TMI Blog2017 (4) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... titled for benefit of N/N. 50/2003-CE - appeal allowed - decided in favor of appellant. - E/59178 & 59430 /2013-(DB) - A/60578-60579/2017-EX[DB] - Dated:- 7-4-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Sh. Naveen Mullick, Advocate- for the appellant Sh. V. Gupta, AR -for the respondent ORDER Per Ashok Jindal Both sides are in appeal. 2. The facts of the case are that in the year 2005, the assessee started manufacturing Lead Acid Batteries, Battery Plates, Grids, Grey Oxide of specification required for making of Battery Plates. The Grey Oxide, undisputedly, falls under Chapter Heading No. 38.24 that the asseessee were availing benefit of Notification No.50/2003-CE dated 10.06.2003. The assessee was manufacturing Battery Plates from Grey Oxide in the year 2005. The purpose of using the Battery Plates is that when the said plates are dipped in Sulphuric Acid contained in the container of the Batteries, it creates a charge to enable to the battery to work. During the period from 2005-2008, the Grey Oxide was being manufactured and there was no purchase any Red Lead Oxide by them. Such Grey Oxide was being manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abricated and installed another plant to manufacture of Red Lead Oxide through Barton Process and started manufacturing the intended production so called Red Lead Oxide, after doing the process of manufacturing of Red Lead Oxide, the assessee conducted test in respect of the product manufactured but the test reports did not confirm the product is Red Oxide. In fact, the desired product i.e. Red Lead Oxide could not be obtained. The test reports were maintained by the assessee and were supplied to DGCEI during the course of investigation. The persons who are carrying out the above test reports was never investigated nor summoned. He further submits that it is an admitted position about the assessee while filing the declarations under Notification No. 50/2003-CE in response to a letter bearing number CE-20-DECL/KENZO/R-III B208/1880 dated 29.02.2008 wherein the assessee was directed to furnish and file the process chart, investment in plant and machinery, manufacturing process etc, the assessee declared the process of manufacture of batteries and also production of Red Lead Power by Bartron Process and Grey Oxide by Ball Mill process which were being used in manufacture of Battery Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed and the Report dated 06.09.2011 was only supplied with the impugned show cause notice i.e. after a period of eight months. 8. He further submits that it is on record that the cross examination of Sh. R.P Singh Chemical Examiner, CRCL admitted that the shelf life of the samples of Grey Oxide and Red Oxide was only two months. 9. He further submits that Sh. R.P. Singh, Chemical Examiner, CRCL has admitted in his deposition that he was not the person who conducted any tests of the samples sent to them and he only signed the report as presented to him by his staff. 10. During the course of cross examination of Sh. Jatinder Singh, IO, deposed that he has no knowledge about Grey Oxide and Red Oxide and he prepared the Panchnama on the directions of his seniors. 11. He further submits that the goods of Heading No. 28.24 pertain to the category of 'Technical or Scientific Sense'. The description appearing in Heading No. 28.24 like Lead Oxide, Red Lead Oxide, Lead Monoxide are not the expressions to which any Trade Parlance Test has to be applied. Depending upon the process carried out, formulations including overall factors of maintaining temperatures during manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand for extended period of limitation. It is his submissions that all the details regarding manufacturing process, as sought, were placed before the Range Superintendent as early as in the year 2008. As classification of the product is disputed, therefore, the extended period of limitation is not invokable. He further submits that the firm was working under the watchful eyes of the proper officer having immediate jurisdiction which the department cannot pretend ignorance, therefore, the Ld. Commissioner has rightly held that the extended period of limitation is not invokable. In that circumstances, the Revenues appeal is to be dismissed. 14. On the other hand, the Ld. AR opposed the contention of the Ld. Counsel and submits that during the course of investigation, various statements of the responsible officers of the assessee were recorded who admitted that they were manufacturing Lead Oxide and the manufacture of Red Oxide was suppressed from the department. In that circumstances, the extended period of limitation is rightly invoked. He further submits that the test reports clearly shows that the samples is in form of Red Colour Power and having Red Acid which is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities on 09.04.2008. The Noticees had expressly declared that in the process of manufacture of batteries they manufacture red lead powder by Barton process and grey oxide by ball mill process and used the said products in the manufacture of battery plates for further manufacture of batteries. The Noticees also filed a flow chart of the process of manufacture. Photo copies of said documents showing the receipt by the jurisdictional inspector of Central Excise have been filed by the Noticees along with the reply to the show cause notice. The Noticees-1, thus, had declared their process of manufacture and also the products manufactured by them. It was for the Central Excise authorities to examine the information filed by the Noticees and take appropriate action. The Noticees had declared and put on the table of the jurisdictional Central Excise Authorities all the activities they were undertaking in their manufacturing unit. In such a scenario, it would be unfair and illegal to charge the Noticees for deliberately suppressing the facts from the knowledge of the revenue authorities with intent to evade the payment of Central Excise duty. The factor which empower the revenue author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of investigation and the same has not been denied by the Revenue. The person who conducted the test was not questioned. We also take note of that during the course of drawing the panchnama, the samples were drawn and sent for Chemical Examination, CRCL and the test memo was prepared which is extracted here below: In the test memo, we find that the samples were drawn for what purpose is not mentioned. The column at Serial No. 9 relating to the sample to be tested for was left blank, therefore, the samples are to be tested for what purpose is not known. Further, we find that as per the test report the following is test result. C No.35/CRCL/2011-12/ct 2941 C.Ex (Int.)/ Dt 06.09.2011 Report: The sample is in the form of used coloured powder, having Lead Oxide content. 75.04% by weight sealed remnant returned. The test result says that the samples in the form of Red Colour Powder having Lead Oxide content 75.04% by weight. We find that during the cross examination it is stated by the examiner that the relevant literature has been consulted while testing. As from ISI specification, there is a procedure for testing which has been prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carotene will exist in the oil within permissible percentage. In the cited decision the Tribunal has held that the carotene content varies with the efflux of time. This is not simply the view of the Tribunal, this was based on the scientific literature from reputed laboratories. In the said decision and the Commissioner (Appeals) in the present case has taken a very rigid stand that the carotene value would be the same at any point of time. This approach is not correct. Moreover, he has also not considered the point that when the test result is given after such a long delay the appellant loses the right to ask for retests. He could not have asked for retest, as the same would not be beneficial to him, because it has already been seen that storing the oil for a long time changes the carotene value. Only on the basis the earlier decision, which was cited, has been taken and same has been upheld by the High Court. By ignoring the said decisions we find that commissioner has committed gross judicial indiscipline. The tendency has to be avoided. In our view, the appellants case is squarely covered by the cited decision and the department also has committed a great irregularity in not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of oxide of lead in the sample the chemical test report would have specified the chemical formula of the oxide of lead present in the sample. Without the said formula it is impossible to say that whether the oxide of lead contained in the sample was PbO or Pb 3 O 4 only Pb 3 O 4 is red lead. The chemical analysis report is, therefore, not of any help in determining the correct classification of product manufactured by Noticee-1. 21. The said observations has been accepted by Revenue and has not been challenged. As per the said observations, the test reports cant relied upon. 22. We also take note of the fact that the Ld. Commissioner fell into an error to hold that in the trade and industry, oxide of lead, when red in colour has known as Lead Oxide or Red Lead. We hold that the item in question whether is Red Oxide or Red Lead is to be decided on the basis of chemical formulation and not as per trade parlance. 23. As the Ld. Commissioner while confirming the demand has relied on presumption that in the trade and industry if it is Red Colour Powder shall be called as Red Oxide. The said finding of the Commissioner is without any technical analysis. We also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Explanatory Notes to HSN on chapter Heading 5804 specifically says that 'lace does not have distinct weft and scrap', whereas the appellant has mentioned that they have been producing these by different settings of warp and weft threads design pattern by the weaving process , when explanatory notes specifically state that lace does not have distinct warp and weft; whereas subject goods are weaved by using the threads as warp and weft; the subject goods though may be described, commercially in the invoices by the appellant as lace and looking like lace, the same cannot be classified technically as lace under chapter heading 5804 of Central Excise Tariff. Consequently, the classification of subject goods under Tariff Heading 5804 is ruled out. 10. Considering the Explanatory Notes of Chapter Heading 5804, when the subject goods cannot be classified as lace under this chapter, other classification in alternative in the present proceedings in Chapter Heading 5807. Therefore, only choice for the classification now in the present proceedings is chapter heading 5807 as the Revenue has not pleaded any other classification i.e. in lieu of chapter heading 5804 other than 580 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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