Customs, Excise and Gold Tribunal - Delhi
Gujarat State Fertilisers Ltd. vs Collector Of C. Excise on 4 October, 1991
Equivalent citations: 1994(69)ELT403(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal is directed against the order-in-appeal No. 1538/BD-682/86 dated 5-5-1987 by which the Collector (Appeals), Bombay has confirmed the classification of the waste and scrap of polymethyl methacrylate sheets also known as "Acrylic sheets" under subheading 3920.31 of Central Excise Tariff.
2. The appellants have submitted that they are engaged in the manufacture, among many things, of the goods chargeable to duty under Chapter 39 of Central Excise Tariff, 1985. They had filed classification list and price list from time to time, with the proper officer in accordance with Rule 173B and Rule 173C respectively and were approved from time to time after scrutiny. They submit that after the introduction of new Central Excise Tariff Act, 1985, they file classification list for the various items manufactured by them including polymethyl methacrylate sheets referred to shortly as "acrylic sheets" in the discharge of its obligation under Rule 173B of the rules.
3. They contended that under compulsion from the Assistant Collector, they filed under protest classification list in respect of waste and scrap of acrylic sheets on 7-3-1986 which came to be approved and they appealed to Collector (Appeals) who passed the impugned order upholding the classification list in respect of waste and scrap of acrylic sheets.
4. They have given details of manufacture of the acrylic sheet, which undergoes through five processes namely :
(1) Syrup preparation process;
(2) Cell construction process;
(3) Polymerisation process;
(4) Finishing process; and (5) Auxiliary process (Utensil process) They contended that in the process of manufacture of acrylic sheets, waste and scrap arises at two stages. They contended that their customers place indent for trimmed acrylic sheets for the reason that they do not have required facility to carry out trimming. Accordingly, they carry out trimming operation on acrylic sheets bound with gaskets. The trimming process yields small and irregular strips of uneven sizes with gaskets attached to them. This waste has been a subject matter of classification list. They contended that the second stage where waste and scrap results is the stage of polymerisation when the upper glass would be separated and the polymerised cast sheets are obtained. In the course of removal of the upper glass mould (cell) the sheets, on occasions, get damaged or deformed. Such defects or damage can be cured or rectified only by cutting the polymerised sheets at appropriate places and it is at this stage that small pieces of the dimensions of less than one foot result as waste and scrap. The appellants contended that the waste and scrap arising during the course of manufacture are unavoidable one and quite different from and cannot be equated with the parent material. They contended that the waste and scrap of acrylic sheets was not the product of application of any labour or manipulation pertaining to any process of manufacture within the contemplation of Section 2(f) of the Central Excises and Salt Act, 1944. They contended that the impugned goods waste and scrap of acrylic sheets did not constitute goods and being non-excisable, it is not dutiable and hence not classifiable under TI 3906.10 of Central Excise Tariff as held by Assistant Collector. They contended that they sent a letter dated 1-3-1986 to the Assistant Collector that they would be paying the duty under protest and requested the Assistant Collector to treat the said letter as 'letter of protest' under Rule 233B of the Central Excise Rules, 1944. They also refer to subsequent correspondence they had with the Assistant Collector in this regard. The Collector (Appeals) has relied on note 6 of Chapter 39 and has treated the waste and scrap as polymethyl methycrylate in primary form and classifiable under Tariff subheading 3920.31 of Central Excise Tariff, 1985. The appellants are thus challenging the classification of the irregular non-geometric shape of acrylic sheet which they consider it as waste and scrap.
4A. Shri Mehta, learned counsel arguing for the appellants submitted that the impugned product is a waste and scrap of acrylic sheets and it is not excisable commodity. He submitted that the appellant wanted to declare the product as "other goods" but Assistant Collector did not agree to it and hence they filed the classification list under protest declaring as classifiable under Chapter Heading 3906.10. It was approved by the Assistant Collector and hence they appealed and it was also rejected. He contended that there is no material on record to consider the scrap and waste of acrylic goods being excisable. He contended that plastics were classified in erstwhile tariff under TI 15A(1) and article of plastics under 15A(2) while the same items have now, under new tariff, been distributed under TI 3901 to 3904. He contended that acrylic sheets fall under TI 3920.00 and therefore its scrap cannot fall under 3906.10 of Central Excise Tariff and hence the reason given for classification by lower authorities was not sustainable. He contended that the waste and scrap of acrylic sheets were not capable of moulding. He contended that in Apna Industries v. Collector of Central Excise as reported in 1989 (43) E.L.T. 510, it was held that acrylic scrap was not capable of being classified under TI 15A (1). He relied on the following rulings :
1. Asiatic Oxygen Ltd. v. Collector of Central Excise -1989 (44) E.L.T. 718 (Tribunal)
2. Apna Industries v. Collector of Central Excise - 1989 (43) E.L.T. 510 (Tri.)
3. HMM Ltd. v. Collector of Central Excise -1989 (40) E.L.T. 422.
4. Collector of Central Excise v. Captainganj Distillery -1987 (29) E.L.T. 122.
5. Hindustan Lever Ltd. v. Collector of Central Excise -1985 (22) E.L.T. 232.
6. Jay Electric Wire Corporation Ltd. v. Collector of Central Excise -1984 (18) E.L.T. 582.
5. Shri L.N. Murthy, learned Jr. D.R. submitted that the classification under Chapter Heading 3915.00 was maintainable as there is a heading for the item in question. The learned Collector had relied on the head notes. He contended that the scrap had arisen during the course of the manufacture and during its incidental process and hence it could not be considered as waste and scrap. It was goods and was being marketed by the appellants. He relied on the rulings of Hon'ble Supreme Court rendered into case of Dunlops India Ltd. v. Union of India as reported in 1977 (1) E.L.T. J199 (S.C.) and that of Empire Industries v. Collector of Central Excise as reported in 1985 (20) E.L.T. 199 and M/s. Khandelwal Industries as reported in 1985 (20) E.L.T. 222 (S.C). He submitted that in the rulings of Apna Industries case there was no finding that the product was not excisable.
6. Shri Mehta in his counter submitted that mere mention in Tariff was not sufficient to hold the product as excisable and relied on the rulings of the Supreme Court tendered in the case of Ambalal Sarabhai's case. He contended that the ruling relied by the learned Jr.D.R. was not applicable to the facts of the case. He also submitted that Note 6 to Chapter 39 was also not relevant in this case.
7. We have carefully considered the submissions made by both sides and perused the records. The question that arises for our consideration is as to whether it was proper for the Collector (Appeals) to have confirmed and approved the classification done by Assistant Collector, in absence of Assistant Collector following the procedure laid down under Rule 9B read with Rule 173B of the Central Excise Rules, 1944. The facts narrated in this case clearly indicate that the Assistant Collector had compelled the appellants to file classification list in respect of the impugned goods, despite the protest of the appellants regarding the exdsability of the impugned product. The Assistant Collector is entitled to call upon the assessee to furnish any information necessary for the assessment of duty on any excisable goods as laid down under Rule 9B(1) of the Central Excise Rules and on the assessee producing all the necessary documents and furnishing the information for the assessment of duty; the Assistant Collector is empowered to make all necessary enquiries to satisfy himself about the dutiability of the goods. He may either on his own or on a written request made by the assessee direct that the duty leviable on such goods shall, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally at such rate or such value. After a proper enquiry the Asstt. Collector is required to finally assess the rate of duty. This is the procedure as laid down in Rule 9B and Rule 173B of the Excise Rules, 1944. The assessee in this case had filed the classification list under protest and they were required to follow the procedure under Rule 233B of the Rules as well. In this case, the Assistant Collector has not followed the procedure as laid down under Rule 9B read with Rule 173B and 233B of the Rules. The classification list had been filed under protest by the assessee. Therefore, the Assistant Collector should have made proper enquiries in this regard, by calling upon the assessee to furnish any information required by him for determining the case before him. Thereafter he was required to have given a reasoned order. In Collector of Central Excise v. Muzaffarnagar Steels Ltd. as reported in 1989 (44) E.L.T. 552, the Tribunal observed as follows in para 13 :
"The Rule 173B providing for the filing of classification list clearly shows that what is required of the Assistant Collector is the approval "after such enquiry as he deems fit". The approval of classification list is an important part of the process of assessment and, therefore, the Assistant Collector is required to be very careful and is expected to apply his mind before according approval. He is entitled to and indeed required to make such inquiries and summoned such information as may be called for in order to arrive at the correct decision. In other words, the act of approval was not merely a passive act or concurrence but involves an active decision making and the Assistant Collector was required to fully satisfy himself about the particulars of goods being manufactured and the process of manufacture wherever necessary and the relevant facts and then only determine the classification and pass appropriate orders; and once the Assistant Collector has approved the classification the department has to bear the consequences thereof.
8. A similar observation has been made in ICEM Engineering Co. (P) Ltd. v. Collector of Central Excise reported in 1989 (44) E.L.T. 744:
* * * * *
9. Thus approval of classification list is a quasi-judicial function as held in the above noted rulings. In a similar case the assessee had challenged the excisability of a product. The Hon'ble Rajasthan High Court in the case of Shyam Oil Cake (Pvt.) Ltd. v. Supdt. of Central Excise as reported in 1991 (55) E.L.T. 163 (Raj.) in para 5 has held :
"It is true that so far as question of classification is concerned, it is essentially a question of fact and that has to be first adjudicated by the authority under the Act. Therefore, in view of the decision given by Division Bench, Jaipur, I direct that the petitioner shall appear before the Assistant Collector, Central Excise to decide the classification of the petitioner after hearing him without prejudice to the observations made by the Supdt, Central Excise and Customs. Petitioner shall appear before him on 11-2-1991 and the Assistant Collector, Customs shall decide the matter in accordance with law within a period of 10 days, thereafter."
10. Therefore, respectfully following the ratio of the above rulings, we set aside the impugned order and remand the matter to the Assistant Collector for de novo consideration of all the pleas of the assessee and follow the procedure laid down under Rule 9B and Rule 173B read with Rule 233B of Central Excise Rules regarding approval of the classification list of the impugned product and pass a reasoned order thereon, after affording full opportunity to the appellants, expeditiously. Ordered accordingly.