2019 (3) TMI 1136 - AT - Central Excise

Classification of brick under 68159910 or 68109990 - Denial of Exemption Notification No. 48 and that of Notification 1/2011-CE dated 01.03.2011 - Held that - Applying rules of Interpretation to these facts we observe that Chapter 68 Articles of stone, plastic, cement, asbestos, mica or similar material is applicable to the impugned bricks, sand and lime being the stone/plaster. Since fly ash was added later to sand lime composition of bricks that Rule 3 (b) of the interpretation rule is most applicable. From the composition of bricks, as above, fly ash being used in least quantity, essential material for impugned bricks remain is sand and lime. Thus, the impugned bricks, to our opinion qualify for being classified under tariff entry 6810 precisely 68109990. The impugned bricks can be manufactured without fly ash, as it used to be earlier but not without sand and lime. The notification 1/2011 specifically mentions bricks of sand and lime. Hence, we are of opinion that appellants have rightly availed the benefit of exemption therein. No question of confiscation at all arises - Appeal allowed - decided in favor of the assessee.

Summary

Issues Involved:
1. Classification of Sand Lime Fly Ash Bricks.
2. Applicability of General Exemption Notification No. 48 and Notification 1/2011-CE.
3. Allegation of time-barred demand and mis-declaration or suppression of facts with intent to evade duty.

Issue-wise Detailed Analysis:

1. Classification of Sand Lime Fly Ash Bricks:
The primary issue was whether the bricks manufactured by the appellants should be classified under tariff heading 6810 (specifically 68109990) as "other sand and lime bricks" or under tariff heading 6815 (specifically 68159910) as "fly ash bricks." The appellant argued that their bricks, which contain sand, lime, and fly ash, derive their essential character from sand and lime, and thus should be classified under heading 6810. The department contended that the bricks should be classified as fly ash bricks under heading 6815 due to their composition.

2. Applicability of General Exemption Notification No. 48 and Notification 1/2011-CE:
The appellants claimed the benefit of Notification No. 1/2011-CE, which provides exemptions for certain types of bricks. The department denied this benefit, asserting that the bricks should be classified as fly ash bricks, which do not qualify for the exemption under the said notification. The Tribunal examined the composition of the bricks, noting that they contain 1170 grams of sand and lime, 910 grams of fly ash, and 520 grams of moisture. Since the fly ash content is less than 50% by weight, the Tribunal concluded that the bricks should be classified under heading 6810, making the appellants eligible for the exemption.

3. Allegation of Time-Barred Demand and Mis-Declaration or Suppression of Facts with Intent to Evade Duty:
The appellants argued that the demand for duty was time-barred, as the Show Cause Notice (SCN) was issued on 01.10.2013 for the period up to August 2012. They contended that the issue was one of interpretation, and there was no mis-declaration or suppression of facts with intent to evade duty. The Tribunal agreed, noting that the classification issue was a matter of interpretation and that the appellants had not suppressed any facts. Consequently, the demand was deemed time-barred, and the allegation of mis-declaration or suppression was not upheld.

Conclusion:
The Tribunal concluded that the impugned bricks should be classified under tariff heading 6810 (specifically 68109990) as "other sand and lime bricks," making the appellants eligible for the benefit of Notification No. 1/2011-CE. The Tribunal also found that the demand for duty was time-barred and that there was no mis-declaration or suppression of facts with intent to evade duty. The order under challenge was set aside, and the appeal was allowed.