1994 (8) TMI 105 - AT - Central Excise

Summary

Issues Involved:

1. Classification of white cement under the correct tariff heading.
2. Determination of the appropriate criteria for classification (ISI specifications vs. trade parlance).
3. Application of the doctrine of contemporaneous exposition.
4. Relevance of end-use in classification.
5. Onus of proof in classification disputes.
6. Admissibility of additional evidence at the appellate stage.

Issue-wise Detailed Analysis:

1. Classification of White Cement:

The central issue was whether the white cement manufactured by the appellants should be classified under the specified tariff entries or the residuary entries. The appellants argued that their product conformed to the ISI specifications for Rapid Hardening Cement (RHC) and should be classified under the specified entries (Tariff Item 23(1) before 28-2-1986 and 2502.20 after 28-2-1986). The department contended that the product was known in the market as white cement and should be classified under the residuary entries (Tariff Item 23(2) before 28-2-1986 and 2502.90 after 28-2-1986).

2. Criteria for Classification:

The appellants argued for classification based on ISI specifications, asserting that their product met the standards for RHC. They cited various technical reports and expert opinions supporting their claim. The department, however, argued that trade parlance should be the deciding factor, emphasizing that the product was known and marketed as white cement, which had distinct ISI specifications (8042:1978) different from RHC (8041:1978).

The Tribunal held that ISI specifications could be one of the tests for classification but not the sole criterion. It emphasized that trade parlance, i.e., how the product is known in the market, should be considered. The Tribunal noted that the product was marketed and known as white cement, and therefore, it should be classified accordingly.

3. Doctrine of Contemporaneous Exposition:

The appellants referred to Notification No. 24/91-C.E., dated 25-7-1991, and its amendment by Notification No. 2/92, dated 2-1-1992, to argue that white cement was included under the specified entries. The department countered with references to the Cement Control Order, which distinguished between white cement and RHC.

The Tribunal held that the doctrine of contemporaneous exposition was not applicable in this case, as the notifications and amendments were issued within a short period and did not provide a consistent interpretation over time.

4. Relevance of End-Use:

The appellants argued that end-use should not be a criterion for classification, citing the Supreme Court's decision in Dunlop India. The department countered that end-use was relevant to understand trade parlance.

The Tribunal agreed with the department, stating that end-use was relevant to understand how the product was known in the market, although it was not the sole criterion for classification.

5. Onus of Proof:

The appellants argued that the onus was on the department to prove that their product did not fall under the specified entries. The department contended that it had discharged this burden by providing evidence that the product was known as white cement.

The Tribunal held that the department had discharged its burden of proof by demonstrating that the product was marketed and known as white cement, which was not covered by the specified entries.

6. Admissibility of Additional Evidence:

The department attempted to introduce additional evidence at the appellate stage, which the appellants opposed.

The Tribunal allowed the additional evidence, stating that it was relevant to the issue of classification and supported the department's case.

Conclusion:

The Tribunal concluded that the product manufactured by the appellants was white cement, which was not covered by the specified entries for RHC. Therefore, it was correctly classifiable under the residuary entries (Tariff Item 23(2) before 28-2-1986 and 2502.90 after 28-2-1986). The order of the Collector (Appeals) in the case of J.K. White Cement was set aside, and the appeal was allowed. In the case of Indian Rayon, the order of the Collector, Central Excise (Appeals) was upheld, and the appeal was rejected.