2001 (6) TMI 464 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product "rich copper concentrate."
2. Applicability of the extended period of limitation.
3. Eligibility for exemption under Notification 217/86.

Detailed Analysis:

1. Classification of the Product:
The central issue was the classification of "rich copper concentrate" produced by the appellant. The appellant argued that the product should be classified under Chapter Heading 26.03, whereas the Commissioner classified it under Chapter Heading 7401.20, labeling it as "cement copper" (precipitated copper).

- Appellant's Argument: The product, obtained from copper ore using a leaching method, retains the chemical composition of copper and should fall under Chapter 26, which covers copper ores and concentrates.
- Revenue's Argument: The process involves precipitation by adding iron to the aqueous solution, fitting the definition of cement copper under Chapter Heading 74.01.

The Tribunal noted that the HSN Explanatory Notes to Chapter 26 allow for physical, physico-chemical, or chemical operations normal to ore preparation for metal extraction. The process described by the appellant did not alter the chemical composition of the copper, and roasting, a key factor for classification under Chapter 74.01, was not involved.

Conclusion: The Tribunal held that the product is classifiable under Chapter Heading 26.03, as the process used by the appellant did not involve roasting and the product was not cement copper.

2. Applicability of the Extended Period of Limitation:
The show cause notice dated 29-11-1996 demanded duty for the period from November 1991 to July 1995, invoking the extended period of limitation under the proviso to Section 11A(1).

- Appellant's Argument: The central excise authorities were fully aware of the manufacture of "rich copper concentrate," and the Superintendent had accepted the surrender of registration after being satisfied that the product could not be classified as cement copper.
- Revenue's Argument: There was an intention to evade payment of duty.

The Tribunal found that the authorities were aware of the manufacturing process and had accepted the classification of the product as "rich copper concentrate." Additionally, the benefit of Modvat credit would have been available to the appellant's units if duty had been paid, indicating no intention to evade duty.

Conclusion: The demand raised in the show cause notice was barred by limitation.

3. Eligibility for Exemption under Notification 217/86:
The appellants raised an additional ground relating to the admissibility of Notification 217/86, which was permitted by the Tribunal.

Conclusion: In light of the findings on classification and limitation, the Tribunal did not find it necessary to record a finding on the plea of admissibility of the benefit of Notification 217/86.

Final Judgment:
The Tribunal set aside the impugned orders, classified the product under Chapter Heading 26.03, and concluded that the demand was time-barred. Consequently, the duty demand and penalty were set aside, and the appeals were allowed.