2003 (1) TMI 104 - SC - Central Excise

Whether the manufactured products of the appellant sold in the trade name of Marbella Agglomerated Marble and Marbellam Tiles are commercially known as mosaic tiles and are entitled to the benefit of exemption notification? Held that - The appellant before the authority has produced sufficient material to demonstrate that the tiles manufactured by it with use of marble chips and crushed stones of marble are also known in the market as mosaic tiles like other mosaic tiles in which stones or articles other than marble are used. Thus on a wholly irrelevant and unsubstantial ground the well reasoned orders of the lower authorities were upset by the Tribunal and benefit of exemption notification was wrongly denied to the appellant. In favour of assessee.

Issues Involved:
1. Classification of the appellant's product under the Central Excise Tariff Act.
2. Eligibility for exemption from payment of duty under Notification No. 59/91-C.E.
3. Commercial recognition of the appellant's product as "mosaic tiles."

Issue-wise Detailed Analysis:

1. Classification of the Appellant's Product:
The appellant, engaged in the manufacture of floor tiles marketed as "Marbella Agglomerated Marbles" and "Marbellam Tiles," classified their product under Tariff Heading 68.07 for excise duty purposes. This classification was confirmed by the Collector of Customs and Central Excise (Appeals), Ahmedabad, on 21-6-1993. The product was not disputed to be neither block of marble nor marble in tile, but rather classified under Chapter 68 with Heading Articles of stone, plaster, cement, asbestos, mica, or similar materials, specifically under subheading 68.07, which includes all other articles of stone, plaster, cement, asbestos, mica, or similar materials not elsewhere specified or included.

2. Eligibility for Exemption from Payment of Duty:
The appellant claimed exemption from payment of duty under Notification No. 59/91-C.E., dated 20-3-1990, which exempts 'mosaic tiles that is to say tiles known commercially as mosaic tiles' included in Tariff Heading 68.07. The appellant's claim was initially accepted by the Collector of Central Excise (Appeals). However, the Central Excise and Gold (Control) Appellate Tribunal (CEGAT) overturned this decision, arguing that since the appellant marketed its tiles under different trade names and not as 'mosaic tiles,' they were not entitled to the exemption.

3. Commercial Recognition of the Appellant's Product:
The core issue was whether the appellant's tiles, sold under the trade names "Marbella Agglomerated Marble" and "Marbellam Tiles," were commercially recognized as "mosaic tiles." The appellant provided evidence, including affidavits from traders and an architect, as well as a report from the Assistant Chemical Examiner, Central Excise, Baroda, to support their claim. The Collector of Central Excise (Appeals) found this evidence persuasive, noting that the department did not produce any material to refute these assertions. The Tribunal, however, dismissed this evidence, emphasizing the trade names used by the appellant.

Judgment Analysis:
The Supreme Court found that the Tribunal erred in rejecting the appellant's claim for exemption based solely on the trade names used. The appellant had adequately demonstrated, through technical information and affidavits, that their product was both technically and commercially known as "Mosaic Tiles" or Marble Mosaic Tiles. The department failed to provide any rebuttal evidence. The Court emphasized that the classification of products in fiscal statutes should be understood in their popular sense, as recognized by those trading and using the product, rather than in a strict scientific or technical sense.

The Court concluded that the Tribunal's decision to deny the exemption was based on an irrelevant and unsubstantial ground. The appellant had produced sufficient material to show that their tiles, made with marble chips and crushed marble stones, were known in the market as 'mosaic tiles.' Consequently, the Supreme Court allowed the appeal, set aside the Tribunal's order, and restored the orders of the Assistant Collector of Central Excise and the Collector of Central Excise (Appeals).

Conclusion:
The Supreme Court ruled in favor of the appellant, granting them the benefit of the exemption notification and restoring the earlier favorable decisions by the lower authorities. The Court underscored the importance of understanding product classifications in their popular sense for fiscal purposes.

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