TMI Blog2024 (3) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is given as Mineral Waters . The department has therefore held that the Packaged Drinking Water would fall within the category of Mineral Water . A product has to be classified on the basis of Tariff Act and not on the basis of the notifications. The present notifications are Central Excise Notifications giving the details of abatement in regard to valuation of goods under Section 4A. Merely because the chapter heading, sub heading has been mentioned in Col. 2, the goods cannot be said to be assessed under Section 4A unless the goods also fall under the description given in Col.3. At the cost of repetition, in Column 3 of Notification No.2/2006, 14/2008 and 49/2008, the description of goods is given as Mineral Water only. The process of manufacturing Mineral Water and Packaged Drinking Water is different. From the Circulars issued by the Board, it can be seen that when no minerals are added to the water, it cannot be classified as mineral water. So also, it is clarified by the Board that when the water is demineralized by reduction of minerals the same would form artificial mineral water . The Packaged Drinking Water is entirely different product falling under separate chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese reasons, the invocation of extended period cannot sustain. For the same reasons, the penalty imposed on the Executive Director of appellant-company is not warranted and requires to be set aside. The impugned order is set aside - Appeal allowed. - MS. SULEKHA BEEVI. C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Mr. P. Satheesan, Advocate - For the Appellant Mr. N. Sathyanarayanan, Assistant Commissioner (A.R) - For the Respondent ORDER Brief facts of the case are that the appellants are engaged in the business of manufacture and sale of packaged drinking water under the brand name Holy Aqua falling under Chapter Heading 22019090 of Central Excise Tariff Act, 1985. Scrutiny of records of the appellant revealed that they were clearing Packaged Drinking Water from different units without taking Central Excise registration even after crossing the cumulative value of clearances of SSI exemption limit of Rs.150 lakhs of all the four units located at Konnakuzhy, Athur, and Thiruvallur and Sadivayil at Coimbatore, without accounting the details of production and clearance in daily stock account, without issuing invoices and without payment of duty. Hence show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under Section 4A of the Central Excise Act, 1944. The notifications specify the description of goods given in Column (3) to be covered by Column (2) of the Tariff Heading. However, in column the description of goods is mineral water . The finding of the adjudicating authority as well as the Commissioner (Appeals) that since the description of mineral water remained unchanged in Notification Nos.2/2006, 14/2008 and 49/2008, Packaged Drinking Water would also be covered by the description of MRP is far-fetched and against the law of interpretation. The view taken by the department that the description of goods, namely, mineral water contained in notification is inclusive of Packaged Drinking water is erroneous interpretation of the scope of notification. 4. The intention of the Government is to charge Central Excise duty under Section 4A only for goods covered by description mineral water falling under Chapter 2201 or 2202 and not packaged drinking water falling under chapter 2201 9090. Mineral Water and Packaged Drinking Water are two different commodities known in the market and hence grouping of both these products together is bad in law. 5. The Ld. Counsel adverted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has all the while pleaded and explained that they are engaged in manufacture of potable drinking water only. 8. The Ld. Counsel submitted that potable drinking water is different from mineral water. The price of mineral water is higher than that of potable drinking water. So also, the BIS specification numbers are different. BIS certification is mandatory for packaged drinking water and also mineral water. These specifications are mentioned on the bottles. The BIS code of packaged drinking water is IS 14543. The BIS specification of Mineral Water is IS 13428. The appellant has been issued BIS certification for Packaged drinking water (other than packaged natural mineral water) and the certificate is produced along with appeal. The BIS noted in this certificate is IS 14543. It is submitted by the learned counsel that the department has wrongly held that the goods are assessable under Section 4A of Central Excise Act, 1944. 9. The amended Notification No.3/2015-CE (NT) dt. 01.03.2015 was adverted to by the learned counsel. At Sl.No.25A of the said notification, the tariff item shown is 2202. The description of goods given is all goods except mineral waters and aerated w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that when the second notice is issued on the very same set of facts and issue, the department cannot invoke the extended period. The issue is interpretational in nature as it involves the question whether the assessment has to be made under Section 4 or Section 4A of the Central Excise Act, 1944. It also involves interpretation of notifications. There was no intention on the part of appellant to evade payment of duty. The department has gathered information with regard to the clearances made by appellant for quantification of duty on the basis of the accounts maintained by the appellant. Therefore, there is no suppression with intent to evade payment of duty and the extended period cannot be invoked. Penalty imposed on the appellant as well as the Executive Director cannot sustain. There is no evidence that the Executive Director had involved directly in the clearance of the goods. It is prayed that the appeals may be allowed. 13. Ld. A.R Shri N. Sathyanarayanan appeared and argued for the Department. It is submitted by Ld. A.R that appellant has contested the determination of value under Section 4A claiming that only Mineral Water and Aerated Water are covered under Sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Mineral Water. The valuation is therefore to be done under Section 4A of the Central Excise Act, 1944. The appellant was clearing the goods without payment of duty even though the value of clearances when computed under Section 4A exceeded the SSI limit. 17. As per Notification 8/2003-CE (NT) dt. 1.3.2003 (which provides for SSI exemption) the manufacturer is eligible for exemption from payment of Central Excise duty if the aggregate value of all the clearances of specified goods from one or more factories does not exceed Rs.150 lakhs during a financial year and the aggregate value of all clearances of all excisable goods for home consumption by the manufacturer from one or more factories or from a factory by one or more manufacturers does not exceed Rs.400 lakhs in the preceding financial year. In the present case, the aggregate value of clearances from all the four units has exceeded the exemption limit of Rs.150 lakhs. When the value is assessed under Section 4A of the Act, after granting abatement (as per the above notifications 2/2006, 14/2008 49/2008), the appellant is liable to pay duty of Rs.4,48,070/- during the period from December 2007 to September 2010. 18. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring Mineral Water and Packaged Drinking Water is different. From the Circulars issued by the Board, it can be seen that when no minerals are added to the water, it cannot be classified as mineral water. So also, it is clarified by the Board that when the water is demineralized by reduction of minerals the same would form artificial mineral water . The circulars are noticed as below : - 23. The Packaged Drinking Water is entirely different product falling under separate chapter sub-heading. Further, the price of Packaged Drinking Water is less than the price applicable to Mineral Water. Again, BIS specification for Mineral Waters is different from that of Packaged Drinking Water. The appellant has been issued BIS certification for packaged drinking water as IS 14543. The certificate is noticed as below : 24. All these would go to show that both are different products. The valuation of the product has to be based upon the classification of the product. When the classification unambiguously falls under 22019090 the valuation has to be on transaction value as per Section 4 of Central Excise Act, 1944. Merely because the abatement notification mentioned heading 22019090 in column (2) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015, in column No. (2) the tariff heading is mentioned as 2202 and description of the goods is given as all goods except mineral waters and aerated waters . In Notification 49/2008, the Sl.No.24 referred to Mineral Water and Sl.No.25 to Aerated Water . As per amendment brought forth in Notification 49/2008 w.e.f. 1.3.2015, a new Sl.No.25A was added which referred to all goods except mineral water and aerated water . This makes it clear, that drinking water was never intended to be specified as goods to which Section 4A would apply. We therefore find that the duty demand cannot sustain. 25. The Ld. Counsel has argued on limitation. The issue is purely interpretational in nature. Further, there were earlier notices issued to the appellant on the very similar set of facts. In other similar matters, the department has set aside demand and taken the view that Packaged Drinking Water cannot be assessed under Section 4A of the Act ibid. For these reasons, we hold that the invocation of extended period cannot sustain. For the same reasons, the penalty imposed on the Executive Director of appellant-company is not warranted and requires to be set aside, which we hereby do. 26. In the result, ..... 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