1996 (12) TMI 192 - AT - Central Excise

Summary

Issues:
- Classification and exemption of product "Silicon Emulsion" under Tariff Heading 15AA and Notification No. 101/66-C.E.
- Applicability of Tribunal's Larger Bench decision and Supreme Court judgments on the case.
- Dispute regarding duty payment and penalty imposition.

Classification and Exemption of Product "Silicon Emulsion":
The appeal pertains to an Order-in-Original passed by the Collector of Central Excise, Ahmedabad, concerning M/s. Aparajita Traders and M/s. Atita Traders. The Collector held that duty was payable on the entire quantity of "Silicon Oil" converted into "Silicon Emulsion," regardless of the manufacturing unit. M/s. Aparajita Traders had declared the product as "Silicone Emulsion" in 1982, stating it was made from imported silicon oil without a change in chemical property. The Supreme Court's judgment in Reliance Silicon (I) Pvt. Ltd. v. Collector of Central Excise established the conversion process as manufacturing, classifying the item under Tariff Heading 15AA. Additionally, the Tribunal's decision in Shri Bhadrada Chemicals Pvt. Ltd. v. Collector of Central Excise allowed exemption under Notification No. 101/66-C.E. The product was found to be eligible for exemption, and no duty was payable.

Applicability of Tribunal's Decisions and Supreme Court Judgments:
The Tribunal considered the arguments presented, noting that the issues were covered by its Larger Bench decision in Auxichem, followed in the case of Shri Bhadrada Chemicals Pvt. Ltd., and confirmed by the Supreme Court in Reliance Silicon (I) Pvt. Ltd. The judgments extensively addressed technical aspects, leading to the conclusion that the product, declared as silicon emulsion in 1982, fell under Tariff Heading 15AA and was exempt under Notification No. 101/66. As the declaration remained unchallenged by the department, no duty was payable, and no penalty was warranted. The impugned order concerning the product and the appellant was set aside, and the appeal was allowed with any consequential relief due.

Dispute Regarding Duty Payment and Penalty Imposition:
The Learned DR argued that without establishing the product's identity or composition through samples, its classification under 15AA could not be accepted. However, it was acknowledged that the appellants were manufacturers of silicon emulsion, as per the department's show cause notice and the Collector's observations. The Tribunal found that the product in question was indeed silicon emulsion, aligning with the case law cited by the appellant. Consequently, the duty payment dispute was resolved in favor of the appellant, given the classification under 15AA and exemption under Notification No. 101/66. The penalty imposed was deemed unnecessary and set aside, leading to the appellant's success in the appeal.