2017 (12) TMI 892 - AT - Central Excise

Classification of goods - various construction chemicals - whether classified under CETH 3816 as miscellaneous chemicals or under CETH 3214? - Held that - The appellant, before the lower Authorities has agitated the alternation classification under 3824 for their products. On perusal of Order-in-Original, it is found that such claim has been dealt with and denied only in respect of two or three products. In respect of the other products this alternate claim has not been discussed at all - the matter is required to be remanded to the Ld. Commissioner with a direction to carefully examine the alternate claim of the appellant for classification under CETH 3824 in respect of all the goods manufactured by the appellant - appeal allowed by way of remand.

Summary

Issues:
Classification of goods under Central Excise Tariff Headings 3816, 3214, and 3824.

Analysis:
The appellant, engaged in manufacturing construction chemicals, classified their goods under CETH 3816 as miscellaneous chemicals. The department reclassified the goods under CETH 3214, demanding differential duty of ?70,91,784. The appellant argued that their products, including cement grout and repair mortar, should be classified under 3816 as they contain silica used in refractory materials. They also proposed an alternate classification under CETH 3824 for prepared binders and chemical products. The appellant contended that under Chapter 38, there would be no assessment under section 4A on MRP basis. The Ld. Commissioner (Appeals) in a separate case allowed classification of some products under CETH 3824, supporting the appellant's claim.

The Ld. DR supported the impugned order, stating that the appellant's claim for classification under 3824 was considered but found inappropriate. He argued that once goods are classified under CETH 3214, they must be assessed on MRP basis under Section 4A for clearances through dealers. The impugned orders allowed valuation under section 4 for goods directly sold to industrial consumers. The Tribunal noted that Chapter 38 covers miscellaneous chemical products, while Chapter 32 pertains to dyes, colours, and paints. After examining the ingredients and potential use of the goods, the Tribunal concluded that most products did not align with surfacing preparations or painting activities, ruling out classification under 3214.

Considering the use of silica sand in the products and its common application in refractory coatings, the Tribunal found that goods like refractory cement fall under CETH 3816, while non-refractory applications are under CETH 3824. The Tribunal observed that the alternate classification under 3824 was denied for only a few products in the Order-in-Original, lacking discussion for other products. Referring to the Order-in-Appeal by Commissioner (Appeals) Goa classifying some products under 3824 and others under 3214, the Tribunal remanded the matter to the Ld. Commissioner to reexamine the appellant's claim for classification under CETH 3824 for all manufactured goods, considering the Tribunal's views and the Goa Commissioner's classification.

In conclusion, the Tribunal set aside the impugned order and remanded the matter for further examination by the Ld. Commissioner, allowing the admission of additional evidence as per the law.