2017 (5) TMI 1710 - AT - Central Excise

Classification of goods - waste or not - product arising in the process of manufacture of sponge iron in the rotary kiln where non-coking coal is added to the iron ore - original authority while deciding the demand of duty on this product classified the same under 2619.00 as coal dust/coal shell/char dust and confirmed the duty demand - HELD THAT - The impugned goods are nothing but waste arising during the course of manufacture of sponge iron. In the impugned order, the learned Commissioner (Appeals) has referred to the Chemical Examiner's report which indicates that the goods are predominantly comprising of coal. The use of the impugned goods is also as fuel to generate heat. The product is akin to coal and accordingly is to be classified under 2701.00 - Appeal dismissed - decided against Revenue.

Summary

Issues: Classification of goods for duty determination

In the present case, the issue revolves around the classification of goods for duty determination. The primary concern is whether the product arising during the manufacture of sponge iron, predominantly comprising of coal, should be classified as coal under sub-heading 2701.00 or as coal dust/coal shell/char dust under 2619.00, impacting the duty liability.

Analysis:

The appeals filed by the Revenue were based on the classification of the goods arising during the manufacturing process of sponge iron. The original authority had classified the product as coal dust/coal shell/char dust under sub-heading 2619.00, subjecting it to a duty rate of 16%. However, the Commissioner (Appeals) took a different view, classifying the goods as coal under sub-heading 2701.00, which attracted a 'nil' rate of duty at that time. This discrepancy in classification led to the filing of the present appeals by the Revenue.

During the hearings, the Revenue contended that the impugned goods, considered waste containing coal char/dust/shell, were generated in the process of manufacturing sponge iron. They argued that the product had distinct characteristics, a unique name, and was marketable, justifying its classification under sub-heading 2619.00. On the other hand, the Commissioner (Appeals) relied on the Chemical Examiner's report, highlighting that the goods were predominantly composed of coal and used as fuel to generate heat. Based on these findings, the Commissioner classified the product as akin to coal, falling under sub-heading 2701.00.

Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals), emphasizing that the impugned goods were waste material arising during the production of sponge iron, primarily consisting of coal and serving as a fuel source. Given these characteristics and the findings of the Chemical Examiner's report, the Tribunal found no grounds to interfere with the classification under sub-heading 2701.00. Consequently, the appeals filed by the Revenue were rejected, affirming the classification of the goods as coal and subject to a 'nil' rate of duty.