ORDER
Jyoti Balasundaram, Vice President
1. The above appeals arise out of the order of the Commissioner of Central Excise, Mumbai confirming duty demand of Rs. 93,98,607/-against the appellant company and imposing penalty of Rs. 40 lakhs in terms of Rule 173Q of the Central Excise Rules 1944 for the period 1.4.93 to 27.9.96 and Rs. 54,01,636/- under Section 11 AC of the Central Excise Act, 1944 for the period 28.9.96 to 31.3.98 and imposing penalties of Rs. 2 lakhs, 1 lakh and 50,000/- on the Managing Director, Chief Executive and Authorised Signatory respectively of the company. The demand confirmation is as a result of classification of the product ‘Bitufelt Type III Grade.I’ under Chapter Heading 68.07 of the Schedule to the CETA 1985, rejecting the claim of the assessees for classification under Chapter Heading 59.09 read with Notification No. 53/65 CE dated 20.3.65 and Notification No. 92/94 CE dated 25.4.94.
2. We have heard both sides. The process of manufacture is as under:-
“The appellants use duty paid hessian cloth as the base fabric. The said fabric is obtained in running length from the market. The said base fabric after its receipt, is first air dried and passed through series of hot rollers, to free the same from moisture. The moisture free hessian base material is thereafter passed through a tank containing molten “Rot Proof bituminous solution so that the fibres present in hessianbase material get uniform application of “Rot Proof solution. The Bitumen used is of low melting point quality 80/100 petroleum Bitumen. It (the fabric) is given further bituminous coating to fill up interstices of the said fabrics and thereafter it is squeezed between two rollers to give a final coating of rot-proofing. The said impregnated jute fabrics are thereafter finished with mica powder to make it “fire” resistant and also to prevent the said coated fabrics from sticking and to facilitate the smooth unwrapping at the time of actual use. The said impregnated and coated jute fabrics are thereafter cooled and then wrapped in running lengths of 20 mtrs. And one mtre width. The resultant product is a bituminous coated/covered hessian fabric which is “Rot Proof, Waterproof and Fire-resistant”.
The Dy. Chief Chemist reported that “the sample is a black coloured flexible sheet. It is composed of woven jute fabrics thickly coated on both side with bitumen, inorganic fillers and mica. The percentage composition of constituent is as under:-
1. Bitumen – 51.90%,
2. Jute fabrics – 10.2%,
3. Mica 6.4%,
4. Inorganic fillers as balance.
The Adjudicating authority has slotted the product under Chapter Heading 68.07 on the ground it was bitumen which gave the product essential character and therefore, the product was an article of bitumen under Chapter Heading 68.07 and not an article of Jute under Chapter Heading 59.09 as contended by the assessee. We find that in the case of CCE, Calcutta v. Bitumen Products(India) [1999(31)RLT 296], the Tribunal has held that Bituminised hessain based felt is not covered under Chapter Heading 68.07 which covers “other articles of stone, plaster, cement, asbestos and mica or of similar materials not elsewhere specified or included” for the reason that the expression “similar materials” has to be seen in the light of the other articles specifically mentioned thereunder ie. stone, plaster, cement, asbestos and mica. The Tribunal upheld classification under Chapter Heading 59.09. In the light of the above decision, the appellants’ claim for classification under Chapter Heading 59.09 is correct. There is no dispute on the availability of the benefit of Notifications in question, which benefit has been denied only for the reason that the goods do not fall for classification under Chapter Heading 59.09. We, therefore, accept the contention of the assessess that the product falls for classification under Chapter Heading 59.09 and the benefit of Notification No. 53/65-CE dated 20.3.65 is admissible to the product.
3. The second issue for determination in this appeal is whether the process of making blown grade bitumen out of straight grade bitumen amounts to manufacture. This issue is also no longer res-integra as it has been settled in favour of the assessees by Tribunal’s decision in the case of CCE, Vadodara v. Tikitar Industries [2000(118)E.l.T. .468], National Tar Products v. CCE, Vadodara [2001(135)E.L.T.1388] and S.T.P. Limited v. CCE, Mumbai.I [ 2001(134)E.L.T.411].
4. In the light of the above discussion, we set aside the impugned order and allow the appeals. Since the appeals are being allowed on merits, we are not recording any findings on the argument raised before us that the demand is barred by limitation.
(Dictated in Court)