TMI Blog2009 (9) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... nalties. In the light of the decision of Collector of Central Excise v. Jayant Oil Mills etc, held that- the facts and circumstances of the case, we are of the considered view that the impugned orders are not sustainable and liable to be set aside and we do so. We hold that the final product “Mineral Wool Fibre Tiles” are classifiable under CSH No. 6807.10 for the period up to 27-2-2005 and eligible for benefit of ‘Nil’ rate of duty and subsequently eligible for benefit of Notification No. 03/2005-CE dated 24-2-2005. Impugned orders are set aside and appeals are allowed with consequential relief, if any. - E/298, 830-831/2007 and 170/2009 - 1345-1348/2009 - Dated:- 22-9-2009 - S/Shri M.V. Ravindran, Member (J) and P. Karthikeyan, Member (T) Shri G. Shiva Dass, Advocate, for the Appellant. Ms. Sudha Koka, SDR, for the Respondent. [Order per: M.V. Ravindran, Member (J)]. - All these appeals raise a common issue and hence, they are being taken up for disposal together and are being disposed of by a common order. Sl. No. Appeal No. Name of the party Order-in-Appeal No. Duty demanded (Rs.) Penalty (Rs.) 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chattisgarh State, PIN-491441. The appellants in their letter dated 25-5-2004 and in a Statement dated 24-3-2005 furnished to the Superintendent of Central Excise, Kukatpally-I Range, Hyderabad L Division, Hyderabad-IV Commissionerate, have declared that they have used the following raw materials in the manufacture of "Mineral Wool fibre ceiling tiles," (a) Rock wool, (b) Fly Ash, (c) Ball Clay, (d) Starch, (e) Newsprint, (f) Biocides, and other chemicals (g) Pint (Water based). Since "blast furnace slag" is not being used directly in the manufacture of the final products "Mineral Wool Ceiling Tiles, "it appeared that the said excisable goods do not merit classification under chapter sub-heading No. 6807.10 for the month of 02/2005 and therefore, the appellants appear to have wrongly classified the said goods under Ch.Sh.6807.10 for claiming Nil rate of duty as against the right classification under Ch. Sh. 6807.90 attracting 16% adv of duty. 3.2 After introduction of new 8 digit Central Excise Tariff w.e.f. 28-2-2005, the above said goods are brought under 68069000. From 28-2-2005-trey have classified the goods under 68069000 under "Articles of heat insulating or sound-insulatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee and remanded the matter back for quantification. Aggrieved by such an order which is against the assessee on merits, assessee preferred these appeals. 4. Learned Counsel appearing on behalf of the appellants submitted as under: A. COMPOSITION OF MINERAL WOOL AS CLEARED FROM THE FACTORY OF THE APPELLANTS AT RAJNANDGAON SETTLED BY DECISION OF JUDICIAL FORA A.1 The Appellants submit that during 2002 the department raised a dispute as to whether rock wool manufactured by the Appellants at its Rajnandangaon factory is classifiable under Chapter Heading 6807.10 as claimed by the Appellant or 6803.00 as claimed by the Department. The Commissioner (Appeals) confirmed the classification of the impugned goods under Chapter Heading 6803.00 on the ground that the description of the product rockwool/slagwool/mineral wool was specifically mentioned in the sub-heading 6803.00. The fact that the said product contained more than 25% by weight of blast furnace slag was however not disputed in the proceedings. The said dispute traveled to the Hon'ble Tribunal. A.2 The Tribunal vide Final order dated 22-8-2002 reported in 2003 (153) E.L.T. 135 held that the rockwool having mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COMMISSIONER, RAIPUR. B.1 The Appellants was issued Show Cause Notices dated 4-9-2006 and 6-2-2007 for the period from 08/2005 to 06/2006 by the Central Excise Department at Raipur proposing to deny the benefit of Notification No. 03/2005-C.E., dated 24-2-2005 on the ground that the Appellants had failed to submit evidence that the product contained more than 25% by weight of red mud, press mud or blast furnace slag. B.2 The Commissioner after having the samples tested and after verification of the manufacturing process and various records/registers maintained at the factory came to the conclusion that there was documentary evidence to show the fulfillment of the conditions of the Notification. He accordingly dropped the proceedings. B.3 The Appellants submit that this order also recognizes the fact that during the period in question there has been usage of blast furnace slag of more than 25% in the raw material used by the Appellants at the factory at Rajnandgaon from where the appellants have received the raw material for the manufacture of ceiling tiles. C. TILL 28-2-2005 THE ISSUE IS OF CORRECT CLASSIFICATION OF GOODS - REVENUE HAS NOT DISCHARGED ITS BURDEN. C.1 The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed so as to take the goods out of entry 6807.10 then ipso facto the Notification gets satisfied for the subsequent period. D.4 The Appellants submit that it cannot be that even if the revenue is not able to prove its claim prior to 28-2-2005 regarding the non-usage of blast furnace slag, by way of any report of the chemical examiner, the appellants has to prove the same for the period after 28-2-2005 by a report of the same Chemical Examiner. D.5 In any case, as indicated by the Chemical Examiner himself, the appellants have been able to prove by their raw material consumption details, that blast furnace slag of more than 25% has been used. D.6 If the revenue wants to dislodge the appellants from the Notification, it should lead in evidence to the effect. Reliance is placed on the decision rendered in the case of Commissioner of Customs v. K. Mohan - 1989 (43) E.L.T. 811 (S.C.) E. WHERE THE NOTIFICATION DOES NOT CALL FOR ANY DIRECT USE, THE SAME CANNOT BE INTRODUCED WHILE INTERPRETING THE SAID HEADING/NOTIFICATION E.1 The Revenue seeks to re-classify the goods and deny the benefit of Notification No. 03/2005-C.E., dated 24-2-2005 on the ground that the Appellants have not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Titaghur Paper Mills - 1985 (21) E.L.T. 901 (Tri.). Maintained by Supreme Court [1995 (80) E.L.T. A275 (S.C.)] (c) CCE v. Elconment Ltd. reported in 2001 (134) E.L.T. 106 (Tri.) (d) Lohia Steel Products v. CCE - 2000 (118) E.L.T. 372 (Tri.) E.8 A Similar view has also been expressed by the Central Board of Excise Customs vide Circular No. 70/2001-Cus., dated 27-11-2001 and Circular No. 3/13/87 dated 25-6-1987. F. SUBMISSIONS ON OTHER SUBMISSIONS OF THE DEPARTMENT IN THE APPEAL BEFORE CCE (A) F.1 The department in the Appeal filed against the Order-in-Original before the Commissioner of Central Excise (Appeals) has alleged that no documentary, evidence has been placed by the Appellants to show that the input i.e., rock wool contained more than 25% of blast furnace slag and whether the same was consumed in the manufacture of the final product i.e., Ceiling Tiles. F.2 In this regard the Appellants submit that the said allegation is a completely new ground taken up by the Department which was never set up in the Show Cause Notice. It is further submitted that all along the Department has not disputed the fact that mineral wool is the raw material which is used in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation of statutes and exemption notifications to be construed strictly by way of literal meaning . It is her submission that literal meaning must be given to words, used unless literal meaning leads to absurdity. It is her submission that the above ratio squarely covers the issue, as the legislative intention was granting exemption to the products which are manufactured by using red mud, press mud or blast furnace slag or one or more of" these materials, up to 25% of the weight of final product. She would also rely upon the decision of the Supreme Court in the case of UOI v. Ganesh Metal Processors Industries as reported at 2003 (151) E.L.T. 21 (S.C.) for the proposition that notification to be read as a whole. It is also her submission that similar view has been taken by the Hon'ble High Court of Orissa in the case of Raj Exports v. National Aluminium Co. Ltd. - 1996 (87) E.L.T. 349 (Ori.), Brakes India Ltd. v. Suptd. of Central Excise, Madras and others - 1986 (26) E.L.T. 211 (Mad.) and Bharat Cottage Industries v. Union of India - 1992 (59) E.L.T. 30 (Bom.). She would also submit that the learned Commissioner has clearly brought out the non-consumption of the quantity of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was subjected to chemical analysis by the Deputy Chief Chemist, whose report we find is totally inconclusive and indicates that "it is not possible to determine by chemical analysis, the percentage by weight of blast furnace slag used in the sample and that the same may be ascertained from the inputs (raw materials) used in the manufacture of the product." This would indicate that the lower authority should have considered the entire issue from the point of view of the purchases, consumption of the raw materials We find that the Adjudicating Authority has considered this issue from that perspective and came to the conclusion that the said products are eligible for benefit of 'Nil' rate of duty. 7.3 It is undisputed that the "Mineral Wool Fibre" is manufactured by the appellant in their own factory at Rajnandgaon. In the said factory, the appellants had claimed that the said product would fall under Chapter Heading No. 6807 and are eligible for the 'Nil' rate of payment of duty, which was disputed by the Revenue and the matter was brought before the Tribunal and the Tribunal vide its Final Order No. 204/2002-D dated 22-8-2002 as reported at 2003 (153) E.L.T. 135 held that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w materials: Description Percentage in total Qty. consumed Ball Clay lumps 0.26% Clay powder 15.84% Boric Acid 0.40% Cartionic Starch 0.90% Loose wool 61.89% Fly ash 9.85% Mz Starch 5.96% NDW Antifoam 0.06% Old newspaper 4.63% Nipacide-ab 0.03% Nipacide-C 15 0.04% Dispersing Agent 0.06% Nopcobond 0.08% 8. We also find that the Adjudicating Authority while coming to conclusion that the product merits classification under 6807.10 has recorded the procurement and consumption of some of these materials during the relevant period, which is as under: Description Qty. in Kgs. Ball Clay lumps 2405 Clay powder 148040 Boric Acid 3711 Cartionic Starch 8400 Loose wool 578280 Fly ash 91994 Mz Starch 55671 NDW Antifoam 552.5 Old newspaper 4329 1 Nipacide-ab 297.6 Nipacide-C 15 365 Dispersing Agent 586 Nopcobond 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to show that he comes within the language of the exemption. But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects: (a) the object and purposes of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted. So far as (b) is concerned, it is common ground before us that rice bran oil as such is not directly used in the manufacture of soap. Rice bran oil contains glycerol and other impurities which have to be removed by a process of hydrolysis or hydrogenation and it is only the resultant purified rice bran oil that is actually used in the manufacture of soap. In fact, the Tribunal has given a clear finding that a pre-treatment to rice bran oil is required to be done as a matter of necessity for its use in the manufacture of soap. Thus even a factory which consumes rice bran oil in the manufacture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter. So far as (a) is concerned, the object of the notification - as even the Tribunal finds - is to grant a conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assumed that, unlike hydrogenated oil the fatty acid is, commercially speaking, a different commodity. We are, therefore, of opinion that, construing the notifications literacy but reasonably in the light of the process of manufacture as explained by the Tribunal, the soap manufactured by the assessee is "soap made from indigenous rice bran oil" and is entitled to the exemption under the notifications to the extent permissible thereunder. ……….. 11. We are, therefore, of the view that the terms of the notification do not have the effect of excluding cases where the manufacture of soap is done out of rice bran oil but the entire process is not carried out by the assessee itself. The question which one has to ask is does the assessee manufacture soap partly or wholly out of indigenous rice bran oil? and the answer, we think, can only be in the affirmative. We, therefore hold that the assessee is entitled to the exemption under the notification referred to above and that the departmental authorities and the Tribunal erred in not granting the said exemption to the assessee. The appeals are, therefore, allowed. However, in the circumstances of the case, we make no order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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