Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Shon Ceramics Pvt. Ltd. on 19 March, 1996
Equivalent citations: 1996ECR273(TRI.-DELHI), 1996(84)ELT502(TRI-DEL)
ORDER Shiben K. Dhar, Member (T)
1. This appeal is directed against the order dated 20-3-1987 of Collector of Central Excise (Appeals), Bombay.
2. The issue for determination is classification of the products claimed to be Mosaic tiles and admissibility or otherwise of such products to exemption of Notification No. 55/86, dated 10th Feb., 1986 effective from 20th February, 1986.
3. Arguing for the Revenue Ld. D.R. submits that Collector (Appeals) has erred in holding the products as Mosaic tiles. He has ignored the vital distinction between Chapter 68 and Chapter 69 while arriving at a finding that the goods are classifiable under Chapter 68.07.00. HSN explanatory notes clearly indicate that firing after shaping is essential distinction between goods of Chapter 69 and the minerals or stones classifiable under Chapter 68 which are generally not fired. Assistant Collector referring to the letter of the Respondents dated 2-6-1986 correctly concluded that the products were fired after they were pressed i.e. shapped and leaded. Assistant Collector had also relied on the flow chart which was enclosed to that letter. In view of the Chapter Note 2 of Chapter 69 according to which that chapter applies only to ceramic products which have been fired after shaping Assistant Collector had correctly held that the products were classifiable under Heading 69.05.00. Since products are classifiable under Heading 69.05, no exemption under Notification 58/86 was available since that notification grants exemption only to Mosaictiles as are classifiable under Chapter 68. The Ld. D.R. submits that the letter dated 2-6-1986 enclosing the flow chart and the process of manufacture has not been disputed. The letter may be accepted or he may be given time to produce evidence in the form of that letter in order to enable him to support his contention regarding the stage at which the product is shapped. Ld. D.R., on a specific query from the Bench fairly concede that he does not have the flow chart relied upon by the Assistant Collector in the appeal papers.
4. Arguing on behalf of the Respondent the Ld. Consultant submits that reference to the appeal memo itself would indicate that the Revenue themselves have accepted the product as Mosaictiles. In the ground (v) of the Grounds of Appeal the Revenue has specifically stated "the product Mosaic Tiles are correctly classifiable under Chapter 69."
5. What exactly these products were was a question that came for consideration before this Tribunal in their own case Shon Ceramics Pvt. Ltd. v. C.C.E. - 1991 (32) E.L.T. 608. The Tribunal on the basis of evidence produced by them held that the products to be Mosaictiles as these were so referred in Commercial parlance.
6. Collector (Appeals) held that these products are commercially known in the trade parlance as Mosaictiles. This conclusion was reached as would appear from the Order from perusal of the invoice, Cash/Credit Memos issued by the appellants to the Customers and the Appellant's trade literature. There can be no dispute, therefore, that the products are in fact Mosaictiles.
7. Regarding Chapter Note 2 he submits that this Chapter Note only restricts coverage of Chapter 69 and does not enlarge it. In other words, it only means that those products which had been fired before shapping will specifically go out of the chapter. Mosaic tiles can get covered both under Chapters 68 and 69. Reacting to the emphasis laid by the Ld. D.R. on the products being 'ceramic', he submits that itself is not determinative of the issue. The words 'ceramic' occur both in Chapter 69 as well as Chapter 68 and the same is the position in case with HSN Notes also even though HSN is not fully aligned with the Central Excise Tariff Chapters 68 and 69. In this connection he draws our attention to the page 912, page 899 and page 903 of HSN notes which would indicate that the Ceramic products would be covered both in Chapters 68 and 69. He draws attention to the finding of fact arrived at by the Collector (Appeals) with reference to Chapter Note 2 of Chapter 69. Even though Assistant Collector relying on a letter dated 2-6-1986 enclosing the flow chart of the product in respect of process of manufacture arrived at a finding that the products are fired after being pressed i.e. shaped and leaded. Ld. Collector (Appeals) arrived at contrary finding. This finding of facts arrived at by Collector was not based merely on his own opinion but he had looked into the flow chart of the manufacturing process and held that Assistant Collector has treated the process of "pressing" as shaping. Since flow chart referred to by the Asstt. Collector does not state that the firing is done after the shaping. In other words, Collector (Appeals) had before him the necessary evidence relied by the Assistant Collector and came to the conclusion that the flow chart did not indicate what Assistant Collector concluded. If Revenue now seeks to dislodge this finding of the fact they ought to have produced adequate evidence for this since it was a Revenue Appeal. As it is the Revenue have not produced even the flow chart on which the Assistant Collector relied.
Paragraph numbering as per certified copy. 6. Notification 50/86 and even the latest Notification No. 36/94, dated 1-3-1994 as amended by Notification No. 51/95, dated 16-3-1995 refer to Mosaic tiles i.e. to say tiles known ceramic mosaic tiles as classifiable under Chapter 68.07. Classification indicated in exemption notification is a valuable aid in arriving at classification of the product, as it indicates the mind of the persons dealing at the relevant time with particular piece of legislation. He, however, conceds that exemption notification cannot be an authority for classification as has been held in a number of decisions by the Tribunal. He submits that the Hon'ble Apex Court gave considerable weight to how a product was classified in a exemption notification and in support of this he cites the case reported in the 1978 (2) E.L.T. (J 355) in case of J.K. Steel Ltd. v. U.O.I. and Ors. TheLd. Consultant submits that in regard to contention raised by the Ld. D.R. about the letter dated 2-6-1986 enclosing the flow chart since Collector (Appeals) had recorded that he examined the flow chart, it has reasonably to be assumed that he looked into the letter also since letter to which the Assistant Collector refers only forwarded the flow chart.
Paragraph numbering as per certified copy. 7. We have heard both sides. We first take up the question relating to the nature and characteristics of the products. Admittedly the products are the same products which came up for detailed discussion before the Tribunal in their own case reported in 1991 (52) E.L.T. 608. The Tribunal on the basis of commercial parlance held that the products are mosaic tiles though in that case decision was in the context of erstwhile tariff. In the case before us, Collector (Appeals) has at internal page 4 of the order recorded that he has examined invoices, cash/credit memos issued by the appellants to their customers, purchase orders issued by the appellants, their trade literature etc. and thereafter he agreed with the appellants contention that the products are commercially and in common parlance known in the market as Mosaictiles.
8. We agree with the Ld. Consultant that the Chapter Note 2 of Chapter 69 only restricts the scope of the chapter and does not enlarge it. The chapter note reads as under : "This chapter applies only to ceramic products which have been fired after shaping." This would mear products fired before shaping would straightaway go out of the scope of Chapter 69. This note by itself is not a direction for classifying mosaic tiles under Chapter 69. Perusal of the HSN Explanatory Notes 912, 899, 903 also indicates that the qualifying word "Ceramic" by itself is not decisive of the issue since the word occurs in relation to the products both under Chapter 68 and Chapter 69 and indeed appears in Chapter 68 itself in the Heading 68.01.
9. Since these mosaic tiles can be classified under Chapters 68 and 69 we have to see in the circumstances of the case which is the proper chapter which would cover it. The products are made of 80% of the various stones, such as Quarts, silica and Feldspar chips and 20% or less clay material for binding purpose. Chapter 69 and the Note 2 applies only to ceramic products which have been fired after shaping. Assistant Collector has made the following observations:
"In the process of manufacture i.e. the flow chart of their products, the said shon ceramics, have of their own along with their letter No. SC/CEX/AC/6-3/86, dated 2-6-1986, declared that the product will be "fired" after they are pressed i.e. shaped and leaded."
It was vehemently contended by Ld. Consultant that "shaping" and "leaded" is a expression used by the Assistant Collector on his own and did not appear in the flow chart. On the other hand we find that Collector (Appeals) has given a definite finding in regard to the stage at which the products are shapped.
"The Appellants argued that articles which are required to be fired do not necessarily fall under Chapter 69. I agree with this contention of the appellants. The flow chart referred to by the Assistant Collector does not state that firing is done after shaping. The Assistant Collector has treated the process of 'pressing' as shaping. In fact 'shaping' which appellants call "setting" takes place after "firing". "Firing" takes place before shaping in respect of products which falls under Chapter 69. In fact the word 'CERAMIC' does appear even in Chapter 68 (C.H.6801).
This finding is sought to be controverted before us without any evidence as to how this is a wrong reading by Collector (Appeals). In memorandum of appeal also Revenue have not contested specifically this particular finding. If the finding arrived at after due consideration is sought to be dislodged some evidence ought to have been produced. Since there is no contrary evidence before us and the Collector (Appeals) has categorically referred the processes in flow chart and stated that flow chart does not state firing is done after shaping, we accept this finding as correct. In absence therefore, of any evidence to contest the finding arrived at by the Collector (Appeals) we do not find any reason to interfere with the impugned order-in-Appeal. In the result, the Revenue Appeal is rejected and the impugned order is upheld.