2001(06)LCX0085
IN THE CEGAT, SOUTH ZONAL BENCH, BANGALORE
S/Shri G.A. Brahma Deva, Member (J) and S.S. Sekhon, Member (T)
KERALA STATE DRUGS & PHARMA. LTD.
Final Order No. 1166/2001 dated 22-6-2001 in Appeal No. E/2222/97
Cases Quoted
Gujarat State Fertilizers Company Ltd. v. Collector — 1997(11)LCX0203 Eq 1998 (098) ELT 0840 (Tribunal) — Relied on [para 3]
McDowell & Co. Ltd. v. Commissioner — 1998(09)LCX0213 Eq 1999 (105) ELT 0577 (Tribunal) — Relied on... [para 3]
Advocated By : Smt. Radha Arun, SDR, for the Appellent.
Shri P. Asokan, Production Manager, for the Respondents.
[Order per : S.S. Sekhon, Member (T)]. - This appeal has been filed by Revenue, as the respondents were alleged to have manufactured and during the period 1-12-1989 to 30-11-1994 cleared, Demineralised Water and Soft Water to another unit of theirs on debit notes instead of invoice.
2. On adjudication, the Commissioner observed ……
“On going through the process to which the water is subjected to manufacture, it is clear that the assessee by passing it through cation exchanger, anion exchanger and Mixed Bed Exchanger to get demineralised water; the soft water is prepared by passing tube well water though cation exchanger only; there is no indication that the demineralised water and Soft Water prepared by them has achieved the chemical purity of distilled water and soft water prepared by the assessee is not distilled water or conductivity water; there is no dispute that the demineralised water and soft water prepared by the assessee is not distilled water or conductivity water or water of similar purity and hence the demineralised water and soft water prepared by the assessee is not liable to duty under the Heading 2851.00 From the description of the manufacturing process, it appeared that the demineralised water and soft water prepared by them would be more appropriately classifiable under Heading 2201.00 of CET.”
Accordingly he held that the goods under dispute were not dutiable under Heading 2851.00 of CET and dropped the show cause notice.
3. Revenue has filed the appeal on the grounds :-
(i) From Report of Range Officer it was clear that Soft Water is only partially purified, where cations like Calcium and Magnesium are removed and there can be other ions in the water. No chemical agents are added to water for purification except Hydrochloric acid which is used for catalyst regeneration, whereas in the case of demineralised water, all the metallic ions are removed by passing through the cation exchangers. In all these processes no chemical reagents are directly added to water, but the ion exchangers are frequently reactivated by treating with Hydro-Chloric acid and Sodium Hydroxide. The soft water where cations like Calcium and Magnesium are removed are cleared by the party, to other unit for use in boiler and equipment cooling in order to prevent scaling and corrosion.
(ii) In accordance with Central Excise Tariff Act 1985, supported by HSN explanatory notes on TSH 2851.00, the Heading covers “Distilled water, re-distilled water or electro-osmotic water, conductivity water and the water of similar purity, including water treated with ion exchange media.” Therefore, the correct classification of soft water obtained by treating through cation exchanger will be TSH 2851.00. Demineralised water is also classifiable under 2851.00 as it undergoes ion exchange method to make it fully demineralised.
(iii) The benefit of exemption under Notification No. 255/87 dated 25-11-1987 upto 28-2-1994 and 7/94 dated 1-3-1994, being conditional Notifications, would have been available only if the goods manufactured by the assessee is captively consumed within the factory of production and not otherewise separate with distinct Central Excise Benefit of exemption under Notification No. 217/86 could have been extended, If the assessee had opted for the same, by filing the Classification List and also subject to observance of the prescribed Chapter X procedure.
(iv) Proviso to Section 11A is invokable if manufacture and clearance of goods were not intimated to Central Excise Department.
3. We have heard both sides and considered the matter and find :-
(a) To be eligible for classification under T.I. 2851.00, the decision in the case of Gujarat State Fertilizers Ltd., 1997(11)LCX0203 Eq 1998 (098) ELT 0840 (T) would be relevant and was considered by the Tribunal in the case of McDowell & Co. Ltd., - 1998(09)LCX0213 Eq 1999 (105) ELT 0577 (T) to come to a conclusion that mere process of removing two minerals viz Calcium and Magnesium and making water soft, does not amount to manufacture under 2851.00. In the present case before us, the appellants are submitting that no process of distillation was carried out to remove micro-organisms nor water got converted to ‘Conductivity Water Standard’ to be classified under Heading 2851.00. No material appears in the present appeal of Revenue to come to a conclusion that the Chapter Note of HSN under 28.51 is satisfied. The notes read as follows :-
“(A) DISTILLED AND CONDUCTIVITY WATER AND WATER OF SIMILAR PURITY”
The heading covers only distilled water, re-distilled or electro-Osmatic water, Conductivity water and water of similar purity, including water treated with ion exchange media.
Natural Water, even if filtered, sterilized or softened is excluded (Heading 22.01. When put up a medicament in measured dose or in packing for retail sale, water falls under Heading 30.04”
A perusal of the scope of the notes and the exclusion of water in 2207, convince us that the present appeal has been filed by the Revenue without any justification and evidence and grounds. We find no reason therefore to interfere with the finding of the learned Adjudicator as regards the classification of the entity under 2201.00 as arrived at by him and no reason to classify the same under 285100, urged in appeal.
4. In view of our findings, the appeal is dismissed.
Equivalent 2001 (132) ELT 705 (Tri. - Bang.)