ORDER
S.S. Sekhon, Member (T)
1. The appellant company is engaged in the manufacture of the following products :-
(a) Iron Oxide Powder;
(b) Graphite Powder;
(c) Colloidal Graphite Water base;
(d) Fire Cement Powder.
2. They filed the Classification Lists from time to time and claimed classification of the above-said products under heading 2505.00 of CETA, 1985, with the claim of exemption Notification No. 114/73-CE., which was approved. The classification claimed under headings 2505.90 and 2505.00 by filing the Classification List No. 73/91-92 effective from 25-7-91; 3/92 effective from 2-3-92; 3/93-94 effective from 1-3-93; 7/95-96 effective from 16-3-95; 5/95-96 effective from 1-5-1995; and 10/97-98 effective from 1-9-97, was not approved. Therefore, the classification Chapter 38 of the Tariff as against the claims made under headings 2505.90/2505.00 and proposed recovery of the differential duty on the goods cleared by the appellants for the period from August 1990 to March, 1998 and denied the benefit of exemption of Notification Nos. 114/93-C.E. and 7/92-C.E., amended by Notification No. 4/94-C.E. It was also alleged that the goods were admixtures of the goods specified, under Notification No. 114/73 and were also not in the nature of pigments of dry colour. It was also stated that assessments for the period from August, 1990 to July, 1995 were provisional. In the Order-in-Original, the Assistant Commissioner has dealt with each product as follows :-
(i) Bluskyn Iron Oxide Powder : The Asstt. Commissioner observed that process of mixing Iron Oxide lumps of different Fe2O3 contents and pulverizing them brought into existence a new marketable commodity and, such process, amounts to manufacture as per Section 2(f). Since Iron Oxide is specifically mentioned against Heading No. 28.21, the said product should fall under S.H. No. 2821.10 according to the terms of Heading No. 28.21. Further, exemption under Notification No. 114/73, dated 30-4-73 is not available, since the said product has not been manufactured as admixture of the goods specified in the Schedule to the Notification. However, the said product, being Iron Oxide Powder, is entitled to the benefit of Notification No. 23/55, dated 29-4-55 till its validity i.e. up to 28-2-94, and thereafter the product is leviable to duty at appropriate rate under S.H. No. 2821.00.
(ii) Bluskyn Graphite Powder : Graphite lumps of different Carbon contents are mixed and pulverized to form Graphite Powder as the customer’s/I.S.I. specification. The impugned product is known in the market as a different commercial product. The
aforesaid Process is “manufacture” within the meaning of Section 2(f). Further, the said product is nothing but graphite powder, it was classifiable under S.H. No. 2505.90, and after 1995 Budget there being only one sub-heading, the same is classifiable under S.H. No. 2505.00. In so far as claim for exemption is concerned, the lower authority held that the said product has not been manufactured as admixture of the goods specified in the Notification No. 114/73, and, thus, benefit of exemption under Notification No. 114/73 is not available. But being a natural black material and being specifically mentioned in the Notification No. 23/55 till 28-2-94. During the period from 1-3-94 to 15-3-95, the said product being classifiable under Heading No. 25.05 is leviable at ‘Nil’ rate of duty vide Notification No. 7/92, and, thereafter, the said product falling under S.H. 2505.00 would be chargeable to ‘Nil’ rate of duty vide Notification No. 70/95-CE., dated 16-3-95. So, the demand of duty does not arise at all.
(iii) Bluskyn Colloidal Graphite Dry/Water Base : Colloidal Graphite being specified against Heading No. 38.01, the impugned product would fall under the said heading and sub-heading No. 3801.00. The said product falling under Ch. 38 and not being of the nature of pigments or dry colours, would not get the benefit of exemption under Notification No. 114/73 and, thus, the same is leviable at the appropriate under S.H. No. 3801.00.
(iv) Bluskyn Fire Cement Powder : Fire Clay, Ball Clay and Soap Steel are used in the manufacture of the impugned product and the same is used in high temperature components with water for the purpose of resisting heat. The said product has the essential character of fire clay and the same would fall under S.H. No. 2505.90 till 1995 Budget and, thereafter, under S.H. No. 2505.90. As the said product is not of the nature of pigments of dry colours, the same is not entitled to exemption under Notification No. 114/73, and, thus, the same is dutiable during the period from August, 90 to February, 94. However, the said product falling under Heading No. 25.05 is eligible for exemption under Notification No. 7/92-C.E., dated 1-3-92 from 1-3-94 to 15-3-95, and also by virtue of Notification No. 70/95, the same is chargeable to nil rate of duty as applicable to S.H. No. 2505.00.
3. As regards the appellants’ contention to the effect that previous classification lists were approved without any objection, the lower authority has observed that there is nothing wrong in initiating action in respect of the pending classification lists, more so when in the impugned show cause notice, specific allegations regarding classification of the said products have been made. He also held that the case laws, reported in 1991 (51) E.L.T. 151 (T), 1999 (106) E.L.T. 114 (T), 1990 (45) E.L.T. 109 and Tribunal’s Order No. S-21/A-43/CAL/97, dated 14-1-97 are clearly distinguishable. He further observed that as per Apex Court’s judgment, pending approval of classification list/price list clearance made would be deemed provisional, and, thus, the question of time-bar, as contended by the appellants, did not arise and the demands were confirmed.
4. In Appeal before the Commissioner (Appeals), learned Commissioner found, after considering the pleas made before him, observed as follows :-
“From the facts-in-issue, I find that in regard to classification of the impugned products, the appellants have mainly contested the classification of Iron Oxide Powder under S.H. No. 2821.10, as made in the Order-in-Original. In this context, I find that the process of mixing of Iron Oxide lumps of different Fe2O3 contents and pulverisation of the mixture in the machine to attain Iron Oxide Powder as per customer’s specification amounts to manufacture within the meaning of Section 2(f) in as much as a new marketable commodity different from the constituents emerges after undertaking such processes. Further, the said Iron Oxide Powder being clearly mentioned in heading No. 28.21, classification as made by the lower authority is found to be legal and proper.
I also find that in their written note, the appellants have feebly opposed classification of Colloidal Graphite Dry/Water Base under S.H. No. 3801.00 and that of Fire Cement Powder under S.H. 2505.90. In the premises, I find that Colloidal Graphite is specifically accommodated in S.H. No. 3801.00 and, thus, objection so raised by the appellants is ruled out. As regards classification of Fire Cement Powder, I find that the lower authority in his impugned order observed that the said product had the essential character of Fire Clay being manufactured out of Fire Clay, Ball Clay and Soap Steel. The appellants only objected that result of chemical examination has not been communicated to them. But they could not repudiate the findings of the lower authority in regard to chemical composition of the impugned goods. Therefore, classification of the impugned products under S.H. No. 2505.90 till 1995, Budget being in consonance with the tariff, is legal and proper.
In so far as enforceability of the impugned demand is concerned, I find that save and except S.C.N. dated 30-8-95, all notices have been issued within statutory time-limit of six months. I also find that in his impugned order, the lower authority has confirmed the demand under Section 114 read with Rule 9(2). In the impugned S.C.N. mis-statement in the classification list and wilful contravention of the various provisions of C. Ex. Rules with intent to evade C Ex. duty have also been alleged, and, thus, ingredients for invocation of extended period under proviso to Section 11A, existed in the instant case, and, as such, demand is sustainable under C. Ex. Law. I also also not inclined to accept the appellants’ contention in regard to cum-duty price at this stage in terms of Rule 213(1) of the CER, 44. Therefore, I do not find any cogent reason to interfere with the order passed by the lower authority.”
5. We have heard both sides and considered the matter and it is found that –
(a) the Iron Oxide Powder is admittedly the result of a process of mixture of powdered oxide lumps of different Fe2O3 contents pulverized to conform to the required specifications. Chapter Note to Chapter 28 prescribes that only chemically defined compounds are classifiable therein. The impurities which are arising out of the manufacture of such compounds are permissible. In the present case, the item in question is manufactured by pulverizing/powdering lumps of different contents. The goods are not tested and therefore, the classification under Chapter 28.21 cannot be confirmed as the extent and nature of impurities present are not ascertained.
(b) Bluskyn Graphite Powder is a mixture of graphite lumps of different contents and is a different commercial product. Once it is found to be a different commercial product, the same would be leviable for duty once again under tariff heading 2505.90 up to 1995 Budget and thereafter, under 2505.00, as arrived at by the lower authorities.
(c) Bluskyn Colloidal Graphite Dry/Water Base has been specifically mentioned under Chapter 38.01. Therefore, its classification under Chapter heading 3801.00 is confirmed. We find no merits in the appellants’ case made out before us.
(d) Fire Clay, Ball Clay and Soap Steel are used in the manufacture of Bluskyn Fire Cement Powder and the same is used in high temperature areas. The lower authorities considered the use of the product to have essential character of Fire Clay to classify it under 2505.90 till 1995 Budget and thereafter, under heading 2505.00. The appellants admit that the item in question is applied in high temperature component mixed with water for painting only both as heat resistance and anti-corrosive and so it does not have any specific use as a pigment. We would, therefore, find no reason to interfere with the Order of the lower authorities.
6. We find substance in the submissions made by the appellants
that the notices were for classification under Chapter 38 while the goods
have been classified under 2820.10 which is beyond the scope of the notice
and therefore, we cannot uphold the order. Since we have indicated our findings on the classification of the goods, we would set aside the order and remand the matter back to the original authority to re-determine and quantify
the demands and penalties only after giving a clear finding as regards claim
of provisional assessment being made before us. We leave the issue of quantification of demands and for provisional assessment open for both the sides
to determine in the de novo adjudication proceedings. The goods are classified
as per the findings here-in-above and duty liabilities accordingly, have to be
worked out in the remand proceedings. The appeal allowed by way of re
mand in above terms.