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TMI Blog2009 (9) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... Order-in-Appeal which has held that they are not eligible for the benefit of Notification and coming to such a conclusion, the learned Commissioner has remanded the matter back to the Adjudicating Authority for quantification. Appeal No. E/170/2009 has arisen out of the Order-in-Appeal which upheld the Order-in-Original which in remand proceedings confirmed the demand and also imposed the penalties. 3. The relevant facts that arise for consideration are that the appellants are the manufacturers of 'Mineral Wool Fibre Ceiling Tiles' and have registered themselves with the Central Excise Department with PAN based Registration No. AACCM5420HXM002. They have claimed classification under chapter sub-heading No. 6807.10 up to 27-2-2005 and claimed NIL rate of duty as per tariff rate, and under Tariff Item No. 6806 90 00 from 28-2-2005 (consequent to the introduction of new 3 digit Central Excise Tariff) and claimed NIL rate of duty on the above said excisable goods under Notification No. 03/2005-C.E., dated 24-2-2005 w.e.f. 1-3-2005. 3.1 The Chapter sub-heading No. 6807.10 covered excisable goods of description "goods in which more than 25% by "weight of red mud, press mud or blast fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of Notification No. 03/2005-C.E., dated 24-2-2005 is not applicable to the appellants' product "Mineral Wool Fibre tiles" as nowhere in the manufacturing process, it has been mentioned that they are directly using blast furnace slag and that without fulfilling this condition, the appellants have wrongly availed the exemption available under Sl. No. 58 of Notification No. 03/2005-C.E., dated 24-2-2005 with an intent to evade payment of duty. From the above it was concluded that the appellants had initially wrongly classified the goods under Ch. Sh. 6807.10 as against 6807.90 up to 27-2-2005 and from 28-2-2005 onwards rightly classified the goods under Ch. Sh. 6806.90 (which-attracts 16% of duty) but irregularly availed the exemption available under Sl. No. 58 of Notification No. 03/2005-C.E., dated 24-2-2005 attracting Nil rate of duty with an intent to evade payment of duty. 3.4 Hence a show cause notice dated 7-3-2006 covering a period from February' 2005 to September' 2005 was issued to M/s. Minwool Rock Fibres Ltd, proposing to classify the goods under chapter sub-heading No. 6807.90 instead of 6807.10 as claimed by them and demanding the duty amounting to Rs 46,26,143/- (Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that the said products are mentioned by name in sub-heading 6803.00 of the Schedule of Central Excise Tariff, 1985. A.5 In view of the conflicting decisions on the classification of rock wool, the matter was referred to a larger bench in the case of CCE v. Punj Star Insulation Fibre. Co. reported in 2004 (170) E.L.T. 43 (Tri. - L.B.). A.6 The Hon'ble Larger Bench held that though sub-heading 6803.00 of Tariff covers rockwool without any qualification. Sub-heading No. 6807 of Tariff specifically covers the goods in which more than 25% by weight of red mud, press mud or blast furnace slag or one or more of these materials have been used; that as in the goods in question more than 25% by weight of blast furnace slag have been used this will appropriately be classifiable under Heading 6807 of the Tariff. The Larger Bench further observed that if the arguments of the Revenue were accepted, the first portion of Heading 68.07 of Tariff would be rendering redundant. This order was not challenged by the Department. A.7 Incidentally an appeal was filed before the Hon'ble Supreme Court against the Final Order of the Hon'ble Tribunal in the case of NGP Industries Ltd. (cited supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions: (a) Hindustan Ferrodo Ltd. v. CCE - 1997 (89) E.L.T. 16 (b) Union of India v. Garware Nylon Ltd. - 1996 (87) E.L.T. 12 C.4 If the Revenue wants to reclassify the product under 6807.90 it should prove that the goods are not classifiable under 6807.10. It should therefore prove that the blast furnace slag of more than 25% has not been used in the manufacture of the finished goods. There is no material whatsoever either in the Show Cause Notices or in the appeal filed by the Department before the CCE (Appeals) or in the subsequent Orders-in-Original passed by the Additional Commissioner or in the Order-in-Appeal passed by the Commissioner (Appeals) to this effect. C.5 On the other hand, the Final Order passed by this Tribunal, the Order-in-Original dated 22-5-2007 passed by the CCE Raipur, the Orders-in-Original dated 30-1-2006 and 30-5-2006 passed by the Assistant Commissioner in-charge of the appellants factory at Hyderabad the raw material consumption details, all demonstrate that blast furnace slag of more than 25% has been used. D. AFTER 28-2-2005 BENEFIT OF NOTIFICATION IPSO FACTO AVAILABLE TO THE APPELLANTS AS THE ENTRY IN THE NOTIFICATION NO. 03/2005-C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by weight blast furnace slag should have been used in the process of manufacture of the finished product. E.4 The contention of the department is that "have been used" means the blast Furnace Slag should have been used directly in the manufacture of ceiling tiles in the same factory where the tiles are manufactured. E.5 The Appellants submit that a similar dispute arose in the case of Tata Oil Mills Co. Ltd. reported in 1989 (43) E.L.T. 183 (S.C.), wherein the benefit of concessional rate of duty to soap manufactured was denied on the ground that rice bran oil must form part of the process of manufacture of soap in the factory manufacturing the soap and claiming the exemption. In the said case, rice bran fatty acid which has been obtained by hydrolysis of rice bran oil in a different factory was used. The Department alleged that since rice bran fatty acid has been used and not rice bran oil, the benefit would not be available. E.6 This view was negatived by the Hon'ble Supreme Court which clearly held that if any restriction is to be placed the wording should have been so used and in the absence of any such restriction in the scope of the exemption, the same cannot be introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second unit where the ceiling tiles are manufactured. The second unit evidently receives Mineral wool (mentioned as loose wool in the schedule to the annual report). They do not receive blast furnace slag as a raw material separately. In such a circumstances, the reliance on the Annual Report of the second unit to prove that blast furnace slag has not at all have been used reflects a selective and incomplete reading of the Annual report. F.5 The Conclusion of the Commissioner (Appeals) that there is a inconsistency between the Annual Report and the Chartered Accountant Certificate is a conclusion drawn without seeking a clarification from the appellants. The Appellants have filled certificate from the Chartered accountant both at Bhopal and Hyderabad clarifying this position. It is his submission that in view of the submissions made before us, the impugned Order-in-Appeal may be set aside and the appeal may be allowed. 5. Learned SDR on the other hand would draw our attention to the Tariff Heading of the item during the disputed period. It is her submission that the heading very clearly indicates "goods, in which more than 25% by weight of red mud, press mud or blast furnace sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any case, decision of the Hon'ble Supreme Court in the case of Tata Oil Mills Co. Ltd. v. Collector of Central Excise as reported at 1989 (43) E.L.T. 183 (S.C.) will squarely cover the issue in favour of the appellants. 7. We have considered the submissions made by both sides and perused the records. On perusal of the records, we find that the issue involved in this case is regarding the benefit of Nil rate of excise duty on the products manufactured by the appellants and named as "Mineral Wool Fibre Tiles". We find from the records that period involved in this case is from August 2004 to January 2005 and February 2005 to September 2005. The reason for mentioning these two different periods are for the purpose that from August 2004 to January 2005, these items were to be classified under Chapter Heading 68.07 and for the subsequent period the benefit was sought to be claimed under Notification No. 03/2005-C.E., dated 24-2-2005, i.e. to say that the Tariff rate is 'Nil' for the goods cleared were more than 25% by weight of red mud, press mud or blast furnace slag or one or more of these materials, have been used, have been taken up and brought into the purview of the benefit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) while coming to the conclusion that the products fall under Chapter Sub-Heading 6807.90 is as under: "I have gone through the case records and submissions made by the appellants. On observation, it is found that the department's contention is that "nowhere red mud, press mud or blast furnace slag is used in the final product. Instead they, have sued rock wool as one of the main raw materials, which is said to be contained more than 25% by weight of blast furnace slag as input. Since the blast furnace slag is not used directly, the goods cannot be classifiable under Ch. Sh. 6807.10 at nil rate of duty and are classifiable under Ch. Sh. 6807.90 attracting 16% duty". The appellants have submitted that "the mineral/rock wool manufactured by using 50% blast furnace slag and 50% rock. The blast furnace slag constitutes 60% by weight of the mineral fibre, and that mineral fibre in turn constitutes 55% to 60% by weight of the material used in manufacture of ceiling tiles. Thus the proportion of use by weight of blast furnace slag in the impugned ceiling tiles is well over 25%. Thus they are eligible to avail exemption under notification 3/2005-C.E." 7.5 It can be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such. This factory manufactured soap from rice bran fatty acid. The rice bran fatty acid was extracted from rice bran oil in the assessee's factory elsewhere. Incidentally, it maybe mentioned that the other factory is also licensed under the Excise Act for the manufacture of, rice bran fatty acid. The excise authorities rejected the appellant's plea for exemption under the first three notifications on the ground that rice bran fatty acid and rice bran oil are technically and commercially two separate commodities. It was pointed out that the concession under the notifications is available only where soap is made from indigenous rice bran oil and other oils. This meant that rice bran oil must form part of the process of manufacture of soap in the factory which is manufacturing the soap and claiming the exemption. The notification will not apply merely because the soap is manufactured out of rice bran fatty acid which in turn has been obtained by hydrolysis of rice bran oil in a different factory (may be one belonging to the same assessee which is a separate unit of manufacture for purposes of excise duty). …………… 6. We are of opinion that the view taken by the Excise Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in the factory claiming exemption and to exclude cases where soap is made by using rice bran fatty acid derived from rice bran oil. The whole purpose and object of the notification is to encourage the utilisation of rice bran oil in the process of manufacture of soap in preference to various other kinds of oil (mainly edible oils) used in such manufacture and this should not be defeated by an unduly narrow interpretation of the language of the notification even when it is clear that rice bran oil can be used for manufacture of soap only after its conversion into fatty acid or hydrogenated oil. 7. The position will perhaps become clearer if we consider a case where an assessee manufactures soap out of hydrogenated rice bran oil (which process of hydrogenation, again, is akin to the process of hydrolysis which yields rice bran fatty acid). The assessee will then be clearly entitled to the exemption under the notification inasmuch as the hydrogenated rice bran oil does not cease to be rice bran oil. (See in this connection: Tungabhadra Industries Ltd. v. C.T.O. - 1961-2 S.C.R. 14 and Collector of Central Excise v. Jayant Oil Mills etc. (CA 729 of 1983 and 2479 of 1987, decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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