2017 (11) TMI 753 - AT - Central Excise

N/N. 67/1995 dated 16.03.1995 - Intermediate goods - Revenue held a view that the intermediate products, being in the negative list of area based exemption, is neither eligible for exemption under N/N. 50/2003 nor exemption for captive consumption under N/N. 67/95 as the final product is exempted - Held that - the assertion in the impugned order regarding specific nature of inorganic compound was not been established by any chemical test - identical issue was decided in the case of ASSOCIATED PIGMENTS LTD. Versus SUPERINTENDENT OF CENTRAL EXCISE 1993 (6) TMI 91 - HIGH COURT AT CALCUTTA , where it was held that the classification of lead oxide grey will be under Chapter 38. As chapter 38 is not in the negative list for area based exemption under N/N. 50/2003, the confirmation of demand against the appellants is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Eligibility for concession under Notification No.67/1995 dated 16.03.1995 and classification of lead oxide emerging as an intermediate product.

Eligibility for concession under Notification No.67/1995:
The dispute revolved around the eligibility of the appellant for concession under Notification No.67/1995 dated 16.03.1995. The appellants, engaged in the manufacture of lead acid batteries and availing area-based exemption under Notification No.50/03-CE dated 10.06.2003, were questioned by the Revenue regarding the exemption for lead oxide emerging as an intermediate product. The Revenue argued that since lead oxide falls under Chapter 28 of the Central Excise Tariff, it is excluded from the area-based exemption. The Revenue initiated proceedings to demand and recover Central Excise duty on the lead oxide, resulting in a confirmed liability for the appellant. The original authority imposed penalties under Rule 25 of Central Excise Rules, 2002, along with Section 11 AC of the Central Excise Act, 1944.

Classification of lead oxide as an intermediate product:
The appellant's consultant argued that the product emerging at the intermediary stage is lead suboxide or grey oxide, not the chemically defined lead oxide under Chapter 28. The consultant contended that the original authority erred in classifying the product as lead oxide without considering its chemical nature and previous case laws. The Revenue, on the other hand, maintained that lead oxide is a specifically defined inorganic chemical falling under Chapter 28, not Chapter 38 for residual products. The Tribunal noted that the product in question was lead oxide grey or grey oxide, as indicated by the original authority. However, the original authority's classification was based on the assumption that it was lead oxide without any chemical test to establish this. Previous decisions by the Tribunal and High Courts, such as Chloride Industries Ltd. Vs. CCE, Calcutta-II, supported the classification of lead grey oxide under Chapter 38, not Chapter 28. As Chapter 38 was not in the negative list for area-based exemption under Notification 50/2003, the confirmation of demand against the appellants was deemed unsustainable, leading to the setting aside of the impugned orders and allowing the appeals.