1998 (6) TMI 213 - AT - Central Excise

Summary

Issues:
1. Interpretation of tariff classification for zinc ingots.
2. Applicability of exemption under Notification No. 104/88.
3. Effect of change in tariff classification from Chapter 79 to Chapter 26.
4. Eligibility for exemption under Notification No. 175/86.
5. Calculation of value of clearances for exemption eligibility.

Issue 1: Interpretation of tariff classification for zinc ingots
The appeal challenged an order demanding Central Excise duty on zinc ingots manufactured from galvanised zinc ash, disputing the reclassification under Chapter 26 instead of Chapter 79. The appellant argued that the change in classification only took effect after the Finance Act of 1988, citing a previous Tribunal decision supporting their claim based on the Provisional Collection of Taxes Act, 1931. The Tribunal agreed that during the period in question, the benefit of exemption under Notification No. 114/88 applied, supporting the appellant's position.

Issue 2: Applicability of exemption under Notification No. 104/88
The appellant contended that zinc ingots made from zinc ash were entitled to exemption under Notification No. 114/88 during the relevant period. The Departmental Representative argued that the exemption was not applicable due to the change in tariff classification. However, the Tribunal upheld the appellant's argument based on the classification of raw materials and the period of assessment, granting the benefit of exemption.

Issue 3: Effect of change in tariff classification from Chapter 79 to Chapter 26
The Departmental Representative asserted that the deliberate change in tariff classification by the Government meant that exemption was not admissible to manufacturers during the period before the new classification came into effect. The Tribunal disagreed, emphasizing that the eligibility for exemption depended on the nature of the raw material, regardless of subsequent changes in tariff classification.

Issue 4: Eligibility for exemption under Notification No. 175/86
The Tribunal considered the eligibility for exemption under Notification No. 175/86 in light of the value of clearances. It concluded that goods exempted fully from duty should be excluded in calculating the total value of clearances, ensuring that the benefit of exemption continued for zinc ingots made from specified materials despite changes in tariff headings.

Issue 5: Calculation of value of clearances for exemption eligibility
Regarding the calculation of the value of clearances for exemption eligibility, the Tribunal clarified that the value of clearances for zinc ingots cleared free of duty should be excluded in determining the total value of clearances for assessing eligibility under Notification No. 175/86. Consequently, the impugned order demanding duty and penalty was set aside, and the appeal was allowed in favor of the appellant.