2024 (9) TMI 1590 - AT - Central Excise

Classification of goods - Zero Air - whether the Zero Air cleared by the appellant during the period December 2002 to June 2007 is classifiable under Chapter heading 2851 as compressed air attracting NIL rate of duty or classifiable under Chapter heading 2804 attracting 16% duty as confirmed in the impugned order? - HELD THAT - The process of manufacture of Synthetic Air and Compressed Air are different; however, from the evidences collected by the Department viz. statement of Mr. M. Dhananjay, Manager of M/s. Somu Solvents (P) Ltd. who are engaged in the manufacture of Glycol ether acetates and other solvents. It is stated that they purchased Zero Air from the appellant and categorically stated that the said Zero Air contains 78% of Nitrogen, 20.8% of Oxygen and 1.2% of Argon and they do not use the same as Compressed Air in or in relation testing their manufacture of their finished products, since Compressed Air cannot be used in Gas Chromatograph test; besides, composition of Compressed Air is not of required standard for Gas Chromatograph test. Further it is stated by him that there is no difference between Synthetic Air and Zero Air as both are one and the same. In his statement dated 07.11.2007, Mr. Devendra Kumar, Scientist of M/s. EID Parry (India) Limited, Bangalore has also categorically disclosed that they purchased Zero Air from the appellant and the same is used for Gas Chromatograph test by them, to which Compressed Air cannot be a substitute. It is found that the clearance of Zero Air classifying the same under Chapter Heading 2851 as Compressed Air itself involved suppression of facts. Therefore, invocation of extended period, in our view, is justified. Besides that, from July 2007, accepting the classification as pointed out by the Revenue subsequent to visit of their factory, the appellant discharged duty for clearance of the said Zero Air classifying the same under Chapter Heading 2804. There are no merit in the appeal. consequently, the impugned order is upheld and the appeal is rejected.

Summary

Issues: Classification of 'Zero Air' under Central Excise Tariff Act, 1985.

Analysis:
1. The appellant, engaged in manufacturing industrial gases, was investigated for clearing 'synthetic air' as 'zero air' without duty payment. The show-cause notice demanded duty for the period Dec 2002 to June 2007. The appellant argued that zero air was classified as compressed gas under Chapter 2851, following a Tribunal decision upheld by the Supreme Court.

2. The appellant explained the process of manufacturing zero air and synthetic air, highlighting the distinction based on the presence of Argon. The appellant believed in the correct classification under Chapter 2851/2853 and declared zero air in returns. They cited judgments to support their bona fide belief and argued against the invocation of the extended period for demand confirmation.

3. The Revenue contended that zero air sold by the appellant was actually synthetic air, not compressed gas, as per customer statements. The Tribunal found evidence supporting the Revenue's claim, including statements from customers using zero air for specific tests that compressed air couldn't fulfill.

4. The Tribunal concluded that the appellant's clearance of zero air as compressed air under Chapter 2851 involved suppression of facts. The appellant began paying duty under Chapter 2804 from July 2007. The Tribunal upheld the impugned order, rejecting the appeal due to the misclassification of zero air and the subsequent duty payment change.

Judgment:
The Tribunal upheld the Revenue's classification of zero air as synthetic air under Chapter 2804, rejecting the appellant's claim of classification under Chapter 2851. The appeal was dismissed, citing suppression of facts and the subsequent correct duty payment classification.