1989 (3) TMI 235 - AT - Central Excise

Issues Involved:
1. Classification of 'liquid gold' under Central Excise Tariff Act, 1985.
2. Eligibility for exemption under Notification No. 35/85-C.E., as amended by Notification No. 78/86-C.E.

Issue-wise Detailed Analysis:

1. Classification of 'Liquid Gold' under Central Excise Tariff Act, 1985:

The primary contention revolves around whether 'liquid gold' should be classified as 'ceramic colour' under sub-heading 3207.90. Both appellants, manufacturers of 'liquid gold,' filed their Classification Lists claiming it as 'ceramic colour' and sought exemption from excise duty. The Assistant Collector classified 'liquid gold' under sub-heading 3207.90 and additives (chemicals) under sub-heading 3801.90, rejecting the exemption claim. This classification was upheld by the Collector of Central Excise (Appeals).

The Assistant Collector's findings stated, "It is not disputed by the party that the liquid gold is covered under sub-heading 3207.90... Since the description given of the liquid gold as well as and use shown by the party clearly tally with the liquid lustre, therefore, I order its classification accordingly." The Collector (Appeals) confirmed this, noting, "The Classification of liquid gold will have to be determined as per the express description under the appropriate Tariff heading... liquid gold will fall under the heading 32.07 and sub-heading 3207.90 as 'liquid lustre'."

2. Eligibility for Exemption under Notification No. 35/85-C.E., as amended by Notification No. 78/86-C.E.:

The appellants argued that 'liquid gold' should be considered as 'ceramic colour' and thus eligible for exemption under the said notifications. The Assistant Collector and the Collector (Appeals) denied this, stating that 'liquid gold/liquid lustres' are not specifically mentioned in the notification. The Collector (Appeals) noted, "Ceramic colours used in the notification are not identical with 'liquid lustres'."

The appellants contended that 'liquid gold' is a ceramic colour decorating material, supported by various technical references and certificates. They argued that the authorities erred in distinguishing between 'prepared colours' and 'liquid lustres' without considering the broader term 'similar preparations' used in the tariff heading. They emphasized that 'liquid gold' and 'lustres' are both metal solutions used for ceramic decoration, and thus 'liquid gold' should be considered a 'ceramic colour.'

The Tribunal observed, "The words used in the Notification refer to 'ceramic colour'. This description is functional and end-use is relevant for deciding on the nature of the goods as 'ceramic colours' are not defined in the Tariff." It was noted that both the Assistant Collector and the Collector (Appeals) acknowledged that 'liquid gold' is used in the ceramic/glass industries.

The Tribunal concluded, "Liquid gold does not cease to be a ceramic colour which the Notification sought to exempt... we hold that liquid gold is a ceramic colour and is entitled to the exemption under Notification No. 35/85 as amended by Notification No. 78/86-C.E."

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeals and granting the consequential relief, holding that 'liquid gold' is indeed a 'ceramic colour' and thus entitled to the exemption under Notification No. 35/85-C.E., as amended by Notification No. 78/86-C.E.

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