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TMI Blog2017 (4) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... g manufactured and there was no purchase any Red Lead Oxide by them. Such Grey Oxide was being manufactured in the ball mill installed by the assessee after importation. 3. In the year 2008, the assessee fabricated and installed another plant through Barton Process with an intention to manufacture Red Lead oxide. The asseessee was maintaining the separate records for a manufacturing of Grey Oxide or intended production of so called Red Lead Oxide. The assessee was also having tested the so called Red lead oxide and maintaining the Test Reports. On 20.07.2011 and 28.07.2011, the DGCEI searched the factory premises of the assessee and after studying the process resumed certain records under Panchnama dated 20.07.2011 and through investigation, it was alleged that the assessee was not entitled to availment of exemption Notification No.50/2003- CE dated 10.03.2003 on the production and clearance of Grey Oxide and red Oxide as the said items are covered under Chapter Heading 28 are mentioned in Annexure-I to the Notification No.50/2003 ibid and the Red Lead and Grey Oxide manufactured by the assessee are classifiable under Chapter Heading 28.24, therefore, the assessee is liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Process and Grey Oxide by Ball Mill process which were being used in manufacture of Battery Plates. It is an admitted position that the assessee have declared and provided all the details, as sought from them by the Range Superintendent. Thereafter, the assessee was availing benefit of notification no.50/2003. He further submits that Red Lead Oxide was intended to be manufactured by the assessee w.e.f, 2008 through Barton Process, however, the same could not be manufactured due to snags in the Barton Plant. The test reports prepared by them confirms the same. This happened due to erratic functioning of the plant. Resultantly, the goods coming out through such plant could not be made use of, as Red Lead Oxide. The use of Red Lead Oxide is normally required to provide charging of the battery within a very short time or to say, immediate charging. This resulted in closure of the Barton Plant till the same was duly rectified. 5. He further submits that during the course of investigation on 20.07.2011, the panchnama was drawn and representative samples, each of Grey Oxide and Red Oxide were drawn. The test memo was prepared on the same date which shows that Serial No 9 of the Test Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out, formulations including overall factors of maintaining temperatures during manufacturing process, atmospheric conditions for carrying out the manufacturing process and like such technical aspects are required to be analysed and further determined for finding percentage of goods for Heading No.28.24. therefore, he submits that the trade parlance test is not applicable to the facts of this case in the light of the decision of Hon'ble Apex Court in the case of Mukesh Kumar Aggarwal & Co. reported in 1998 (14) ECR 353 (SC), therefore, he submits that the goods as having been produced and further in dispute fall under exclusion i.e. goods for Technical or Scientific Sense. Therefore, the Ld. Commissioner grossly erred in relying and referring that in Trade and Industries, the Oxide of lead, when red in colour, is known as Red Oxide or Red Lead. He further submits that as per the finding in para 3.21, it is held by the Ld. Adjudicating Authority the samples were not tested with correct protocol and also hold the department failed to discharge the burden that the impugned goods are classifiable under chapter 28.24. 12. He further submits that as the test reports of CRCL were not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e samples is in form of Red Colour Power and having Red Acid which is clear that the product is Red Oxide, therefore, the test report is clear and in the Trade Parlance, the Red Colour Powder is known as Red Oxide. In that circumstances, the assessee is required to pay duty on Red Oxide manufactured by them which is classifiable under Chapter Heading No. 28.24. In that circumstances, the impugned order qua, dropping demand for extended period of limitation is to be set aside. 15. Heard both the sides and considered the submissions. 16. On careful consideration submissions made by both the sides, we find that the following issues are as under: (i) Whether in the facts and circumstances of the case, the extended period of limitation is invokable or not (ii) Whether on the basis of the test reports it can be held that the goods in question are Red Lead Oxide or not (iii) Whether the goods can be classified as Red Lead Oxide as per trade parlance or not Issue No I: The contention of the assessee is that vide letter dated 09.04.2008, the appellant replied to the letter No. CE-20-DECL/KENZO/R-III B208/1880 dated 29.02.2008, and explained the whole process of manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The factor which empower the revenue authorities to invoke extended period of limitation to recover duty not levied or short levied and not paid or short paid were not present in the proceedings at hand. Once the Noticees declared what they were required to declare they cannot be charged with the offence of suppression of facts, fraud, mis-representation or collusion and least for such omissions and commissions with intent to evade the payment of Central Excise duty. In such circumstances only normal period of limitation is applicable. Under Section 11 A of the Act the normal period of limitation is one year which is to be computed from the relevant date. In these proceedings the duty of Central Excise was payable on clearances of red oxide and the duty has not been paid and periodical return relating to production and clearance has not been filed. Accordingly, the relevant date for computing the period of one year shall be the last date on which periodical return was required to be filed under the Act and rules made thereunder. The periodical return is required to be filed by the tenth day of the calendar month following the month in which clearances of the excisable good had take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed which was not followed as per test report placed before us. 17. As no details how the tests were conducted placed on record therefore, the test results are doubted and the same cannot be admissible. The Ld. Commissioner has also observed the same. 22. The Report of CRCL is also silent with regard to the method by which the samples were tested. It is incumbent upon the Expert concerned with testing of samples to place on record the method by which the samples were tested. It is open to judicial scrutiny. Further Sh. RP Singh, who signed the Report admitted during cross examination of him being not the person concerned with testing and he only appended his signature on the document placed before him. Such deposition goes a long way to establish about the alleged Test Report having only been a paper formality to falsely implicate M/s Kenzo international. 18. Further, we find that during the cross-examination, Sh. R.P. Singh, Chemical Examiner has said that there will be change in the properties of samples of Grey Oxide and Red Oxide due to atmospheric condition more or less for nearly two months. There may be a slight change in the oxidation of the salts due to atmosphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the test results within a reasonable period of time. In these circumstances, the impugned order has no merit, we set aside the same and allow the appeal with consequential relief. 20. We also take note of the fact that the Ld. Commissioner in the impugned order has examined and observed as under: 3.21 The Chemical formula for red lead or the red oxide is Pb3O4. The red lead is an oxide of lead metal. But it is not the only oxide of lead metal. There are many other products which are known as oxides of lead. The common lead oxides include; lead oxide (PbO), red lead (Pb3O4) and lead dioxide (PbO2). Less common lead oxides are lead sesquioxide (Pb2O3) and Pb12O19 (monoclinic, dark brown or black crystals). So, unless the chemical test report discloses the chemical formula of the oxide of lead it is not possible to know which oxide of lead is contained in particular sample. Even with respect to the grey oxide the test report mentions the sample is in the form of grey coloured powder, having lead oxide content 99.8% by weight. Sealed remnant returned. So, except for the difference in colour (which is a physical property of any substance and for which no chemical analysis is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt opinion. In that circumstances, the finding of the Ld. Commissioner with regard to the powder in question is Led Oxide or Red Lead is not correct. The classification of dispute cannot be determined as per trade parlance test. 24. We find that there is nothing on record if the product of M/s Kenzo International was the same as of other manufacturers manufacturing Red Lead Oxide. There is also nothing on record if the samples of M/s Kenzo International product in dispute were shown to others in trade for getting their opinion. Both the impugned show cause notice and impugned order are silent on such account. There was just no basis for the learned Commissioner to classify the so called Red Lead Oxide under Heading 28.24.The Learned Commissioner himself had held that the product having 70 to 80% of Lead Oxide is covered by Grey Oxide and Black Oxide of Heading 38.24. Even if one looks to CRCL report, for argument sake, it also provides Lead Oxide content of about 75%. There is no reason therefore to classify product in dispute under Heading no.28.24. Such finding of the Learned Commissioner about the Chemical Analysis Report is not worth reliable and further on the basis of such R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Tariff. When it is so then impugned order is set aside and the matter is remanded back to the original adjudicating authority for fresh adjudication with a direction to decide the liability of duty of Central Excise, if any, against the appellant. The process must be completed within a period of four months from the date of receipt of this order by providing an opportunity of hearing and production of evidence to the appellant as per law. 26. We find that the Ld. AR relied on the various statements recorded during the course of investigation that the assessee was manufacturing Red Lead Oxide. In fact, conclusion of the statement is that the assessee intended to manufacture Red Lead Oxide through Barton process but they could not succeed in manufacturing the same due to defects in the plant. 27. In view of the above observations, we find that the trade parlance test is not applicable to the fact and circumstances of the case the test reports relied by the Revenue is inconclusive, as no procedure was followed and the assessee was deprived from re-testing the samples, therefore, the product in question cannot be classified under chapter heading 28.24 without any posi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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