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TMI Blog2013 (9) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... ub heading No.6802 2190. Leviability of duty on the processed agglomerated marble slabs for the period from 01.03.2006 to March 2008 - held that:- The appellant received such agglomerated marble slabs, and undertook the activity of resin filling and polishing as may be required before dispatch of such agglomerated marble slabs into the market. As already held by us hereinabove that the process of resin filling, polishing etc will not amount to manufacture in view of the facts discussed above, fortified by the judgment of co-ordinate Bench in the case of Oriental Trimex Ltd (2009 (8) TMI 454 - CESTAT, NEW DELHI), we find that the activity of resin filling, polishing by the appellant on agglomerated marble slabs will not amount to manufacture. Hence, the demand of duty on such processed agglomerated marble slabs for the period prior to March 2008 is un-sustainable in law. The duty liability, if any, arises on the appellant, on the marble slabs which they received prior to March 2006 from their job workers on payment of duty, the appellant is eligible to avail the CENVAT Credit on such amount and he would have been eligible for benefit of Notification No.4/2006-CE and they would d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 990. ii) The job workers are sending back the natural marble slabs blocks which are merely cut and sawn to the unit by paying duty@ Rs.30 per sq.mtr as applicable under Notification No.04/2006, dt.01.03.2006 classifying the goods under CETSH No.25151220. iii) On receipt of these marble slabs from the job-workers, the unit is carrying out further processes of resin filling, fibre backing and polishing and in some cases resin filling and fibre backing. iv) No duty is paid by the unit on these resin filled, fibre backed and polished natural marble slabs when they are cleared from their factory on sale to the various customers or on stock-transfer basis to their depot at Bhandup, Mumbai and Bhiwandi, Dist.Thane (Maharashtra) cleared by them under Commercial invoice showing therein the classification of goods under CETSH No.25151220. v) Duty on such processed marble slabs was paid by the unit during the period from March 2006 to May 2006 @ Rs.30 per sq.mtr classifying them under CETSH No.25151220 and no duty has been paid by them thereafter. vi) Agglomerated marble slabs are received from the job workers without Central Excise duties being paid by the job workers on payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, resin filling, polishing and/or edge cutting carried out by the appellant, as may be required, during the relevant period (prior to installation of Gangsaw Machines in their factory) in respect of the duty-paid natural marble slabs received from the job workers amounts to manufacture in terms of Section 2(f) of Central Excise Act, 1944 so as to attract the levy of duty ii) If the processes carried out by the appellant in respect of duty-paid natural marble slabs received from the job workers are considered as amounting to manufacture in terms of Section 2(f) of Central Excise Act, 1944, whether the processed natural marble slabs would continue to be classifiable under sub heading 2515 12 20 under which the job workers have paid the Central Excise duty@ Rs.30 per sq mtr under Notification No.4/2006-CE, dt.01.03.2006 or the same would be classifiable under S.H. 6802 91 00 attracting the duty at the ad-valerom rate as held by Commissioner or under S.H. 6802 21 90 and entitled for exemption under Notification No.4/2006-CE. iii) Whether the natural marble slabs obtained by the appellant by cutting/ sawing from natural marble blocks (after installation of gangsaw machines in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said processes undertaken by them are not nor can be considered as incidental or ancillary to the completion of a manufactured product; that, as the processes undertaken by the Appellant do not amount to manufacture in terms of Section 2(d) of the Act, the levy of duty is not attracted at all in respect of processed slabs and the demand of duty raised and confirmed thereon is without authority of law and cannot be sustained. Reliance placed on Note 1 of Chapter 25 is misplaced: that, the reliance placed by the Ld. Commissioner on Note 1 of Chapter 25 so as to conclude that the natural marble slabs subjected to the said processes would be classifiable under Chapter 68 is entirely misplaced and improper; that, on harmonious reading of Note 1 and Note 6 of Chapter 25 and in view of the opening qualifying phrase Except where the context or Note 4 to this Chapter otherwise requires, used in Note 1 and sizing and polishing being specifically included in Note 6, the inference is obvious that even after the natural marble slabs are subjected to the said processes, the final product would remain classified under Chapter 25; that, further, the said Chapter Note 1 does not sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty cannot go beyond the show cause notice while confirming the demand. The Appellant relies upon the following judgments: 1. CCE V/s. Ballarpur Industries- 2007 (215) ELT 489 (SC); 2. CCE V/s. Toyo Engineering India Ltd.-2006 (201) ELT 513 (SC); 3. HPCL V/s. CCE -2011 (269) ELT 422 (Tribunal); that, the aforesaid finding of the Ld. Commissioner is otherwise also baseless, incorrect and improper. The Appellant say that the marble slabs (natural or agglomerated) which are not subjected to such process are also capable of being bought and sold in the market and are in fact being sold. The Appellant undertakes one or more of such processes only if required and it is not the case of the department nor the department has established that the same are undertaken invariably in all cases; that, the judgment in M/s. Emptee Poly Yarn s case (supra) was rendered in the context of the provisions of Section 80-IA of the Income Tax Act, 1961 and has no applicability nor can be relied upon so as to determine whether the process carried out by the Appellant would amount to manufacture in terms of Section 2 (f) of the Act. It is well established that the terms like production and manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Income Tax Act, 1961. that, the Ld.Commissioner has also ignored the mandate/ caution of the Hon ble Supreme Court in Emptee Poly Yarns case that the said judgment would be confined to the facts of that case only. The issue is no longer res integra in view of the judgment in Oriental Trimex case: that, in the case of Oriental Trimex Ltd. V/s. CCE 2010 (249) ELT 259 (Tri.-Del.), the Honble Tribunal took note of the various judgments and finally, held that the activities of sawing of marble blocks into slabs and subjecting the same to further processes viz. sizing, edging, trimming and polishing for making the cut-to-size, polished marble slabs and polished marble tiles would not amount to manufacture prior to 01.03.2006. The ratio laid down in this judgment would be applicable in respect of the processes undertaken by the Appellant in respect of duty paid natural marble slabs even after 01.03.2006; that, in view of this authoritative and binding judgment of the Hon ble Tribunal, the mere process of fibre netting, resin filling, edge cutting and polishing, carried out by them, as may be required, in respect of duty-paid natural marble slabs cannot be considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out by them in respect of duty paid natural marble slabs amount to manufacture and the resultant product i.e. polished natural marble slabs would be classifiable under Chapter 68, the same would be properly and appropriately be classifiable under sub-heading no. 6802 21 90 and not under sub-heading 6802 91 00 as wrongly and improperly held by the Ld. Commissioner; that, the Ld. Commissioner has failed to appreciate that sub-heading 6802 91 00 and the 3 sub-headings following it are a sub-classification of group of Articles described as other and which is preceded by. In other words, sub-heading 6802 91 00 and the 3 sub-headings following it are in the nature of residual entries and the question of considering the same would arise only if the subject goods are not classifiable under the preceding entries of heading 6802. However, from the careful reading and perusal of heading 6802 21, it would be evident that the subject goods i.e. polished natural marble slabs are appropriately classifiable under sub-heading 6802 21 90 which covers the Articles/goods not covered by the previous sub-headings 6802 21 10 or 6802 21 20. Clarification issued by the Board vide TRU Circular dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry of the Notification that, as the benefit of exemption under Notification No.4/2006-CE is, admissible to the subject goods i.e. polished natural marble slabs, whether considered as classifiable under Chapter 25 or Chapter 68, the demand of duty raised and confirmed thereon vide the impugned order cannot survive in the eyes of law and is liable to be set aside. The Appellant therefore submits that viewed from any angle, the demand of duty raised and confirmed in respect of polished natural marble slabs is not sustainable. Issue at Sr. Nos. (iii) Classification of polished Natural Marble Slabs obtained by cutting of blocks and further processing : that, the natural marble slabs obtained by cutting/ sawing of blocks (after installation of Gangsaw Machines in their factory) and subjected to further processes including polishing would remain classified under sub-heading 2515 12 20 and eligible for concessional rate of duty under Notification No. 4/2006-CE and hence, demand of duty raised and confirmed thereon is not sustainable; that, even if it is assumed without admitting that such polished natural marble slabs obtained by the Appellant from Blocks are classifiable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the Note 3 of Chapter 68 apply prospectively: that, assuming without admitting that the said Note 3 of Chapter 68 has any relevance so far as the processes of resin filling, polishing etc. carried out on the tax-paid Agglomerated Marble Slabs are concerned, the said Note is effective only prospectively i.e. w.e.f. 26.02.2010 and cannot apply respectively as is the settled law. The demand of duty raised and confirmed in respect of such processed Agglomerated Marble Slabs is therefore invalid and untenable in law. Issue at Sr. No. (v) Levy of duty on processed Agglomerated Marble Slabs obtained by cutting of blocks and further processing: that, the process of cutting or sawing of Agglomerated Marble Blocks into slabs and further processes of resin filling, polishing etc. undertaken in respect thereof did not amount to manufacture in terms of Section 2(f) of the Act prior to insertion of Note 3 in Chapter 68 w.e.f. 26.02.2010, in view of the ratio laid down in Aman Marbles case (supra) and other judicial pronouncements as discussed above; that, the said Note 3 inserted in Chapter 68 vide the Finance Act, 2010 w.e.f. 26.02.2010 is also effective only prospectively a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , willful mis-statement, and mis-declaration of facts with intent to evade duty made and upheld against them are absolutely baseless and invalid and untenable in law and consequently, the invocation of extended period of limitation and confirmation of the demand of duty thereunder is absolutely unjustified, without authority of law and therefore unsustainable in law; that, the Appellant was also under bonafide belief, in view of the various judicial pronouncements, that such activities of fibre filling/resin backing/polishing carried out by them in respect of Natural Marble Slabs or Agglomerated Marble Slabs did not amount to manufacture as envisaged under Section 2 (f) of the Act and in the absence of any enabling Chapter Note or Section Note in the relevant Chapter/Section declaring such activities as amounting to manufacture; that, the bonafide belief of the Appellant was further fortified in view of the fact that other manufacturers/ processors involved in identical activities in and around Silvassa and elsewhere have also not been paying any Excise duty on such activities. The belief on part of the Appellant was also strengthened by the fact that the department had accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Submissions: that, as the demand of duty raised and confirmed against them on various counts is not sustainable in law on merits itself, the penalty imposed on them under Section 11AC of the Act cannot be sustained in law; that, the demand of duty raised vide the show cause notice dated 08.08.2008 is also time-barred as discussed above and therefore, the penalty under Section 11AC of the Act is not maintainable; that, moreover, the demand of duty raised vide the subsequent show cause notices dated 08.10.2008 and 10.02.2009 (upheld vide Order-in-Original dated 30.04.2010) and show cause notices dated 20.01.2010 and 23.11.2010 (upheld vide Order-in-Original dated 31.05.2011) were only in the nature of follow-up demand. Consequently, assuming without admitting the validity of such demand of duty on merits, the invocation of penal provisions of Section 11AC of the Act and/or Rule 25 of the Rules and the imposition of penalty thereunder in terms of such follow-up show cause notices cannot be sustained;that, so far as the co-appellants are concerned, the essential ingredients of Rule 26 of the Rules are not conclusively established as existing against them vide the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e backing/netting and resin filling is done, the marble slabs during transportation may get cracked or broken and hence these processes undertaken by the appellant should be equated and compared with packing and manufacturing activity. He would also rely upon the decision of the Hon'ble Supreme Court in the case of Shyam Oil Cake Ltd. 2004 (174) ELT 145 (SC), holding that once there is definition of deemed manufacture, brought into chapter note as regards product being processed and manufactured, the same will override all other propositions given by the ld. Counsel. It is his submission that the decision relied upon by the ld. Counsel in the case of Oriental Trimex Ltd 2010 (249) ELT 259 (Tri-Del), is today not a good law as the same has been overruled by the decision of Hon'ble Supreme Court in the case of Emptee Poly Yarn Pvt. Ltd. He also replied upon the decision of Hon'ble Supreme Court in the case of Arihant Tiles Marbles Pvt.Ltd. 209-TIOL-127-SC-IT-LB, wherein the Hon'ble Supreme Court has specifically held that cutting of marble blocks to slabs and tiles would amount to production. It is his submission that once such law is settled by Apex Court, any argument of the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated. From their factory, the same are sent to different job workers for processes of sawing/cutting i.e. the process of cutting the said blocks into slabs as the appellant did not have the facility of sawing in the factory. It is also undisputed that the natural blocks, after being cut into natural marble slabs, are received in the factory of the assessee under the cover of Central Excise invoices from the job worker on discharge of Central Excise duty @ Rs.30 per sq.mtr, after availing the benefit of Notification No.4/2006-CE, dt.01.03.2006. There is also no dispute that the agglomerated marble blocks, after being cut into agglomerated marble slabs, are received from the job workers under the cover of delivery challans on payment/discharge of Service Tax under the category of Business Auxiliary Service. 12. The adjudicating authority, in the entire Order-in-Original, has dedicated the findings as to whether the process of fibering of the marble slabs, filling of the marble slabs with resin, filling with color pigments in order to fill the cracks and pin holes present on the surface of the slabs, process of edge-cutting in which un-even sides of the slabs are being cut to give p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the decision of the Tribunal in the case of Nitco Tiles Ltd 2004 (155) ELT 50 (Tri-Mum) and in the case of Oriental Trimex Ltd 2010 (249) ELT 259 (Tri-Del) is on the self same issue. We find that the reliance placed by the adjudicating authority on the Chapter Note 6 of Chapter 25 is inserted w.e.f. 1.3.2006 would not have any applicability inasmuch as the said note would apply only when processes specified therein are undertaken for conversion of blocks into slabs or tiles. In order to appreciate correct position, we produce said chapter Note 6 as under: In relation to products of heading 2515 and 2516, the process of cutting or sawing or sizing or polishing or any other process, for converting of stone blocks into slabs or tiles, shall amount to manufacture. 16. It can be seen from above reproduced chapter note that this note will be applicable to a situation wherein an assessee brings entire stone blocks into his factory, cuts into the slabs and tiles and does all other activities. It cannot be read into this Chapter note that an activity performed by the appellant on the duty paid slabs shall also amount to manufacture. We find that reliance placed by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would get covered under Chapter 68 of Customs Excise Tariff Act, 1985. In our view, the activity undertaken by the appellant from cutting of the marble blocks till the polishing of the same would remain classifiable under Chapter 25 and would fall under Heading 2515 1220 and is eligible for benefit of Notification No.4/2006. Our view is fortified by the decision of the Tribunal in the case of Oriental Trimex Ltd (supra). We find in that judgment, the co-ordinate Bench of the Tribunal was considering an identical issue for the period prior to 01.03.2006 and also post 01.03.2006. In that case also, Revenue was canvassing a view that the product processed marble slabs would fall under Chapter 68. With respect, we reproduce the entire judgment, which is as under: 1. Common issue is involved in these appeals and, therefore, both are being taken up together for disposal. 2. The relevant facts of the case as per record, in brief, are that the appellants were purchasing marble blocks and marble slabs for processing thereon. The blocks were subjected to processing of sizing to make it rectangular and cut into slabs of uniform thickness by using Gangsaw machines. The slabs got cracks an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Associated Stone Industires (Kotah) Ltd. v. CCE, 1992 (60) E.L.T. 639, affirmed as reported at (2003) 10 SCC 771 (cutting into marble slabs and tiles). (ii) Rajasthan SEB v. Associated Stone Industries - (2000) 6 SCC 141 (cutting and polishing of stones into slabs). (iii) Aman Marbles Industries v. CCE - 2003 (157) E.L.T. 393 (S.C.) (Cutting into marble slabs). (iv) Bell Granito Ceramica Ltd. v. CCE, 2006 (198) E.L.T. 161 (S.C.) (Polishing of tiles). (v) Anmol Granites v. Union of India, 2006 (199) E.L.T. 769 (Raj.) cutting and polishing of granites into slabs. (vi) Calcutta High Court in the case of Oriental Tiles Ltd. v. Union of India vide its judgment dated 18-5-2006. (cutting of marble into slabs and polishing). (c) The Central Government introduced 8 digit classification in Central Excise Tariff with effect from 1-3-2005. CBEC vide Circular no. 808/5/2005-CX., dated 25-2-2005 clarified that Government had no intention to vary the duty structure on goods while transition from 6 digits to 8 digits. (d) In view of the above CBEC Circular, the Department cannot change its stand post 1-3-2005 and the decisions are applicable even in 8 digit tariff. (e) There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process undertaken by the appellants is not merely cutting by saw. He submits that besides cutting a number of processes were being undertaken by them on the raw materials received by them. The process undertaken by them are sizing, surfacing, applying fibre paste, filling of resin, cutting in sizes, edge trimming, polishing, etc., and such processes are cleary beyond the process of cutting of crude or roughly trimmed marble. He also submits that Shri S.C. Anand, DGM (Operation) in his statement dated 6-7-2006 stated that the stone blocks are subjected to the processes like sizing and surfacing of the faces before being cut into slabs of uniform thickness by Gangsaw machine. It is his submission that on physical examination of the goods, it was found that the goods were neither in crude form nor merely cut by sawing etc. So, it would not come within the purview of Chapter 25. 6. He submits that decision of the Hon ble Supreme Court in the case of Aman Marble Industries Pvt. Ltd. (supra) would not apply for the reasons that in the said case, the process was simply mere cutting of marble blocks into slabs. But, in the present case, the appellants were undertaking various processes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as it does not bring in a distinct product. Hence, this appeal is dismissed. There shall be no order as to costs. (c) The Hon ble Supreme Court in the case of Aman Marble Industries Pvt. Lid. v. Collector of Central Excise, Jaipur reported in 2003 (157) E.L.T. 393 (S.C.) held that the cutting of blocks into marble slabs involves only sawing of the marble blocks and thereby does not bring into existence as distinct commodity so as to state that when such activity is completed a new substance has come into existence and marble will remain marble and, therefore, this activity does not amount to manufacture. (d) The Hon ble Rajasthan High Court in the case of Anmol Granites v. Union of India reported in 2006 (199) E.L.T. 769 (Rajasthan) allowed writ petition, wherein, the issue was involved as to whether cutting and polishing of granite slabs and tiles from block amounts to manufacture and the end-product becomes subject to charge of excise duty under the Central Excise Act, 1944. (e) The Tribunal in the case of NITCO Tiles Ltd. v. CCE, Mumbai-II reported in 2004 (165) E.L.T. 50 (Tribunal-Mumbai) held that marble slabs obtained by cutting, polishing and fibre glass reinforcemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Commissioner observed that the case of Associated Stone Industries (Kotah) Ltd. (supra) and Aman Marbles Ltd. (supra) are not applicable in the present case as the said cases pertain to the period prior to 1-3-2005 (i.e. date of introduction of 8 digit Tariff). We are unable to accept the finding of the Commissioner. We find that ratio of the above decisions are squarely applicable in this case. The activities carried out by the appellants on the marble blocks and slabs do not amount to manufacture even after introduction of 8 digit classification code in the Tariff on 1-3-2005, unless by Section Note or Chapter Note of the Tariff or by wording of the relevant heading or sub-heading, the said process has been specified as manufacture. 9. We find that Note 6 was inserted in Chapter 25 of the Tariff with effect from 1-3-2006, as under:- In relation to products of heading 2515 and 2516, the process of cutting or sawing or sizing or polishing or any other process, for converting of stone blocks into slabs or tiles, shall amount to manufacture.It is observed by the Commissioner in the impugned order that Note 6 to Chapter 25 is clarificatory in nature. It is also observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are unable to accept the finding of Commissioner in view of the HSN Explanatory Notes of Heading 6802 as under:- The heading therefore covers stone which has been further processed than mere shaping into blocks, sheets or slabs by splitting, roughly cutting or squaring, or squaring by sawing (square or rectangular faces). The heading thus covers stone in the forms produced by the stone-mason, sculptor, etc. 12. It is not the case of department that the goods in question are monumental or building stone or the stone in the form produced by stone-mason, sculptor, etc. So, the classification of goods under Chapter 68 and demand of duty after 1-3-2006 are not justified. 13. It is seen that the CBEC vide Circular No. 134/02/2006-CX., 4 dated 3-9-2008 clarified as under :- A question has arisen as to whether marble slabs on which resin and hardner are applied on one side and fibre net on the other side would be covered by the exemption under notification no. 4/06-C.E., dated 1-3-2006. 2. The process of manufacture is that glass fibre net is applied on one side of the marble slabs to strengthen the slabs which are fragile and to enable safe handling and transportation. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Notification No.4/2006-CE extending the analogy of the said circular of CBEC, the duty liability, if any, arises on the appellant, on the marble slabs which they received prior to March 2006 from their job workers on payment of duty, the appellant is eligible to avail the CENVAT Credit on such amount and he would have been eligible for benefit of Notification No.4/2006-CE and they would discharge of duty liability @ Rs.30 per sq.mtr as indicated in the said notification, which is revenue neutral position. 19. As regards leviability of duty on the processed agglomerated marble slabs for the period from 01.03.2006 to March 2008, we find that it is undisputed that job worker used to cut the agglomerated marble slabs on job work basis and were sending the slabs to the appellant on payment of Service Tax under the category of Business Auxiliary Service for the reason that after cutting/sawing of agglomerated marble blocks, the processed agglomerated marble slabs would fall under Chapter Heading No.68 would not amount to manufacture as there was no deemed manufacture definition. The Revenue authorities have been accepting the discharge of Service Tax liability by job worker holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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