under heading 34.03. The central excise department itself began by classifying these goods, after the Chief Chemist’s report in October, 1979, under item 15AA C.E.T. Therefore, we can see from this that there is no great dispute about assessment of ‘Katrang AF 150’ under 15A at least not till 1-3-1982. The dispute, however, is with respect to the claim of M/s. Hico for preferential assessment under Sl. No. 3 of Notification No. 101/66-C.E., dated 17-6-1966. This serial number covers “surface active preparations and washing preparations containing less than 5% by weight of the principle active ingredients”. ‘Katrang AF 150’ is a surface active preparation but not a washing preparation; however, it contained more than 5% of the active surfactent/ emulsifying agent and therefore, this serial number was correctly denied by the central excise. However, when denied, Sl. No. 3, M/s. Hico filed another classification list on 3-1-1981 claiming exemption under Sl. No. 4 of the notification. This serial number covers “emulsifiers, wetting out agents, softeners and other like preparations intended for use in any industrial process” (we assume that “wetting out agents” is a reference to wetting agents). In order dated 1-10-1982, the Assistant Collector refused this concession by saying that if M/s Hico felt that the product ‘Katrang AF 150’answers the description both at Sl. No. 3 and Sl. No. 4 of Notification No. 101/66-C.E., dated 17-6-1966 they could claim the same in the classification list of 20-5-1980. He concluded that in the circumstances ‘Katrang AF 150’ was correctly classifiable under tariff item 15AA upto 28-2-1982 and that they would not be eligible to exemption as claimed by them. This is a pity because we do not know by what reasoning the Assistant Collector arrived at the conclusion that Sl. No. 4 would not cover ‘Katrang AF 150’. In the arguments before the Tribunal, the learned representative for the department said that the product did not fall under this heading because the words “other like preparations” would have to cover goods similar to emulsifiers, wetting agents and softners. This product was not like any of these but it was an anti-foaming agent, and therefore, was not a like preparation. We are not able to agree with the learned representative because the facts are quite obvious and this is that, going by the constituents of the product and its declared use, ‘Katrang AF 150’ is an antifoamer/antifoaming agents used in an industrial process viz. manufacture of Pharmaceuticals, Noting the properties of silicones, there can be little doubt about its eligibility to this serial number of the notification and we have no trouble in holding that an antifoaming agent/defoamer is a preparation like emulsifier, wetting agents and softeners. An antifoaming agent inhibits the formation of bubbles in a liquid during its agitation by reducing its surface tension, a process essential in many manufacturing activity when mixing penetration and fluid consistency is necessary for the best results. We, therefore, hold that the exemption under Sl. No. 4 of the notification should be extended to Hico from 3-1-1981 when they filed its classification list claiming this exemption. The assessment before that date would likewise be under 15AA but without the exemption under Sl. No. 4 as this claim was not made till 3-1-1981.
11. The central excise then changed its assessment of ‘Katrang AF 150’ saying that from 1-3-1982, the product should fall under 15A, We have reproduced the headings of this at the relevant time both before and after 1-3-1982. The reason for the change made by the central excise seems to be the fact that from 1-3-1982 item 15A was reformed. But it is not very clear to us why the product would have to be reassessed under 15 A from that day. The central excise appears to have been led by the fact that this is a product that contains silicones, and silicones was listed under explanation II of the recast item as one of the goods that would fall under sub-item (1). But silicones were classifiable even before this reform, under 15A and was specially listed under item 15A(1) (i). (The Collector Appeals says as much). Furthermore, there can be no dispute that the silicones as such would have to be assessed under 15A, being products of polymerisation, (compounds that contain in the molecule more than one silicone-oxygen-silicon linkage and containing organic groups connected to the silicon atoms by direct siliconecarbon bonds). If it was the presence of silicones in ‘Katrang AF 150’ then that assessment under item 15A should have been made even before 1-3-1982 the product remaining the same. The presence of the silicones in ‘Katrang AF 150’ does not make it assessable under 15A. The compounded ‘Katrang AF 150’ is a product/or preparation containing silicones, but is not a silicone itself. Nor is it a silicones-in-emulsions for use as a silicone resin. It is a product containing silicones and meant for use as wetting/anti-foaming agent. We can receive guidance on this when we refer to the CCCN. Lubricating preparations containing silicone greases and oils fall under heading 27.10, a heading that covers “petroleum oils and oils obtained from bituminous minerals other than crude”, and which includes lubricants with varying quantities of products like anti-foaming agents, such as silicones, while mould release preparations which contain silicone greases and oils fall under heading 34.03 which covers lubricating preparations etc. for treatment of textiles etc. We can see from this that the CCCN classifies preparations and mixtures meant for specific uses such as lubrication and defoaming under headings different from the one covering artificial resins and plastic materials (Chapter 39). There is, therefore, in our opinion a strong case for assessing ‘Katrang AF 150’ under 15AA even after 1-3-1982 and for extending to it the exemption under Sl. No. 4 of Notification No. 101/66-C.E., dated 17-6-1966 and that is our order in respect of these appeals.
12. We will discuss briefly the learned representative for the department’s argument that Order No. 368/83-C of M/s. Hico decides this matter also in respect of the assessment after 1-3-1982. That matter concerned the emulsification of imported silicone oil. The department held that the emulsification gave rise to a silicone oil in emulsion form, and therefore, since item 15A of central excise tariff covered resins in various forms including emulsions, the silicone oil in emulsion should be subjected to duty once again having changed its form. M/s. Hico disputed this saying that there had been no manufacture when they emulsified the silicone oil, countervailing duty on which had been paid on import. The Bench held by a majority that emulsification required fresh duty to be levied on the silicone oil in emulsion. We are concerned here not with silicone oil in emulsion but with a preparation containing silicone, and which is used as defoamer/anti-foaming agent. The learned representative also said that M/s. Hico had been changing its stand from time to time but we can see no help for this since the department itself had been changing its stand as often. The learned representative is also in error when he says that an anti-foaming agent was not similar to an emulsifier or wetting agent. A defoamer/anti-foamer is a preparation similar to an emulsifier because both act on the same principle of lowering surface tension. The words “other materials and articles specified below” of the recast item 15A covers only those articles which are listed. To go strictly by technological fact, the materials and articles specified below in the recast item are similar in substance, nature, characteristics to artificial and synthetic resins and plastic materials. The words “other materials” cannot bring into this item anything which is not similar to 15A or which is not listed under 15A and it will be observed that this item lists only substances, materials and articles which have close similarity. It will not be correct to read the words “and other materials” as a separate definition.
13. We set aside the order of the Collector of Central Excise (Appeals) dated 11-3-1983 and direct assessment to be made in accordance with our order above. Refund of all moneys recovered in excess shall be given within three months.