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Issues:
1. Classification of imported oak wood casks in CKD form under Central Excise Tariff. 2. Interpretation of the term "improved wood" under Tariff Item 16B. 3. Determination of whether the process of converting raw oak wood into barrels constitutes physical treatment. Analysis: 1. The appeal challenged the order confirming countervailing duty on imported oak wood casks in CKD form under Item 16B of the Central Excise Tariff. The appellants claimed exemption under Item 68 and Notification No. 48/79-Cus. The department alleged that the goods satisfied the criteria of improved wood under Item 16B and were liable for countervailing duty. A show cause notice was issued, and the case was decided against the appellants by the lower authorities. 2. The appellants argued that the oak wood casks were not subjected to physical or chemical processing as required for improved wood under Item 16B. They emphasized that only densified or impregnated wood undergoes physical processing, which was not the case with their imported oak wood casks. The appellants contended that the oak wood remained unchanged and was not converted into a different product. They sought to set aside the lower authorities' orders based on the lack of processing. 3. The department countered by presenting evidence from the Encyclopaedia Britannica detailing the manufacturing process of barrels, which involved physical processes like steaming, firing, trussing, and toasting. The department argued that these processes met the definition of improved wood under Tariff Item 16B. The department highlighted that even if the oak wood casks were only subjected to processes described in the manual on barrel construction, those processes could be considered physical treatments. 4. The Tribunal analyzed the technical literature provided by both parties. While the appellants relied on the manual emphasizing natural seasoning without physical processes, the department's evidence showed that the barrel manufacturing process involved significant physical treatments. The Tribunal noted that even if the oak wood casks were separated into smaller pieces in CKD condition, the processes like steaming, firing, and crozing applied to the barrels constituted physical treatments. Consequently, the Tribunal upheld the classification of the imported goods under Tariff Item 16B, affirming the imposition of countervailing duty. 5. In conclusion, the Tribunal determined that the processes involved in converting raw oak wood into barrels met the criteria of physical treatment, qualifying the wood as improved wood under Tariff Item 16B. Therefore, the Tribunal found no legal flaws in the lower authorities' decision to levy countervailing duty on the imported oak wood casks. As a result, the appeal was dismissed, and the impugned order was upheld.
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