NGP Industries Ltd. vs Commissioner of Central Excise, JSR.>2002(10)LCX0004

2002(10)LCX0004

IN THE CEGAT, EASTERN BENCH, KOLKATA

Smt. Archana Wadhwa, Member (J) and Shri V.K. Agrawal, Member (T)

NGP INDUSTRIES LTD.

Versus

COMMISSIONER OF CENTRAL EXCISE, JSR.

Order No. A/1020/KOL/2002, dated 4-10-2002 in Appeal No. E/R-401/2001

Cases Quoted

Commissioner v. Rockwool (India) Pvt. Ltd. — 2002(04)LCX0047 Eq 2002 (144) ELT 0404 (Tribunal) — Relied on [Para 6]

H.M. Bags Manufacturer v. Collector — 1997(07)LCX0062 Eq 1997 (094) ELT 0003 (S.C.) — Referred ................... [Para 3]

Lloyd Rock Fibres Ltd. — 2000(09)LCX0206 Eq 2001 (128) ELT 0314 (Commr. Appl.) — Referred.................... [Para 3]

DEPARTMENTAL CLARIFICATION CITED

C.B.E. & C. Circular No. 587/24/2001-CX, dated 17-9-2001........................................ [Paras 3, 4]

Advocated By : Shri S.K. Roychowdury, Advocate, for the Appellant.

Shri T.K. Kar, SDR, for the Respondent.

[Order per : Archana Wadhwa, Member (J)]. - The dispute in the present appeal relates to the correct classification of the slag-wool and rock-wool manufactured by the appellants. Whereas the Revenue has classified the same under sub-heading No. 6803.00 of the Central Excise Tariff. The appellant’s claim is that the goods are properly classified under heading 6807.00.

2. For better appreciation of the two claims, we reproduce below the two contending entries as were in existence during the relevant period :-

“ 68.03 - Slag-wool/rock-wool and similar mineral wools.

68.07 - Goods, in which more than 25% by weight of redmud, pressmud or blast furnace slag or one or more of these materials, have been used; all other materials of stone, plaster, cement, asbestos, mica or of similar materials, not elsewhere specified or included.”

Though the slag-wool and rock-wool have been specifically described against sub-heading 68.03, the appellants’ contention is that the goods manufactured by them by use of more than 25% by weight of blast furnace slag would merit correct classification under sub-heading 6807.

3. Shri S.K. Roychowdury, ld. Advocate appearing for the appellants, submits that Chapter 68 was re-structured in 1997-98, Union Budget. However, prior to the said period Heading 68.07 reads as “all other articles of stone, plaster, cement, asbestos, mica or of similar materials not elsewhere specified or included”. He submits that admittedly during the period prior to 1997-98, the goods manufactured by them were not covered by heading 68.07. There was a Notification of 8/96-C.E., dated 23-7-96 which exempted goods of Chapter 68 in which more than 25% by weight of redmud, pressmud or blast furnace slag or more of these materials have been used. He submits that this exemption was withdrawn with the re-structuring of Chapter 68 and the goods were specifically brought under Heading 6807.10. He submits that a simultaneous reading of Heading No. 68.07 both prior to and after re-structuring by 1997-98 Union Budget clearly shows that all goods falling under Chapter 68 and manufactured by use of more than 25% by weight or redmud, pressmud or blast furnace slag or one or more of these materials which were thereto wholly exempt from duty by Notification No. 8/96-C.E., dated 23-7-1996 (as amended) have been included in Heading No. 68.07/sub-heading No. 6807.10 as a distinct and exclusive entry covering all goods falling under Heading Nos. 68.01 to 68.06 manufactured by use of the specified materials with simultaneous withdrawal of notification whereby such goods were granted exemption from whole of duty of excise liable thereon. It thus follows that slag-wool, rook-wool manufactured by the appellants by use of much more than 25% by weight of blast furnace slag merits classification correctly under sub-heading No. 6807.10 of the Tariff as against sub-heading No. 6803.00 of the Tariff as contended by the Revenue by taking recourse to Rule 3(a) of the Rules for the Interpretation of the Tariff.

3.0 He further submits that assuming slag-wool/rock-wool manufactured by the appellant by use of blast furnace slag much more than 25% by weight is classifiable both under sub-heading Nos. 6803.00 and 6807.00 of the Tariff, in that case also it merits classification under sub-heading No. 6807.10 of the Tariff in terms of Rule 3(c) of the Interpretation Rules having occurring last in the numerical order among those which equally merit consideration.

3.1. He further submits that the Board, however, by issue of Circular No. 587/24/2001-C.X., dated 17-9-2001 [reported in 2001 (133) ELT T9] clarified that slag-wool known/marketed as such will appropriately be classifiable under Heading No. 68.03 even though “containing more than 25% by weight of blast furnace slag, etc. He points out that the above said clarification of the Board is not free from doubt inasmuch as it runs contrary to the specific entry against sub-heading No. 6807.00 of the Tariff which, inter alia, covers goods (of Chapter 68) manufactured by use of specified materials being more than 25% by weight. In any case, the said clarification of the Board would be effective from the date of its issuance and not for the previous period as held by the Hon’ble Supreme Court in its decision in the case of H.M. Bags Manufacturer v. Collector of Central Excise reported in 1997(07)LCX0062 Eq 1997 (094) ELT 0003 (S.C.) .

3.2. Shri Roychowdury also submits that the Commissioner (Appeals), Pune in the case of Lloyd Rock Fibres Ltd. - 2001 (128) ELT 314 has held that rock-wool shall attract classification under Heading 68.07 of the Tariff.

3.3. Shri Roychowdury also attacks demand confirmed by the authorities below on the ground of limitation by submitting that the show cause notice for the periods 1997-98 and 1998-99, was issued on 2-9-99. Thus the same was beyond the normal period of limitation. He submits that the Revenue had earlier issued them a show cause notice on 18-12-1998 for different period and as such the entire facts were known to the Revenue, the demand is squarely barred by limitation.

4. Shri T.K. Kar, ld. SDR, appears for the Revenue and submits that the slag-wool and rock-wool having been specifically mentioned against Heading 68.03, there is no justification for classifying the same under the residuary Heading 68.07. He submits that the appellants have not disputed the fact that their product is slag-wool and rock-wool and is also known in the market as such. Heading 6807 is only a residuary heading providing for the goods in which more than 25% by weight of redmud, pressmud or blast furnace slag, have been used. As per the provisions of Rule 3(a) of the Rules for Interpretation of the Excise Tariff Schedule, the heading which provides most specific description shall be preferred to the heading providing more than general description. As such, he submits that the appellant does not have any case on merits. As regards limitation, he reiterates the reasoning of the adjudicating authority and submits that the appellant was not recording the production in their statutory records and were clearing the same under the parallel set of gate passes reflected upon their mala fides intention. He submits that the issuance of earlier show cause notice in the year, 1998, will not cut short period of limitation. The appellants have been indulging in suppression and misstatement during the period relevant for the purposes of present appeal, which empowers the Revenue to issue show cause notice within a period of five years from the relevant date. Shri Kar also relies on the Board’s Circular and submits that the Commissioner is bound by the same.

5. We have considered the submissions made from both sides. The dispute in the present appeal is in respect of classification of slag-wool and rock-wool. We find that the said products are mentioned by name against sub-heading 6803.00 of the Schedule of Central Excise Tariff, 1985. As per the provisions to Rule 3(a) of the Rules for Interpretation of Excise Tariff- Schedule, the heading providing the specific description has to be preferred over the heading giving more general description. The appellants have not denied that the goods are rock-wool and slag-wool and they are also known in the market as such. Their only contention is that since they have used more than 25% by weight of blast furnace slag, the goods should be classified under Heading 68.07. Reliance has been placed upon provisions of Rule 3(c) of the Rules for Interpretation which are to the effect that heading occurring last in the numerical order among those which equally merit consideration should be adopted. However, we find that such rule is applicable only when there is some ambiguity or dispute and when the two contended headings seem to cover the product in question. However, when the classification can be decided by referring to the provisions of Rule 3(a), there is no justification for going to Rule 3(c). Rule 3(a) provides for adoption of that heading which provides specific description of the goods. The rock-wool and slag-wool have been specifically numerated against heading 6803.00. As such, there is no justification for adopting the heading 6807.00.

6. We also find that an identical question came up for decision before Bangalore Bench of the Tribunal in the case of CCE., Hyderabad v. Rockwool (India) Pvt. Ltd. [2002(04)LCX0047 Eq 2002 (144) ELT 0404 (Tri.)] and it was held that rock-wool in pristine form is properly classifiable under heading 6803 and not under heading of the Central Excise Tariff, 1985. It was further observed that the rock-wool in articles form viz. mats, slabs, cut pieces would be classifiable under Heading 6807, if they satisfied the condition of containing more than 25% by weight of redmud, blast furnace slag. While arriving at the above decision, the Tribunal has also taken into account the corresponding heading of HSN as also the fact that heading under Central Excise Tariff are not fully aligned to the HSN heading. As such following the decision of the above case, we are of the view that rock-wool and slag-wool have been rightly held to be classified under heading 6803.00. We also note at this stage that the Board’s Circular specified that slag-wool and rock-wool which are known in the market as such would be classifiable under Heading 68.03 even though containing more than 25% by weight of blast furnace slag, etc.

7. As regards limitation, it is seen that the periods involved in the present appeal is 1997-98 and 1998-99. Prior to the period in question, the appellants were classifying the slag-wool and rock-wool under sub-heading 6803.00. It is also seen that beginning the financial year 1998-99, they filed the classification list classifying the product under Heading 6803.00. Subsequently, they filed another classification list in June, 1998 claiming the classification of the product under Heading 6807.10. The said classification list filed by the appellants was not approved by the proper officer and they were issued a show cause notice on 23-12-98 proposing to deny the appellants’ claim of classification of a product under heading 6807. The appellants in the meanwhile started clearing their goods without payment of duty under the cover of their private challan. As such, it is seen that there was no approved classification list during the relevant period and the entire dispute of classification was open. In such case, the limitation will not apply. Accordingly, we uphold the demand of duty of Rs. 10,73,750.40 against the appellants.

8. As regards personal penalty of equivalent amount imposed under the provisions of Section 11AC, taking into account the overall facts and circumstances of the case, we find that the issue is one of the bona fide dispute on the point of limitation for the appellants have been filing the classification list also. As such, we find no justification for imposing of personal penalty upon the appellants. The same is accordingly set aside. For the same reasons, confiscation of 26.940 MT of slag-wool with an option to the appellants to redeem the same on payment of redemption fine of Rs. 5,000/- (Rupees five thousand only) is also set aside. Appeal is disposed of in the above manner.

Equivalent 2003 (152) ELT 0414 (Tri. - Kolkata)