2008 (3) TMI 145 - AT - Central Excise

De-mineralised water - no dispute that the impugned goods are extremely pure water - water before treatment and after treatment cannot be held to have same properties and application - assessee also doesn t explain how the same is not distilled water or conductivity water or water of similar purity - such water used within the factory of production falls under CSH 2851.11 & attracts nil rate of duty, whereas when removed from factory, are classifiable u/h 2851.19 & attracts duty liability

Summary

Issues: Classification of de-mineralised water for duty liability under specific sub-headings.

In this judgment by the Appellate Tribunal CESTAT, CHENNAI, the issue at hand involves the classification of de-mineralised water (DM water) for duty liability under specific sub-headings. The appeal was filed by M/s. Zeneca ICI Agro Chemicals Ltd. to challenge a demand of Rs. 6,075 raised on them for the clearance of DM water during a specific period. The lower authorities classified the goods as distilled water or conductivity water under Chapter sub-heading 28.51, specifically sub-heading 2851.19, as the goods were cleared outside the factory and not captively consumed. The assessee's claim for classification under CSH 22.01 was rejected, and it was argued that the water purified using ion exchange resins falls under CSH 2851.

The Tribunal considered that the impugned goods are indeed extremely pure water used for industrial consumption. The Tribunal noted that the water before and after treatment had different properties and applications, indicating a manufacturing process. It was highlighted that the impugned product could be classified as an inorganic compound under sub-heading 2851. The Tribunal emphasized that while such water used within the factory falls under a specific sub-heading with nil duty rate, the same goods when removed from the factory are correctly classified under a different sub-heading, attracting duty liability. The Tribunal also observed that the assessee had not appealed against a similar order in a previous case, indicating consistency in classification. Consequently, the Tribunal upheld the demand of Rs. 6,075 and dismissed the appeal.

The judgment provides a detailed analysis of the classification of de-mineralised water for duty liability under specific sub-headings, emphasizing the differences in treatment and application of the water before and after purification. It clarifies the distinction between classification within the factory and outside the factory, highlighting the duty implications based on the location of use. The judgment underscores the importance of consistency in classification decisions and upholds the lower authorities' classification of the impugned goods under the relevant sub-heading for duty liability.