ORDER
T Anjaneyulu, Member (Judicial)
1. The appellant, M/s Hardcastle & Waud Mfg. Co Ltd., is a company within the meaning of the Companies Act, 1956 and is, inter alia, engaged in the manufacture of lubricating preparation, paints, varnishes etc. and for the said purpose has a factory at Netivali, Kalyan.
2. The present appeal involves the determination of the question of classification of three products manufactured by the appellant, which are marketed as Rustolene, Hawco CG-3 and Hawco Asbestos Jointings. The appellants filed classification list No.1/91-92 w.e.f. 30.07.1991, wherein they classified their products Hawco CG-3 and Rustolene under CSH 2710.99 claiming exemption vide Notification No.120/84-CE dated 11.05.1984 as amended. The adjudicating authority vide Order dated 25.10.1991 classified those produces under CHS 2710.99 @ 15% advance basis vide Notification No.287/86 dated 5.5.1986 as amended since both the products are neither motor spirit used as fuel in spark ignition engines nor they are lubricating oils/greases. HAWCO CG-3 is used specifically in glass industries as mould releasing compound and Rustolene is used specifically in glass industries as mould releasing compound and products are never to be used as lubricating oils/greases and are correctly classifiable under residuary sub-heading 27.10 i.e. 2710.99 @ 15% basic + 10% Spl. On basic. In classification list No. 100/85-86 on 1.3.86, the products under dispute HAWCO CG-3 and Rustolene were approved provisionally under CSH 2710.19 granting exemption vide Notification no. 120/4. In respect of product claimed under CSH 6805.90, it is proposed to classify the product under CSH 2806.90 since same are used as jointing sheets and therefore appropriately classifiable as friction material.
3. The Commissioner (Appeals) remanded back the matter. Therefore Show Cause Notice was issued on 5.2.96 giving reasons for classification of the products under CSH 2710.99 and 6806.90. Therefore Order-in-Original dated 5.12.97 is passed. Based on the Order dated 25.10.91, demands were issued to the appellants, which were confirmed by the lower authority vide Order-in-Original No.359/97-98 dated 29.12.97 and 360/97-98 dated 30.12.97.
4. In the impugned order, the Commissioner (Appeals) found that the appellants have not produced any approved copy of classification list filed subsequent to classification list No. 100/85-86 and before classification No.1/92-92. As far as the question of the product is concerned, he did not feel interfering tin the Order passed by the Asst. Commissioner. In case of jointing sheets, the appellants have not produced any approved copy of classification list classifying the product under CSH 6805.90, as such the demand issued prior to 30.7.91 is not sustainable. He did not find any justification to interfere with the impugned order passed by the Commissioner (Appeals), except the above items.
5. It is contended on behalf of the appellants that the Commissioner (Appeals) failed to appreciate that the test report of Lta Lab in respect of Rustolene, which was submitted by the appellants with written submissions on 10.3.96, clearly sowed that the product was a blend of mineral oils and lubricating oils and thus justified the appellant’s claim to the exemption granted by Notification No. 120/84-CE. In so far as Hawco CG-3 was concerned, it has lubricating properties and was regarded as lubricating oil. The ld. Commissioner (Appeals) did not discuss the submissions made by the appellants and the evidence on record.
6. That in so far as the classification of Asbestos Jointing Sheet is concerned, there is noting on record to show that it was a friction material. It was Department’s assertion that the product merits classification under sub-heading 6806.90. It was, therefore, necessary for the Department to demonstrate that the product was a friction meriting classification therein.
6. The ld. Commissioner (Appeals) ought to have appreciated that the Show Cause Notice raising demands were issued on the basis of Order dated 25.10.1991 passed by the Asst. Commissioner. This Order had already been set aside by the Commissioner (Appeals). As a result, the Show Cause Notice issued by the Asst. Commissioner ought to have abated.
7. The ld. Commissioner (Appeals) filed to appreciate that the Show Cause Notice challenging the classification was issued on 5.2.1996 and therefore, if at all, the change in classification could have only prospective effect and not retrospective effect. Confirmation of any demand for a period prior to the Show Cause Notice was, therefore, uncalled for.
8. The appellants also placed reliance in the case of Union of India & Others v. M/s Madhumilan Syntex Pvt. Ltd. Reported in . It is observed in para four that Section 11A of the Central Excise & Salt Act, 1944 clearly proceeds that prior Show Cause Notice must be issued to the person against whom any demand on ground of short levy or non-levy of payment of excise duty is proposed to be made. Therefore, the post facto Show Cause Notice cannot be regarded as adequate in law. In para 6 it is observed that “If the approved Classification List has been modified by the Assistant Collector without any opportunity and the Show Cause Notice is given only with regard to quantification of the amount of the short-levy, such a Show Cause Notice cannot be regarded as for modification of Classification List hence it is not covered under Section 11A of the Central Excise and Salt Act, 1944 and the period six months is also not available. However, such a Show Cause Notice can be regarded proper for the period subsequent to its issue’.
9. The contention raised by the ld. Counsel for the appellants are well founded and the demands raised under the Show Cause Notice in the instant case appears to be not proper, just and legal in the light of aforesaid decisions. The impugned order apparently did not discuss the points raised by the appellants with relevance to the classification of goods and issue of subsequent Show Cause Notice raising demands. The impugned order is apparently passed without application of mind and accordingly, it is liable to be set aside. In the result, the appeals are allowed.