2002 (8) TMI 222 - AT - Central Excise

Summary

Issues involved:
1. Classification of rockwool containing more than 25% by weight of blast furnace slag.
2. Applicability of Rule 3(a) and Rule 3(c) of the Rules of Interpretation of the Central Excise Tariff Act.
3. Validity of the CBEC Circular No. 587/24/2001-CX, dated 17-9-2001.
4. Legislative intent and fiscal policy regarding the use of waste materials in manufacturing.

Issue-wise detailed analysis:

1. Classification of rockwool containing more than 25% by weight of blast furnace slag:
The appellants manufacture rockwool and claimed its assessment under sub-heading 6807.10, which applies to goods containing more than 25% by weight of blast furnace slag, at a lower duty rate of 8%. This claim was initially accepted by the Dy. Commissioner but overturned by the Commissioner (Appeals), who classified the rockwool under sub-heading 6803.00, which covers slagwool, rockwool, and similar mineral wools, with a higher duty rate of 18%. The Commissioner (Appeals) relied on Rule 3(a) of the Rules of Interpretation, which prefers a more specific description over a general one, arguing that 6803.00 provides a more specific description of the product.

2. Applicability of Rule 3(a) and Rule 3(c) of the Rules of Interpretation of the Central Excise Tariff Act:
The appellants contended that both sub-headings 6803 and 6807 are specific for the goods mentioned therein. They argued that Rule 3(c) should be applied, which warrants classification under 6807, as it occurs last in the numerical order among the headings equally applicable to the classification. The Revenue, however, maintained that Rule 3(a) should prevail, as 6803 provides the most specific description.

3. Validity of the CBEC Circular No. 587/24/2001-CX, dated 17-9-2001:
The circular clarified that goods known/marketed as slagwool, rockwool, and similar mineral wool, even if containing more than 25% by weight of blast furnace slag, should be classified under Heading 6803. This circular was followed by the Commissioner in the impugned order. The Tribunal examined the circular's correctness and found that it contradicted the legislative intent and the specific provisions of the tariff. The Tribunal emphasized that an administrative circular cannot override legislated entries and Explanatory Notes to the Budget.

4. Legislative intent and fiscal policy regarding the use of waste materials in manufacturing:
The Tribunal noted that the Government's policy aimed to encourage the use of waste and polluting materials in manufacturing, granting full exemption or lower duty rates for goods containing more than 25% by weight of such materials. This policy was reflected in various notifications and the re-casting of Chapter 68 in the 1997 budget, which introduced Heading 6807 specifically for goods with more than 25% by weight of red mud, press mud, or blast furnace slag. The Tribunal concluded that the correct classification should align with this legislative intent and fiscal policy.

Conclusion:
The Tribunal held that the correct classification of goods containing 25% or more by weight of blast furnace slag is under Heading 6807, not 6803. The appeal was allowed, setting aside the impugned order and providing consequential relief to the appellants. The Tribunal emphasized the importance of adhering to legislative intent and the specific provisions of the tariff, rejecting the CBEC circular that contradicted these principles.