Customs, Excise and Gold Tribunal - Bangalore
Commissioner Of Central Excise, Cochin vs Kerala State Drugs And Pharmaceuticals ... on 22 June, 2001
Equivalent citations: 2001(132)ELT705(TRI-BANG)
ORDER
Shri S.S. Sekhon
1. This appeal has been filed by Revenue, as the respondents were alleged to have manufactured and during the period 1.12.89 to 30.1194 cleared, Demineralized Water and Soft Water to another unit their on debit notes, instead of invoices.
2. On adjudication, the Commissioner observed.....
"On going through the process to which the water is subjected to manufacture, it is clear that the assessee by passing it through cation exchanger, anion exchanger and Mixed Bed Exchanger to get demineralised water; the soft water is prepared by passing tube well water through cation exchanger only; there is not indication that the demineralised water and Soft Water prepared by them has achieved the chemical purity of distilled water or conductivity water; there is not dispute that the demineralised water and soft water prepared by the assessee is not distilled water or conductivity water or water of similar purity and hence the demineralised water and soft water prepared by the assessee is not liable to duty under the heading 2851.00. From the description of the manufacturing process, it appeared that the demineralised water and soft water prepared by them would be more appropriately classifiable under heading 2201.00 of CET."
Accordingly he held that the goods under dispute were not dutiable under heading 2851.00 of CET and dropped the Show Cause Notice.
3. Revenue has filed the appeal on the grounds-----
i) From Report of Range Officer it was clear that Soft Water is only partially purified, where cations like Calcium and Magnesium are removed that there can be other icons in the water. No chemical agents are added to water for purification except Hydrochloric acid which is used for catalyst regeneration, whereas in the case of demineralised water, all the metallic ions are removed by passing through the cation exchangers. In all these processes no chemical reagents are directly added to water, but the ion exchangers are frequently reactivated by treating with Hydro-Chloriic actid and Sodium Hydroxide. The soft water where cations like Callcium and magnesium are removed are cleared by the party, to other unit for use in boiler and equipment cooling in order to prevent scaling and corrosion.
ii) In accordance with Central Excise Tariff Act 1985, supported by HSN explanatory notes on TSH 2851.00, the heading covers "Distilled water, re-distilled water or electro-osmotic water treated with ion exchange media." Therefore,the correct classification of soft water obtained by treating through cation exhanger will be tsh 2851.00 as it undergoes ion exchange method to make it fully demineralised.
iii) the benefit of exemption under Notification No. 255/87 dated 25.11.87 up 28.294 and 7/94 dated 1.3.94, being conditional Notifications, would have been available only if the goods manufactured by the assessee is captively consumed within the factory of production and not otherwise separate with district central excise Benefit of exemption under Notification No. 217/86 could have been extended, if the assessee had opted for the same, by filing the Classification List and also subject to observance of the prescribed Chapter X procedure.
iv) Proviso to Section 11 A is invocable if manufacture and clearance of goods were not intimated to Central Excise Department.
4. We have heard both sides and considered the matter and find------
(a) To be eligible for classification under T.I. 2851.00, the decision in the case of Gujrat State Fertilizers Ltd., 1998(98) ELT 840 (T) would be relevant and was considered by the Tribunal in the case of MC Dowell & Co. Ltd. 1999 (105) ELT 577 (T) to come to a conclusion that mere process of removing two minerals viz Calcium and Magnesium and making water soft, does not amount to manufacture under 2851.00. In the present case before us, the appellants are submitting the `no process of distillation was carried out to remove micro-organism nor water got converted to `Conductivity Water Standard' to be classified under Heading 2851.00. No material appears in the present appeal of Revenue to come to a conclusion that the Chapter Note of HSN number 28.51 is satisfied. the notes read as follows-----
"(A) DISTILLED AND CONDUCTIVITY WATER AND WATER OF SIMILAR PURITY"
The heading covers only distilled water, re-distilled or electro-osmatic water, Conductivity water and water of similar purity, including water treated with ion-exchange media.
Natural Water, even if filtered, sterilized or softened is excluded (heading 22.01). When put up as a medicament in measured does or in packing for retail sale, water falls under heading 30.04"
A perusal of the scope of the notes and the exclusion of water in 2207, convince us that the present appeal has been filed by the Revenue without any justification and evidence and grounds. We find no reason therefore to interfere with the finding of the learned adjudicator as regards the classification of the entity under 2201.00 as arrived at by him and no reason to classify the same under 285100, urged in appeal.
5. In view of our findings, the appeal is dismissed.
(Pronounced in open court on )