Custom, Excise & Service Tax Tribunal
Cce, Chennai Iv vs M/S. Kent Ceramic Tiles & Co. Pvt. Ltd on 27 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/941/2003 & E/CO/53/2004
(Arising out of Order-in-Appeal No.8/2003 (M-IV) dated 4.8.2003 passed by the Commissioner of Central Excise (Appeals), Chennai)
CCE, Chennai IV Appellant
Vs.
M/s. Kent Ceramic Tiles & Co. Pvt. Ltd. Respondent
Appearance Shri K.P. Muralidharan, AC (AR) for the Appellant Shri S. Venkatachalam, Advocate for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing / Decision: 27.04.2015 Final Order No. 40504 / 2015 Per D.N. Panda Revenues contention in this appeal is that the smaller pieces of the particular goods manufactured and affixed to a seat is ceramic tile liable to be classified under Tariff Heading 6905.10. The assessee earlier classified the goods under Tariff 6905.10. But soon after the decision of the Tribunal in the cases of Shon Ceramics Pvt. Ltd. Vs. Collector of Central Excise 1991 (52) ELT 608 and Collector of Central Excise Vs. Shon Ceramics Pvt. Ltd. - 1996 (84) ELT 502 and Notification No. 8/2002 dated 1.3.2002, it changed its classification to Tariff Heading 6807.10.
1.2 In view of above contention of revenue, the goods falling under the Tariff Heading 6807 and 6807.10 needs to be examined. That reads as under:-
Heading No. Sub-heading No. Description of the goods Rate of duty (1) (2) (3) (4) 6807 Goods, in which more than 25% by weight by red mud, press mud or blast furnace slag or one or more of these materials, have been used; all other articles of stone, plaster, cement, asbestos, mica or of similar materials, not elsewhere specified or included 6807.10 Goods, in which more than 25% by weight of red mud, press mud or blast furnace slag or one or more of these materials, have been used Nil
2. While the claim of assessee is under Chapter 68 as above, the competing entry of Chapter 69 and Tariff heading 6905 claimed by Revenue reads as under:-
Heading No. Sub-heading No. Description of the goods Rate of duty (1) (2) (3) (4) 6905 Unglazed ceramic flags and paving, hearth or wall tiles; unglazed ceramic mosaic cubes and the like, whether or not on a backing 6905.10
- Vitrified tiles, whether polished or not 16% 6905.20
- Other 16%
3. Revenue submitted that the modus operandi of the assessee was to take advantage of the benefit of SSI exemption notification bringing the goods to Chapter 68 without any change in composition thereof or character of the same. Therefore, switching over to Chapter 68 from Chapter 69 is unwarranted. Accordingly, Revenues prayer is to allow its appeal on the ground that Commissioner (Appeals) wrongly classified the goods under Chapter 68 instead of Chapter 69.
4. It was further submitted by Revenue that the reasoning given by learned Commissioner (Appeals) is not correct when the HSN entry 6907 attracts the goods of the respondent. Assessee manufactured cubes of various sizes and shapes. Those were affixed to a sheet (craft paper) to meet to the requirement of buyer. According to the description of goods, that falls under Chapter 69 as per meaning given by HSN under entry 6907 as per HSN Note reading as under:-
69.07 UNGLAZED CERAMIC FLAGS AND PAVING, HEARTH OR WALL TILES; UNGLAZED CERAMIC MOSAIC CUBES AND THE LIKE, WHETHER OR NOT ON A BACKING.
6907.10 - Tiles, cubes and similar articles, whether or not rectangular, the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm
5. Respondent contended that Tribunal was aware about the very character of goods of respondent since it has dealt the case of Shon Ceramics Pvt. Ltd. So also Tribunal is aware how the goods of respondent is sold in the market. It has sold the goods as mosaic tiles only. Tribunal in para 3 of the decision in CCE Vs. Shon Ceramics Pvt. Ltd. 1996 (84) ELT 502 has recorded the argument on classification issue. In para 7 of the decision it is recorded as under:-
7. Regarding Chapter Note 2 he submits that this? Chapter Note only restricts coverage of Chapter 69 and does not enlarge it. In other words, it only means that those products which had been fired before shapping will specifically go out of the chapter. Mosaic tiles can get covered both under Chapters 68 and 69. Reacting to the emphasis laid by the Ld. D.R. on the products being `ceramic, he submits that itself is not determinative of the issue. The words `ceramic occur both in Chapter 69 as well as Chapter 68 and the same is the position in case with HSN Notes also even though HSN is not fully aligned with the Central Excise Tariff Chapters 68 and 69. In this connection he draws our attention to the page 912, page 899 and page 903 of HSN notes which would indicate that the Ceramic products would be covered both in Chapters 68 and 69. He draws attention to the finding of fact arrived at by the Collector (Appeals) with reference to Chapter Note 2 of Chapter 69. Even though Assistant Collector relying on a letter dated 2-6-1986 enclosing the flow chart of the product in respect of process of manufacture arrived at a finding that the products are fired after being pressed i.e. shaped and leaded. Ld. Collector (Appeals) arrived at contrary finding. This finding of facts arrived at by Collector was not based merely on his own opinion but he had looked into the flow chart of the manufacturing process and held that Assistant Collector has treated the process of pressing as shaping. Since flow chart referred to by the Asstt. Collector does not state that the firing is done after the shaping. In other words, Collector (Appeals) had before him the necessary evidence relied by the Assistant Collector and came to the conclusion that the flow chart did not indicate what Assistant Collector concluded. If Revenue now seeks to dislodge this finding of the fact they ought to have produced adequate evidence for this since it was a Revenue Appeal. As it is the Revenue have not produced even the flow chart on which the Assistant Collector relied. [Emphasis supplied]
6. Tribunal has rightly interpreted the meaning of the term ceramic used in Chapter 68 and 69 on the context of HSN Note in para 7 of its decision. That is exactly the goods cleared by Respondent and Respondents products are same as that of Shon Ceramics. Chapter Note 2 of Chapter 69 was also examined in para 8 of the Tribunals decision which reads as under:-
8. We agree with the Ld. Consultant that the Chapter? Note 2 of Chapter 69 only restricts the scope of the chapter and does not enlarge it. The chapter note reads as under : This chapter applies only to ceramic products which have been fired after shaping. This would mear products fired before shaping would straightaway go out of the scope of Chapter 69. This note by itself is not a direction for classifying mosaic tiles under Chapter 69. Perusal of the HSN Explanatory Notes 912, 899, 903 also indicates that the qualifying word Ceramic by itself is not decisive of the issue since the word occurs in relation to the products both under Chapter 68 and Chapter 69 and indeed appears in Chapter 68 itself in the Heading 68.01. [Emphasis supplied]
7. Careful reading of para 8 of the decision throws light on characteristics of the goods. The use of the word ceramic itself is not decisive in view of intention of the chapter. Tribunal therefore further went on examining the rationale behind classification under Chapter 68 in its above decision. It has recorded that the products were made of 80% of the various stones such as quarts, silica and feldspar chips and 20% or less of clay material for binding purposes whereas Chapter 69 and Note 2 thereof applies only to ceramic products. Therefore, it is considered proper to reproduce para 9 of the decision which reads as under:-
9. Since these mosaic tiles can be classified under? Chapters 68 and 69 we have to see in the circumstances of the case which is the proper chapter which would cover it. The products are made of 80% of the various stones, such as Quarts, silica and Feldspar chips and 20% or less clay material for binding purpose. Chapter 69 and the Note 2 applies only to ceramic products which have been fired after shaping. Assistant Collector has made the following observations:
In the process of manufacture i.e. the flow chart of their products, the said shon ceramics, have of their own along with their letter No. SC/CEX/AC/6-3/86, dated 2-6-1986, declared that the product will be fired" after they are pressed i.e. shaped and leaded."
It was vehemently contended by Ld. Consultant that shaping and leaded is a expression used by the Assistant Collector on his own and did not appear in the flow chart. On the other hand we find that Collector (Appeals) has given a definite finding in regard to the stage at which the products are shaped.
The Appellants argued that articles which are required to be fired do not necessarily fall under Chapter 69. I agree with this contention of the appellants. The flow chart referred to by the Assistant Collector does not state that firing is done after shaping. The Assistant Collector has treated the process of `pressing as shaping. In fact `shaping which appellants call setting" takes place after firing. Firing takes place before shaping in respect of products which falls under Chapter 69. In fact the word `CERAMIC does appear even in Chapter 68 (C.H.6801).
This finding is sought to be controverted before us without any evidence as to how this is a wrong reading by Collector (Appeals). In memorandum of appeal also Revenue have not contested specifically this particular finding. If the finding arrived at after due consideration is sought to be dislodged some evidence ought to have been produced. Since there is no contrary evidence before us and the Collector (Appeals) has categorically referred the processes in flow chart and stated that flow chart does not state firing is done after shaping, we accept this finding as correct. In absence therefore, of any evidence to contest the finding arrived at by the Collector (Appeals) we do not find any reason to interfere with the impugned order-in-Appeal. In the result, the Revenue Appeal is rejected and the impugned order is upheld. [Emphasis supplied]
8. Ultimately Tribunal found that in absence of evidence to show that the goods were not ceramic goods, the goods shall fall under Chapter 68 instead of 69.
9. Even today we do not find any material from Revenue to show as to whether the goods of respondent were technically tested by any recognized laboratory or national institute to hold that the goods were ceramic. Accordingly, it is safe to rely on the finding of the Tribunal made in the aforesaid decision for application thereof to the case of the assessee since its goods are similar to that of M/s. Shon Ceramics not opposed by Revenue. Tribunal having examined very carefully the composition of the cubes which are ultimately pasted on kraft paper to give raise to the goods in question, both the decisions of the Tribunal reported in 1991 (52) ELT 608 and 1996 (84) ELT 502 when appealed by Revenue before the Apex Court, those were dismissed as reported in 1997 (95) ELT A153 (SC) finding no discrepancy in the ratio laid down by the Tribunal.
10. In view of above discussion, Revenues appeal fails on merit. Accordingly, that is dismissed.
11. Cross-objection is disposed in view of the disposal of the appeal as above.
(Dictated and pronounced in open court)
(R. PERIASAMI) (D.N. Panda)
Technical Member Judicial Member
Rex
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