Custom, Excise & Service Tax Tribunal
Neyveli Lignite Corporation Ltd vs Commissioner Of Central Excise, ... on 12 April, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/535 & 536/2003 &
E/MISC/281/2009
[Arising out of Order-in-Appeal No.188 & 189/2003 Pondicherry dated 23.5.2003 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Dr. CHITTARANJAN SATAPATHY, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Neyveli Lignite Corporation Ltd.
Appellant/s
Versus
Commissioner of Central Excise, Pondicherry
Respondent/s
Appearance :
Shri N.Prasad, Advocate Shri Savith V.Gopal, Advocate Shri T.H.Rao, SDR For the Appellant/s For the Respondent/s CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of hearing : 12.4.2010 Date of decision : 12.4.2010 Final Order No.____________ Per Jyoti Balasundaram The benefit of exemption in terms of Sl.No.17 of the Table to Notification No.76/86-CE dt. 10.2.1986 covering Sludge obtained in the sewage or effluent treatment plant belonging to municipal corporation, local authority or an industrial unit has been denied to the assessees herein who are manufacturers of urea, on the ground that, what was cleared was carbon dust, and not carbon sludge and that it was not obtained in an effluent treatment plant, resulting in demand of duty of Rs.21,02,659.58 raised in show-cause notice dt. 26.10.92 and subsequent 14 show-cause notices issued upto August 1999 (subject matter of appeal No.E/535/03) together with interest and imposition of equal amount of penalty, and demand of duty of Rs.51,785/- together with interest and penalty of Rs.17,000/- (subject matter of appeal No.E/536/03). The period covered in the first appeal is Feb92 to August99 and the second appeal covers the period from Sept99 to March 2000. The adjudicating authority whose order has been upheld by the Commissioner (Appeals) has held that the product for which the exemption was claimed was not carbon sludge but carbon dust for the reason that it was so described in the invoices of the assessees and also for the reason that sludge is defined as a muddy substance while the product in dispute did not contain any mud. He has further held that the product is not obtained in an effluent treatment plant as contended by the assessees for the reason that manufacturing process shows that the treated carbon slurry overflows from the reactor tank in the settling tank where carbon particles in slurry get settled which is then sun dried and sold as carbon dust and the overflow from the settling tank is allowed to mix along with the water from Barometric Condenser of Urea Plant and therefore the item is a product with a concentration of cyanide arising during the course of manufacture, and not an effluent.
2. We note that the assessees had offered an explanation and filed affidavit before the Commissioner (Appeals) as to why the product was described as carbon sludge/dust in the invoices namely, that prior to 1979 they were adopting lignite gasification process for the manufacture of urea and carbon dust used to emerge in a powdery form, but that process was discontinued from 1979 and subsequently shell gasification process was adopted and carbon slurry was produced in this process. The Revenue has not controverted this claim of the assessees. Further, the Chemical Examiners report dt. 26.8.91 states that the sample is an aqueous paste of carbon dust containing traces of carbon compound. An aqueous paste cannot be dust. We, therefore, accept the claim of the assessees that what was cleared was sludge, and not dust. The Commissioner (Appeals) has concluded that, since the water containing carbon dust particles and traces of hydrogen cyanide containing agitators is mixed with bleaching powder and agitated and in this process the water containing carbon particles is made free of hydrogen cyanide, and then pumped into settling tanks where the carbon dust settles at the bottom while the water remains at the top and kept for 10 to 15 days to get it dried by sun drying process, what is retrieved by the sun drying process is carbon dust which is stored in the open yard and cleared therefrom. However, this conclusion is erroneous as the assessees have subsequently explained that even after the sun drying process, what is cleared is still in the form of sludge as evidenced by documents of the transporters who cleared the sludge from their factory. The question as to whether sludge was obtained in an effluent treatment plant has been answered in favour of the assessees by the certificate dt. 31.8.93 issued by the Tamil Nadu Pollution Control Board that the preparation tank, reaction tank, agitators and settling tank put up by the fertilizer unit of the assessees is an effluent treatment plant. Although the authorities below have classified the product in dispute under CET SH 2803.00 as carbon attracting duty at the appropriate rate, the classification of the goods does not affect the eligibility thereof to the benefit of exemption under the notification as the exemption is not dependent upon where the goods fall for classification.
3. In the result, the impugned orders are set aside and the appeals are allowed. The application of the assessees for raising additional grounds that the goods in question are not excisable, is dismissed as this is a new plea taken at the second appellate stage.
(Operative part of the order was
pronounced in open court on 12.4.2010)
(Dr.CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE-PRESIDENT
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