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This is assessee's appeal for the assessment year 2007-08, taking the following grounds:-

"A. The product 'LABSA' is classifiable under Chapter 34 of Central Excise Tariff Act, 1985 only.

B. Classification of 'LABSA' under Chapter 29 of Central Excise Tariff Act, 1985 is incorrect.

C. The Central Excise Authorities have approved the classification of 'LABSA' under Chapter 34. It is not open to the Income Tax Department to adopt a contrary view.

D. Principles under Harmonized System of Nomenclature(HSN) and National Industrial Classification (NIC) cannot be ignored.

2 ITA 4157(Del)2010 E. The reference to underlying idea of negative list to exclude pollutants from granting exemption is irrelevant consideration for interpretation of fiscal statute."

2. The facts of the case are that the assessee is engaged in the business of manufacture and production of Linear Alkyl Benzene Sulphonic Acid (hereinafter referred to as 'LABSA') which is a raw-material used in the manufacture of synthetic detergents and cleaning products such as scouring power, liquid detergents etc. This activity is carried out in Baddi, an area notified for exemption under section 80 IC of the Income Tax Act. The dispute relates to classification of the said product as to whether it is covered within the list of non-eligible products provided in Part B of the Schedule XIII and in particular serial number 5 thereto.

3. An objection was raised by the AO as to the classification of the product manufactured by the assessee and thus the availability of exemption u/s 80 IC. According to the AO, the treatment of LABSA manufactured by the assessee as a surface-active agent was incorrect inasmuch as it was defined-'chemical compound' and thus classifiable as 'organic chemical' under Chapter 29 of the Central Excise Tariff Act, 1985.

4. The assessee made detailed submissions before the AO with regard to classification of the product by the Central Excise Authorities, inter alia, explaining the treatment and classification of the product under National 3 ITA 4157(Del)2010 Industrial Classification (NIC), 1998 which has a bearing for exemption u/s 80IC inasmuch as reference to the same is made in Part-B of the Schedule XIII. The assessee made further submissions with respect to the Harmonized System of Nomenclature (HSN) which is the International standard for classification of products and commodities and to which the Central Excise Tariff Act, 1985 has been aligned. Additional submissions were made wherein the assessee justified their claim for exemption in terms of the Industrial Policy of 2003.

5. The AO passed the order dated 30.12.2009 holding that the claim of the assessee for exemption u/s 80IC was not sustainable as the product LABSA manufactured by the assessee is not classifiable under Chapter 34 but instead is classifiable under Chapter 29 of the Central Excise Tariff Act, 1985 and, therefore, in view of the restriction to such products under serial number 5 of Part B of Schedule XIII, the exemption is not available.

6. The assessee thereafter obtained a copy of a report given by the Central Revenue Control Laboratory(CRCL) a Government of India undertaking, which was prepared in the year 2006 itself, being report dated 08.12.2006. This report was provided by the Central Excise Authorities to the assessee on 28.01.2010.