Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S Bhadradri Minerals Pvt. Ltd on 26 May, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/1059/2006-DB [Arising out of Order-in-Original No. 25/2005-Commr. dated 28/10/2005 passed by Commissioner of Central Excise, Hyderabad-III Commissionerate ] For approval and signature: HON'BLE Mr. JUSTICE G. RAGHURAM, PRESIDENT HON'BLE Mr. B.S.V. MURTHY, 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? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Commissioner of Central Excise, HYDERABAD-III OPP LB STADIUM ROAD, BASHEERBAGH, HYDERABAD - 500004. Appellant(s) Versus M/s BHADRADRI MINERALS PVT. LTD., D.NO. 02/92, LAKSHMIPURAM VILLAGE, KHAMMAM DIST.(A.P) Respondent(s)
Appearance:
Mr. S.K. Singh, Commissioner (A.R.) For the Appellant None For the Respondent Date of Hearing: 26/05/2015 Date of Decision: 26/05/2015 CORAM :
HON'BLE Mr. JUSTICE G. RAGHURAM, PRESIDENT HON'BLE Mr. B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 21459 / 2015 PER B.S.V. MURTHY M/s Bhadradri Minerals (P) Ltd., (hereinafter referred to as the respondent) is manufacturing and clearing Burnt Lime. Raw lime stone is burnt along with coal in a vertical shaft kiln. It was also stated by the respondent that calcium carbonate which is nothing but lime stone contains calcium carbonate, magnesium carbonate, etc. After burning it to the requirement, the product is graded for unburnt stone and final product is cleared by trade name as Burnt Lime. Thus, Calcium Carbonate (Ca Co3) after burning becomes Calcium Oxide and Carbon dioxide. The respondent had not taken Central Excise Registration Certificate and was not paying Central Excise duty since their product is classifiable under heading 2505.00 of the Central Excise Tariff Act and wholly exempted from payment of duty (according to them). Samples were drawn and sent to Chemical Examiner who reported that percentage of Calcium Oxide (CaO) varies from 57.5% to 80.1% in the final product.
2. Proceedings were initiated against the respondent taking a view that the Burnt Lime manufactured and cleared should not be classified as Calcium Oxide under CETH 2505.00 and the respondent should not be required to discharge the Central Excise duty. Periodical show-cause notices were issued and total Central Excise duty of Rs. 7,02,50,294/- was demanded from the respondent for the goods cleared from May 1995 to May 2004 with interest.
3. The proposal for demand of Central Excise duty and imposition of penalty in the show-cause notices was dropped and the claim of the respondent that the product is classifiable under CETH 2505.00 was accepted in the impugned order. The Revenue is in appeal against this order.
4. Nobody is present on behalf of the respondent. Heard learned Commissioner (A.R.) on behalf of the Revenue.
5.1. After going through the records and considering the submissions of learned A.R., we find that the issue to be decided is whether Burnt Lime manufactured by the respondent is classifiable as Calcium Oxide under CTH 2505.00 or not. The respondent manufactured Burnt Lime which is chemically nothing but Calcium Oxide. The respective Chapter Headings under consideration are as follows :
25.05 2505.00 Mineral substances not elsewhere specified (including clay, earth colours, natural abrasives, sulphurs, slate and stone), lime, plasters with a basis of calcium sulphate, whether or not coloured, but not including plasters specially prepared for use in dentistry.
28.25 2825.00 Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides. 5.2. The Commissioner has taken note of the claim made by the respondent and their reliance on the Boards Circular dated 10.7.1991 after the issue was discussed in the Tariff Conference. For better appreciation of the relevant portion of the Boards Circular No. 112/6/91-CX3 (Circular No. 18/91-CX3) dated 10.7.1991 is reproduced below :
A doubt has been raised as to whether in the light of Note (2) of Chapter 25 which states that Heading No. 2505 does not cover products that have been calcined etc., the burnt lime would get excluded from Heading No. 25.05. The point was discussed in the 1st southzone Tariff-cum-General Conference held at Hyderabad on 23rd and 24th April 1991. The conference observed that Note 2 of Chapter 25 was amended in the Budget of 1990 vide Note No. 106/90 CE dated 16.5.90. As a result of the amendment, the words except where their context otherwise requires were incorporated at the beginning of Note 2 of Chapter 25 this amendment was done with a view to aligning the Note with the corresponding Note in HSN. With the incorporation of the words referred to above, the burnt lime would merit classification under sub-heading No. 2505.60 notwithstanding the fact that the burnt lime is obtained by the process of calcination. The Conference was, therefore, of the view that as there was specific mention of lime under Heading No. 25.05 it merits classification under that Heading.
2. The Board agrees with the decision of the conference. Accordingly, it is clarified that as there was a specific mention of lime under Heading 25.05 Burnt Lime would be appropriately classifiable under sub-heading 2505.60 of the schedule to CET Act, 1985.
5.3. HSN Explanatory Note under Tariff Heading 28.25 also excludes Calcium Oxide which has a purity less than 98% from Chapter 28 in view of the fact that what is covered under 28.25 is Calcium Oxide of purity 98%. The relevant Chapter Note is reproduced below :
(11) CALCIUM OXIDE, HYDROXIDE and PEROXIDE : This Heading covers only the oxide (CaO) and the hydroxide (CaOH), in the pure state (i.e. containing practically no clay, iron oxide, manganese oxide, etc.) such as the product obtained by calcining precipitated calcium carbonate;
The Heading also covers fused lime obtained by fusing ordinary quicklime in an electric furnace. This product has a high degree of purity (approximately) 98% calcium oxide; it is crystalline and generally colourless. It is used, in particular, for refractory linings for furnaces, in the manufacture of crucibles and for addition to concrete, in small pieces, to increase in resistance to water.
Calcium peroxide (CaO) is a white or yellowish powder, hydrated (usually with 8 H2 O) sparingly soluble in water. Used as a bactericide and as a detergent, in medicine and in the preparation of cosmetics.
Quicklime (calcium oxide) and slaked lime (calcium Hydroxide) are excluded (heading 25.22).
5.4. The Commissioner has also taken note of the fact that the words except where their context otherwise requires was not there in the Chapter Note prior to 20.3.1990. The Chapter Note after 20.3.1990 reads as under :
Except where their context otherwise requires, heading Nos. 25.01, 25.03 and 25.05 cover only products which have been washed (even with chemical substances, eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened or concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading or sub-heading.
5.5. On the basis of Tariff heading, HSN Explanatory Note, Boards Circular, Chemical Examiners report and the Chapter Note, it is necessary to consider whether Burnt Lime manufactured by the respondent can be considered as Calcium Oxide classifiable under CTH 28.25.
5.6. The departments contention is based on the fact that the respondents are not manufacturing Burnt Lime by merely crushing, grinding, powdering levigating, sifting etc. and therefore, Chapter heading 25.05 cannot cover the item since what is happened to the raw materials is calcination. The Commissioner has taken a view that this claim cannot be accepted mainly because the Chapter Note is proceeded by the words except where their context otherwise requires.
5.7. In the Tariff description, it is not specified Burnt Lime. Lime includes Burnt Lime also. In fact, it includes all types of limes. It is to be noted that Tariff heading as it reads now does not have specific heading for Burnt Lime, Calcium Hydroxide, etc. 5.8. The claim of the department is that Note 1 to Chapter 28 provides that separate chemically defined compounds, whether or not containing impurities are covered. However, this submission is not supported by HSN Explanatory Note reproduced above as well as the Boards Circular referred to and discussed above. What is covered by Chapter 28.25 is Calcium Oxide which of 98% purity or more. Admittedly in this case, the purity of the burnt lime is 70 to 75% only. Therefore, in view of the Boards Circular as well as HSN Explanatory Note, the product manufactured by the respondent has to be classified under CTH 25.05 only.
6. From the raw materials used, the process employed or the parameters of the resultant product show that the Burnt Lime manufactured by the respondent is not classifiable under CETH 28.25. Honble Supreme Court has already held in the case of Commissioner of Central Excise, Shillong vs. Wood Craft Products Ltd. [1995 (77) E.L.T. 23 (S.C.)] that HSN Explanatory Note can be used as a guide to resolve dispute relating to tariff classification and in this case, HSN Explanatory Notes as well as Boards Circular clearly support the stand taken by the respondent. Moreover, lime is specifically mentioned under Chapter heading 28.25 and lime is general description and therefore, it can be said to cover Burnt Lime.
7. In view of the above, we have come to the conclusion that the impugned order does not require any interference. Accordingly, the appeal filed by the Revenue is rejected.
(Operative portion of the order has been pronounced in open court on completion of hearing on 26/5/2015) (JUSTICE G. RAGHURAM) PRESIDENT (B.S.V. MURTHY) TECHNICAL MEMBER /vc/