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TMI Blog1998 (9) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... , besides imposing a penalty of Rs. 2,00,000/- under Rule 173Q of Central Excise Rules on Mc Dowel & Company and Rs. 50,000/- penalty on M/s. UBL under Rule 209A of Central Excise Rules for having purchased non-duty paid water from M/s. Mc Dowel Co. Ltd. 2. The appellants Mc Dowel & Co. was issued with show cause notice alleging clearances of manufactured excisable goods viz. Demineralised water falling under the above said Tariff heading without following Central Excise formalities and without payment of duty, by wilfully suppressing the production and clearances with an intention to evade payment of duty to the extent indicated above. The annexure to the show cause notice relies on the recorded statement of Shri S. Balakrishna Kartha, Quality Control Superintendent of the factory who, in his statement stated that he is incharge of the Demineralised water plant and also acting as the Quality Control Superintendent of M/s. Mc Dowel & Co. Ltd. He had stated that the said plant was set up for manufacture of Demineralised water of anion grade and that they were manufacturing two types of Demineralised water in the said plant and the process of manufacture is as follows :- "Raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements given by Sri S. Balakrishna Kartha before the Superintendent of Central Excise (Prev.), it is clear that from the degased stage, the borewell water is passed through Ultra Violet lamp system. Here the micro organisms present in the `degased and desuspended borewell water' are destroyed by the high energy/high frequency Ultra Violet rays generated by Ultra Violet arc lamps. Then this water which is of gases; suspended particles and micro organisms are first passed through `anion' columns; for the purpose of removing the mineral ions. It is further stated that in a way, by virtue of passing the water through both columns what is achieved is the demineralisation of water. It is this D.M. water, which is cleared by M/s. Mc Dewel & Co. Ltd. to M/s. United Breweries Ltd. through pipelines. It is further stated that in order to further analyse the properties of the D.M. water of anion grade which is processed through an ion exchange media, the chemical analysis report of the same prepared by the Central Laboratories of Kerala State Pollution Control Board is relied upon. The show cause notice states that it implied from the report that the minerals viz. calcium and magnesium a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded from the entry in the Central Excise Tariff Act. Regarding valuation, they pointed out that the price at which they cleared anion water to M/s. U.B.L. was arrived at on the basis of the cost of purification of the said water. The clearance of M/s. Kelara State Drugs and Pharmaceuticals being water of different specification, could not be treated as clearances of comparable goods and therefore was not acceptable. 6. Ld. Commissioner rejected all their pleas and proceeded to hold the items to be goods classifiable under sub-heading 2851.00 which covers "distilled water, re-distilled water or electro-osmotic water, conductivity water and water of similar purity including water treated with ion exchange media". He has relied on the process of manufacture of the said water as explained by Shri S. Balakrishnan Kartha, who is incharge of the D.M. Water Plant. He rejected the contention that the item is not conductivity water. On the grounds that the process of manufacture has made it clear that the water is treated by passing through ion exchange media and hence there is no doubt that water treated with ion exchange media falls under sub-heading 2851.00 irrespective of the condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion does not arise and the demands were barred by time. 8. Ld. SDR pointed out that the water pumped from the bore-well is de-cast by passing it through U.B. system, i.e. through cation and Anion for D.M. and it is different commodity than the one referred to by the Tribunal in the case of Gujarat State Fertilizer v. C.C.E. and pointed out that in terms of explanatory notes appearing at page 338, the item is clearly covered under Excise Tariff 2851.00. He pointed out that the Board's circular referred to by the party is not applicable to the facts of the present case. 9. Countering the arguments ld. Advocate submitted that the process carried out by the appellant did not convert the item water into any other commodity; water remains water and therefore there was no process involving change in the name, character and use. He submitted that the Tribunal had gone into this aspect in great detail in the referred case and therefore, the judgment is binding on the Tribunal. 10. On a careful consideration of the submission, we notice that the citation referred to by ld. Advocate in the case of Gujarat State Fertilizers Company Ltd. v. C.C.E. dealt with an identical situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um did not make the water a distilled water and it continues to remain water. The Tribunal also examined the circulars which are referred in the present case and also it was noticed that the Board itself has clarified that the item Acqua Mineral Biserly treated water is not excisable. The process was identical to the present one inasmuch as water is treated with bleaching powder to eliminate impurities & micro-organism. Thereafter it is purified by filtration. Subsequently it is softened. Finally it is sterilised to keep such drinking water free from bacteria and avoid contamination during treatment. The Board itself has examined HSN Explanatory note and held that even in terms of such notes the item would not be excisable. It is further clarified that if the item is considered as excisable, then tap water for domestic use supplied by Metropolitan Corporation would also get covered since waters "waters" are specifically mentioned under Heading 22.01 of the Annexure-I charging of duty thereon is not intended by Central Excise Act. The Board itself clarified that there is a difference between Heading 22.01 of HSN and Heading 22.01 of CET inasmuch as the Excise Tariff does not include ..... X X X X Extracts X X X X X X X X Extracts X X X X
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