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TMI Blog2001 (6) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... d at their factory at Malanjkhand, Madhya Pradesh, out of copper ore obtained from the mines. According to the assessee the product falls for classification under Chapter Heading 26.03, while the Commissioner has upheld the classification under Chapter Heading 7401.20 of the Schedule to the Central Excise Tariff Act, 1985 holding that the product is "cement copper" (precipitated copper). Another issue is the applicability of the extended period of limitation. Eligibility of the goods to the benefit of exemption in terms of Notification 217/86 also arises for our consideration. 3. In appeal Nos. E/2735-2736, the assessees have filed Miscellaneous Application (E/Misc. 107/2001) for raising additional ground relating to the admissibility of Notification 217/86. On hearing both sides and noting that the plea regarding availability of this benefit was raised in the reply to the show cause notice and further noting that it is a legal plea, we permit the applicants to raise the additional ground. The miscellaneous application is thus, allowed. 4. We have heard Shri V. Lakshmikumaran, Learned Counsel for the appellants and Shri M.P. Singh, Learned DR for the Revenue and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted process of manufacture shows that it is obtained by precipitation, i.e., by adding iron to the aqueous solution resulting from the leaching of ores or residue. The Department has relied upon HSN Explanatory Notes to Heading 74.01 at page 1043 which states that : "Copper Cement (precipitated copper) is a product obtained by precipitation (cementation) i.e. by adding iron to the aqueous solution resulting from the leaching of certain roasted ore or residue..." Further basis for the classification is that appellant themselves described the product as Cement Copper, as seen from the notes of discussion held on 18-5-1995 with the Representatives of the purchaser for sale of cement copper. 7. The submission of the appellants that the goods in dispute are minerals of mineralogical species actually used in the metallurgical industry for extraction of metals of Section XV (Copper) is not rebutted by the Revenue. It is also not the case of the Revenue that the minerals have been submitted to the processes not normal to the metallurgical industry. The HSN Explanatory Notes to Chapter 26 at page 213 set out that the processes to which products of Headings 26.01 to 26.17 may h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (treated with diluted sulphuric acid) and leaching of unroasted ore results in sulphate of metal. Learned SDR had also referred to extracts from the book 'Metallurgy and Plastics for Engineers' by Merle C. Nutt, at pages 16, 17 and 18 dealing with various methods of extraction of metal ores such as Concentration methods, Pyrometallurgical Processes and Hydrometallurgical to support the argument that the process adopted by the appellant results in production of cement copper. We find that the process of manufacture adopted by the assessee is not of the three methods mentioned above. The Department has not been able to establish with reference to any technical literature that leaching of unroasted ores will also result in production of cement copper. There is one more reason why the goods in dispute do not fall for classification under Chapter 74 and, that is, that Chapter 74 does not cover raw materials from which copper is made - it covers base metals and products thereof; cement copper is a product sometimes used in anti-fouling paints and agricultural fungicides. The product in dispute is admittedly despatched by the appellants to their units at Khetri and Ghatshila where smeltin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-1995 Letter to the Supdt. for making suitable amendment to the Registration Certificate dated 30-6-1992 - for the purpose of selling 'Cement Copper'. The process of manufacture of rich copper concentrate (cement copper) was also submitted along with this letter as Annexure - A. The appellants applied for registration as 'manufacturer' since they wanted to dispose of the Rich Copper Concentrate through tender. Earlier, the appellants were clearing the rich copper concentrates to their other units for extraction of metal. 9-6-1995 Application in Form D-2 submitted to the Department. 9-6-1995 Application for registration with the Department as a manufacturer of 'Cement Copper'. 17-7-1995 Letter from Supdt. directing the appellants to furnish the details pertaining to production and clearance of cement copper for the last four years. 22-7-1995 Details as requested by the Supdt. furnished by the appellants. 17-8-1995 Letter from Supdt. stating that the cement copper falls under sub-heading 7401.20 and attracts duty at the rate of 15% ad valorem. He has also directed the appellants to state the reasons for effecting clearances of cement copper without payment of duty for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants. The allegation and finding of intention to evade payment of duty on the disputed product is also not sustainable since the benefit of Modvat credit would have been available to the assessee's units at Khetri and Ghatsila if the appellants had paid excise duty in Malanjkhand by treating the product as 'cement copper'. In this connection decision of the Larger Bench of the Tribunal in the case of Jay Yushin Ltd. - 2000(119) E.L.T. (Tribunal-LB) = 2000 (39) RLT 501 becomes very relevant. In Para 13 of that order it has been held that with particular reference to the Modvat scheme it has to be shown that the revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of assessee's goods, so as to sustain the argument that the demand is time-barred. In the present case, if duty had been paid credit would have been available to the assessee himself at the units at Khetri and Ghatsila. For the above reasons we hold that the demand raised in the show cause notice dated 29-11-1996 is barred by limitation. In view of our findings on merits and limitation, we do not deem it necessary to reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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