2016 (1) TMI 525 - AT - Central Excise

Classification of chemically coated micronized minerals and Red-oxide power - Revenue classified the chemically coated micronized minerals under Chapter sub-heading 3824.90 and Red-oxide power under Chapter Sub-heading 2821.10 of CETA, 1985 - Assessee classified the same under Chapter 25.05 of CETA - Held that - Chapter note specifically covers products which are in the primary form which are crushed, ground, powdered, levigated, sifted, screened, or concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallisation) and the chapter note specifically excludes products which are roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading or sub-heading. It is evident from the above that the products which are covered under Chapter 25 are the only products which has not undergone any further processing beyond washing, grounded, powdered and concentrated. In the present case, the product micronized minerals which has undergone the process beyond the processes mentioned in Chapter note 2 of Chapter 25. Therefore, by virtue of chapter note, the micronized minerals are chemically coated products which has undergone the process beyond the process mentioned in Section note 2 or chapter 25 of CETA. Therefore, the goods are rightly excluded from Chapter 25. As regards classification of red oxide the appellant classified it under Chapter 25.05 and the department re-classified it under chapter 2821.10. The red oxide which is otherwise known as iron oxide and earth colour are specifically classifiable under Chapter 2821.10 as iron oxide and red oxide. Therefore, we do not find any merit in the appellant s claim of classification under general category under Chapter 25. The appellant s only contention is that the products does not amount to manufacture is not justified as the process involved and also marketed clearly confirms that they are rightly classifiable under 2821.10. Demand of duty confirmed - Confiscation, fine and penalties are set aside. - Decided partly in favor of assessee.

Summary

Issues:
Classification of chemically coated micronized minerals under Chapter 3824.90 or Chapter 25.05, classification of red oxide under Chapter 2821.10 or Chapter 25.05, imposition of penalties, confiscation of goods.

Classification of Chemically Coated Micronized Minerals:
The appeal arose from an OIO passed by the Commissioner regarding the classification of products under central excise. The appellants processed various minerals and cleared them under Chapter 25.05 of CETA. The dispute centered on the classification of chemically coated micronized minerals under Chapter 3824.90 or Chapter 25.05. The Ld. Advocate argued for classification under Chapter 25.05, citing expert opinions and previous judgments. However, the Ld. AR contended that the products were rightly classifiable under Chapter 3824.90. The Tribunal analyzed the manufacturing process and noted that the products had undergone processes beyond those mentioned in Chapter 25, thus excluding them from that classification. Relying on relevant legal provisions and precedents, the Tribunal upheld the classification under Chapter 3824.90.

Classification of Red Oxide:
Regarding red oxide, the appellants claimed classification under Chapter 25.05, while the department re-classified it under Chapter 2821.10. The Tribunal determined that red oxide, also known as iron oxide, fell under Chapter 2821.10 specifically as iron oxide and red oxide. The appellants' argument that the products did not amount to manufacture was dismissed, and the Tribunal upheld the classification under Chapter 2821.10 based on the manufacturing process and market classification.

Penalties and Confiscation:
The issue of penalties and confiscation arose due to the classification dispute. The adjudicating authority had dropped the demand for the extended period and penalties under Section 11AC, indicating no intention to evade duty payment. The Tribunal set aside both penalties, as in the appellants' previous case, and ruled that there was no justification for confiscation. Consequently, the imposition of redemption fine and penalties under Rule 9(2), 52(A) read with Section 11A of the CEA, 1944, was set aside.

Conclusion:
The Tribunal upheld the classification of chemically coated micronized minerals under Chapter 3824.90 and red oxide under Chapter 2821.10. The confirmation of demands was upheld, while confiscation, fines, and penalties were set aside. The appeal was partly allowed, with consequential relief if any.