1991 (1) TMI 150 - HC - Central Excise

Classification of Formed Coal & Coke Briquettes under Central Excise Tariff

The court ruled that Formed Coal and Formed Coke briquettes should be classified under Item 11D of the Central Excise Tariff, not under the residuary Item ... Briquettes of coal and coke Issues Involved:1. Classification of Formed Coal and Formed Coke briquettes under Central Excise Tariff.2. Applicability of Excise Duty under Tariff Item 11D versus Item 68.3. Legality of the orders passed by the Assistant Collector and the Appellate Collector of Central Excise.4. Refund of excise duty paid under protest.Detailed Analysis:Issue 1: Classification of Formed Coal and Formed Coke briquettes under Central Excise TariffThe petitioners argued that their products, Formed Coal and Formed Coke briquettes, should be classified under Item 11D of the First Schedule of the Central Excises and Salt Act, 1944. They contended that these products are essentially coal and coke in a different shape, created through a mechanical pressing process, and thus should not be classified under the residuary Item 68. The respondents, however, maintained that the manufacturing process, which includes the addition of molasses and clay, results in a product distinct from the original coal and coke, thereby justifying classification under Item 68.Issue 2: Applicability of Excise Duty under Tariff Item 11D versus Item 68The court examined the relevant provisions of the Central Excises and Salt Act, 1944, particularly Section 3(1), which mandates the levy of excise duties on all excisable goods produced or manufactured in India as specified in the First Schedule. Item 68 serves as a residuary provision for goods not specified in Items 1 to 67. The court noted that from 1st March 1978, a new Item 11D was introduced, levying excise duty on coal (excluding lignite and coke not elsewhere specified). Subsequent notifications exempted certain goods under Item 11D from excise duty, including all sorts of coke.Issue 3: Legality of the orders passed by the Assistant Collector and the Appellate Collector of Central ExciseThe court critically analyzed the orders issued by the Assistant Collector and the Appellate Collector, which held that the excise duty was payable under Item 68. The court referred to the definitions of 'coke' and 'briquette' from Webster's Dictionary and considered expert reports from the Central Fuel Research Institute and the Institute of Fuel, London. These reports concluded that Formed Coal and Formed Coke briquettes are essentially coal and coke, respectively. The court emphasized that the manufacturing process did not alter the fundamental nature of the products.Issue 4: Refund of excise duty paid under protestGiven the court's finding that Formed Coal and Formed Coke briquettes should be classified under Item 11D, the excise duty levied under Item 68 was deemed incorrect. Consequently, the court quashed the orders dated 30th June 1979 and 28th April 1980, passed by the Assistant Collector and the Appellate Collector, respectively. The court directed the Assistant Collector to redetermine the excise duty payable under Item 11D and implied that the petitioners were entitled to a refund of the excise duty paid under protest.Conclusion:The court concluded that Formed Coal and Formed Coke briquettes should be classified under Item 11D of the First Schedule of the Central Excises and Salt Act, 1944, and not under the residuary Item 68. The orders passed by the Assistant Collector and the Appellate Collector were quashed, and the Assistant Collector was directed to reassess the excise duty in light of this judgment. The petitioners were entitled to a refund of the excise duty paid under protest.