Rajasthan High Court - Jaipur
Polar Marmo Agglomerates Ltd. vs Union Of India (Uoi) And Ors. on 12 May, 2003
Equivalent citations: RLW2004(2)RAJ948, 2003(3)WLC740
JUDGMENT Balia, J.
1. Heard learned counsel for the parties.
2. The petitioner's case is that he is engaged in the business of production of agglomerated marble blocks and tiles since 1991. These blocks and tiles of Agglomerated marbles are made from Lumps/chips of naturally excavated marble. The procedure employed in manufacturing the tiles in question is stated to be that marble chips are crushed mechanically in the Jaw crusher/impactor and crushed marble stones in the desired grits sizes are transported to the Mixer where with addition of calcium carbonate powders, polyester resin as binders and pigments for colouring, are mixed and a dough is formed and conveyed into a mould. Such mixture/dough is taken into a vibro-compaction press where under vacuum and pressure the blocks of agglomerated marbles are formed after being cured for slabbing on sang saw and slabs are polished in an automatically operated polishing line, cut into slabs and tiles of the required sizes. These agglomerated marble slabs and tiles contain the properties, characteristics and aesthetic visuals of natural marble as it comprises of 94% contests /weight of natural marble stones, balance 5-7% being binders, calcium carbonate and pigments.
3. The assessee-petitioner has raised two fold contentions during the course of determination of Excise Duty payable by him on manufacture of tiles in question, firstly pointing out to the contents of the end product, the assessee has urged that the product in question should be classified under tariff item No. 25.04 sub-heading 2504.31. The tariff item No. 2504 is 'marble' and sub-heading 2504.31 refers to in or in relation to the manufacturing of which any process is ordinarily carried out on with the aid of power and where the electromotive force used exceeds 10 HP.
4. However, the Revenues case was that the product in question is governed by the tariff item No. 68.07 sub-heading 6807.00, which reads as under:-
"All other articles of stone, plaster, cement, asbestos, mica or of similar material not elsewhere specified or included."
5. Secondly, before the Assessing Authority the question was also raised that in case the product in question is classified under heading 68.07 sub-heading 6807 then they should be classified as mosaic tiles and mosaic tiles are to be taxed at nil rate under notification No. 59/90 CE dt. 20th March, 1990.
6. The revenue did not agree with the contentions of the petitioner assessee on either count. It found that the product in question has to be classified as article of stone under tariff head 6807 sub heading 6807.31 and not as a marble under Tariff Hem 25.04. The contention with regard to the exemption as mosaic tiles was rejected on the ground that the product of the petitioner is agglomerated marble tiles and not mosaic tiles, because it is not sold as mosaic tiles in market but under trade names Vila Nova and also that it fell in class which was specifically excluded from the preview of the notification No. 59/90 CE by virtue of Clause (1) of serial No. 4 of the table under the said notification and the correct rate of tariff payable under item No. 68.07 is 15% advelorem which was also the rate prescribed under the said exemption notification.
7. The order passed by the Assistant Collector, Central Excise dated 6,2.1995 has since been affirmed by the Commissioner (Appeals) vide his order dated 15.3.1996 and ultimately by the CEGAT vide its order dated 2nd March, 2000.
8. The principal ground which has weighed with the Tribunal and lower authorities in not considering the claim of petitioner for classification as tariff item and exemption was the decision rendered by the Tribunal in the case of Collector of Central Excise, Vadodara v. Kedia Agglomerated Marbles Ltd. (1).
9. Before proceeding further, we may notice that initially when show cause notice was issued to the petitioner, it has filed D.B. Civil Writ Petition No. 631/2001 challenging the show cause notice. In the said writ petition, apart from raising doubt about the proposed classification, the assessee has claimed that the product in question does not come within the preview of manufacture at all and, therefore, not exigible to Excise Duty. This plea found favour with the Division Bench vide its judgment dated 19.5.1993 and it was held that the product sold by the petitioner under trade name Vila Nova is not exigible to Duty under the Act of 1944. However, the order was set aside by the Hon'ble Supreme Court on appeal by finding that the question decided by the High Court was a question of fact and requires to be determined by fact finding authority in the first instance. It may be noticed that in the show cause notice under challenge, the same question was there. The revenue has sought to classify the item under tariff head 68.07. It was left to the Assessing Authorities to decide the question of fact and, thereafter, the matter has proceeded before the Assessing Authority as noticed above.
10. The Assistant Collector, the Commissioner (Appeals) as well as the Tribunal having all relied on the decision of the Tribunal in Kedia Agglomerated Marbles' case referred to above by categorically finding that issue involved in the present case has already been considered and concluded by the Tribunal in the case of Collector of Central Excise, Vadodara v. Kedia Agglomerated Marbles Ltd. (supra). The Tribunal also found as a fact that the process of manufacture of Agglomerated Marbles by the party in the case of Kedia Agglomerated Marbles (supra), and therefore, following the aforesaid decision the product in question was classified under heading 68.70 and not under 2504.31 as claimed by the assessee.
11. It has been brought to our notice that the aforesaid decision of the Kedia Marbles Ltd. has since been subject matter of the appeal before the Supreme Court. Before the Supreme Court in Kedia Agglomerated Marbles Ltd. v. Collector of Central Excise (2), no dispute was raised about the classification of Agglomerated Marble Tiles under Tariff item under which the tiles in question have been classified. Therefore, the decision proceeds on the assumption that the agglomerated marble tiles are to be classified under tariff head 68.07 as contended by the revenue.
12. However, considering the exemption Notification No. 59/90 CE dated 20th March, 1990, the Court also found that the product in question falls within the category of mosaic tiles and governed by serial No. 6 in the aforesaid exemption Notification dated 20th March, 1990 and accordingly, exigible to nil Duty. In other words, no Duty is leviable.
13. In view of the finding of the Tribunal that the process employed by the petitioner assessee is the same as is employed in manufacture of agglomerated marble files by Kedia Agglomerated Marbles Ltd., for determining the Tariff Hem under which the product in question should be classified, namely tariff item No. 68.07, it would necessarily call for applicability of the Notification No. 59/90 dated 20.3.1990 under which the assessee has been claiming exemption in case product is classified under tariff item not. 68.07 as proposed by the revenue.
14. Such claim of the petitioner has been rejected by the Revenue solely on the ground that the item in question has been excluded under Clause (1) of serial No. 4 and the product sold under trade name Vila Nova is not commercially known as mosaic tiles.
15. Annex. 22 annexed with the rejoinder is the copy of the Notification dated 20th March, 1990 which reads as under:-
NOTIFICATION No. 59/90-Central Excise GSR No. (E). In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excisees and Salt Act, 1944(1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of the Table hereto annexed and falling under sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) specified in column (2) of the said Table, from so much of that portion of the duty of excise leviable thereon which is specified in the said Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table.
"TABLE SL. No. Sub Heading No. Description of goods Rate of duty (1) (2) (3) (4)
1. 6803.00 Rock Wool Nil
2. 6805.10 Gaskets other than those used in vehicle of Chapter 87 15% ad volerem
3. 6806.10 Brake linings, pads and clutch other than those used in vehicles of Chapter 87 15% ad volerem
4. 6807.00 All goods excluding the following, namely',-(i) Floor coverings in rolls or in the form of tiles (11) Goods specified in SI. Nos. 5 to 8 below 15% ad volerem
5. 6807.00 Articles of mica Nil
6. 6807.00 Mosaic tiles, that is to say, tiles known commercially as "mosaic tiles"
Nil
7. 6807.00 Goods manufactured at thee site of construction of buildings use at such site Nil
8. 6807.00 Blocks, slabs, lintels, concrete" beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading No.94.06 Nil sd/-
(R.K. Mahajan) Under Secretary to the Government of India"
16. A perusal of the Notification shows that items enumerated at serial No. 5 to 8 have been expressly excluded from the operation of the serial item No. 4, the Assessing Authorities have apparently not applied their mind to this exclusion and have considered it to be sole item applicable to all goods classified under sub-head 6807 particularly. Moreover the expression 'excluding the following' takes out of purview of item No. 4 also the floor covering in the form of tiles, which are classified under Tariff item No. 6807. Floor coverings Tiles are, therefore, not part of item No. 4 subjected to 15% advoleram Duty. Serial item No. 4 to 8 all relate to goods classified under tariff item No, 68.07 and item No. 5 to 8 are also excluded from the ambit of item No. 4 vide its Clause (ii). Hem No. 6 envisages mosaic tiles, that is to say tiles known commercially as mosaic tiles, to be subjected to Duty at Nil rate. In other words, on 'mosaic tiles' falling under item No. 6 of Notification, no Duty is leviable.
17. The Hon'ble Supreme Court in Kedia Agglomerated Marbles Ltd. has found that notwithstanding, the trade name in which commodity manufactured by Kedia Agglomerated Marbles Ltd. was marketed, it was a mosaic tiles and as a commodity known as mosaic tiles commercially though sold under different trade names to maintain individual identity of manufacturer. The Court said :
"The ordinary dictionary meaning of mosaic is "pattern or design with inlaid glass or stone". It is also not seriously disputed that tiles manufactured by the appellant from marbles chips satisfy the dictionary meaning of the word "mosaic". The only dispute raised by the Department is that the appellant's product even though technically can be described as "mosaic tile" is not proved to be commercially known as such to be eligible for claiming benefit of the exemption notification which is very clear terms grants exemption from duty to mosaic the "which are commercially known as mosaic tiles".
18. Referring to the decision of the Tribunal on question, the Court did not accept the reasoning given by the Tribunal for not accepting the product in question to be mosaic tiles and held as under:-
"We find that the Tribunal has clearly gone wrong in rejecting the claim of the appellant for the benefit of the exemption notification on the sole ground that it is marketing its product not in the name of mosaic tiles but in the trade names of Marbella Agglomerated Marbles and Marbellam Tiles. The appellant had produced before the authorities evidence and material to show that both technically and commercially its tiles are known as "mosaic tiles" or marble mosaic tiles. No negative material was produced in rebuttal by the Department. .......
........ A typical trade name to the product could be given by the appellant to distinguish it in the market from ordinary mosaic tiles made from stone other than stones or chips of marbles. The primary object of classifying products in fiscal statute like the Central Excise Act being raising revenue, the settled rule of interpretation is that the various heading or sub-headings in the Tariff should be understood not in strict scientific and technical sense but in their popular sense i.e. the meaning assigned to them by those trading in and using the product."
19. After referring to its earlier decision in Shri Baidyanath Ayurved Bhawan Ltd. v. CCE (3), the Court said that after the words "mosaic tiles", the addition of words "tiles known commercially as mosaic tiles", in the next of the exemption notification appears to be an overemphasis, with intention to assign meaning to the product in the sense in which it is understood by those dealing in and using the product. On this conclusion the Apex Court held that the benefit of exemption Notification was wrongly denied to the assessee by the Tribunal in the case of Kedia Agglomerated Marbles P. Ltd.
20. The question in the present case is too confined to the issue whether the assessee is entitled to benefit of exemption Notification No. 59/90 CE in the light of the judgment of the Supreme Court referred to above. No lis about the classification is now pursued by the petitioner.
21. It is not now disputed by the learned counsel for the respondents also that the ratio of the decision of the Supreme Court governs the case of the petitioner, because the Tribunal has found as fact that product of the petitioner is similar to the product of M/s Kedia Agglomerated P. Ltd. and is subject to same process of manufacture. In view of the aforesaid, we have no hesitation in coming to the conclusion that the Order of the CEGAT under challenge is patently erroneous to the extent it does not consider the applicability of Exemption Notification to the petitioner, which has been held by the Supreme Court to govern the case of Manufacture producing similar product as that of the petitioner. The petitioner on the basis of decision of the Supreme Court in Kedia Agglomerated Marbles P. Ltd.'s case is entitled to the benefit of exemption Notification No. 59/90 CE and its product in question is liable to NIL Duty only.
22. We may notice that the learned counsel urged that the writ petition is not maintainable in view of the observations made by this Court in Laxmi Udyog v. Union of India and others. A Division Bench of this Court after considering the decision of the Supreme Court in L. Chandra Kumar v. Union of India and Ors. (4), and in T. Sudhakar Prasad v. Govt. of Andhra Pradesh (5), has said that in view of Section 35 of the Central Excise Act, the writ petition is not maintainable. However, in a later decision the same Division Bench has doubted the correctness of the aforesaid observations made in Laxmi Udyog's case on the basis of the judgment delivered in the case arising from a contempt petition filed before the Central Administrative Tribunal. In Union of India v. Brij Lal Prabhu Dayal and Ors. (6), the Court has said as under:-
"However, the correctness of the later part of the judgment, which holds the petition under Article 226/227 is not maintainable in view of provisions of appeal Under Section. 35L is open to doubt. Unlike the case of Central Administrative Tribunal exercising contempt jurisdiction, the CEGAT in any circumstance does not become a Tribunal substitute of High Court. It continues to remain a Tribunal subordinate to High Court. Whether right to judicial review by a High Court, of any order passed by a Tribunal subordinate to it, within its jurisdiction, which forms part of basic feature of constitutional scheme, is taken away by providing an appeal to Supreme Court, does not appear to have been considered and decided in the above case, does not appear to have been considered and decided in the above case. If CEGAT is a Tribunal subordinate to High Court, the mere existence of alternative remedy by itself may not be sufficient to oust the jurisdiction under Article 226 and 227 of the Constitution which is a part of the basis feature of the Constitution providing for judicial review of the orders passed by any authorities and Tribunal subordinate to the Court. It remain within the discretion of the Court while exercising extra-ordinary jurisdiction, whether to exercise such jurisdiction or not."
23. We may notice here that while in L. Chandra Kumar's case the Central Administrative Tribunal was held to be a Tribunal subordinate to the High Court, being an additional forum of redressal which exercise substantive jurisdiction, in Sudhakar's case which related to the contempt petition, the distinction was made by the apex court between the orders passed by the Central Administrative Tribunal in its ordinary jurisdiction on the one hand, where it acts as an additional forum and as a Tribunal subordinate to the High Court and on the other, the Central Administrative Tribunal exercising its contempt jurisdiction acts as a Tribunal substitute of High Court in terms of the provisions of the Central Administrative Tribunal Act and the provisions of the Contempt of Courts Act. Hence, it is not a Tribunal subordinate to the High Court amendable to its writ jurisdiction in the matter arising from contempt proceedings.
24. Be that as it may, since the question raised in the present case is squarely governed by the decision of the Supreme Court on merit, we need not go into this question further and decide finally at this stage.
25. In view of the aforesaid, we allow this writ petition and set aside the order passed by the CEGAT. The CEGAT shall now decide the claim to exemption made by the petitioner in the light of the aforesaid decision.