2009 (9) TMI 460 - AT - Central Excise

Tiles- Mineral wool fibre ceiling tiles- The appellants are the manufacturers of Mineral Wool Fibre Ceiling Tiles and have registered themselves with the Central Excise Department with PAN based Registration No. AACCM5420HXM002. They have claimed classification under chapter sub-heading No. 6807.10 up to 27-2-2005 and claimed NIL rate of duty as per tariff rate, and under Tariff Item No. 6806 90 00 from 28-2-2005 (consequent to the introduction of new 3 digit Central Excise Tariff) and claimed NIL rate of duty on the above said excisable goods under Notification No. 03/2005-C.E., dated 24-2-2005 w.e.f. 1-3-2005. The appellants are aggrieved by the Order-in-Appeal which has held that they are not eligible for the benefit of Notification and coming to such a conclusion, the learned Commissioner has remanded the matter back to the Adjudicating Authority for quantification. Appeal No. E/170/2009 has arisen out of the Order-in-Appeal which upheld the Order-in-Original which in remand proceedings confirmed the demand and also imposed the penalties. In the light of the decision of Collector of Central Excise v. Jayant Oil Mills etc, held that- the facts and circumstances of the case, we are of the considered view that the impugned orders are not sustainable and liable to be set aside and we do so. We hold that the final product Mineral Wool Fibre Tiles are classifiable under CSH No. 6807.10 for the period up to 27-2-2005 and eligible for benefit of Nil rate of duty and subsequently eligible for benefit of Notification No. 03/2005-CE dated 24-2-2005. Impugned orders are set aside and appeals are allowed with consequential relief, if any.

Summary

Issues Involved:
1. Eligibility for the benefit of Notification No. 03/2005-C.E., dated 24-2-2005.
2. Classification of 'Mineral Wool Fibre Ceiling Tiles' under the correct Chapter Heading.
3. Burden of proof for classification and eligibility for exemption.
4. Interpretation of exemption notifications and statutory provisions.

Issue-Wise Detailed Analysis:

1. Eligibility for the benefit of Notification No. 03/2005-C.E., dated 24-2-2005:
The appellants claimed exemption under Notification No. 03/2005-C.E., asserting their product contained more than 25% by weight of blast furnace slag. The Department contended that the exemption was inapplicable as the appellants did not use blast furnace slag directly in manufacturing. The Tribunal noted that the appellants had consistently used mineral wool containing more than 25% blast furnace slag, a fact judicially recognized in earlier proceedings. The Tribunal concluded that the appellants were eligible for the exemption as the requirement was the usage of blast furnace slag in the process, not necessarily direct usage.

2. Classification of 'Mineral Wool Fibre Ceiling Tiles' under the correct Chapter Heading:
The appellants classified their product under Chapter Heading 6807.10, attracting NIL duty, while the Department argued it should be under 6807.90, attracting 16% duty. The Tribunal considered previous judicial decisions and the manufacturing process, confirming the product's classification under 6807.10 up to 27-2-2005. Post-28-2-2005, the classification was under 68069000, still eligible for NIL duty under the Notification.

3. Burden of proof for classification and eligibility for exemption:
The Tribunal emphasized that the burden of proof lies with the Revenue to demonstrate that the product does not meet the classification claimed by the appellants. The Department failed to provide evidence disproving the appellants' claim that their product contained more than 25% blast furnace slag. The Tribunal cited Supreme Court precedents affirming that the Revenue must substantiate its reclassification claims.

4. Interpretation of exemption notifications and statutory provisions:
The Tribunal rejected the Department's narrow interpretation that blast furnace slag must be used directly in the manufacturing process. It relied on the Supreme Court's decision in Tata Oil Mills Co. Ltd., which held that the purpose of an exemption notification should not be defeated by a restrictive interpretation. The Tribunal concluded that the appellants' process met the notification's requirements, thus qualifying for the exemption.

Conclusion:
The Tribunal set aside the impugned orders, holding that 'Mineral Wool Fibre Ceiling Tiles' were correctly classified under Chapter Heading 6807.10 up to 27-2-2005 and were eligible for NIL duty under Notification No. 03/2005-C.E. The appeals were allowed with consequential relief.