2025 (7) TMI 1000 - AT - Central Excise

Manufactured bricks with water, sand, and lime classified as sand lime bricks under heading 6810, eligible for notification benefits

CESTAT Chennai ruled in favor of the assessee regarding classification of manufactured bricks. The dispute centered on whether the products were ... Classification of ‘Bricks’ manufactured - Bricks manufactured by the Assessee are only concrete/cement bricks or is Sand Lime Bricks - allowance or denial of benefit of N/N. 1/2011 – CE dated 01.03.2011 - HELD THAT:- When the product contains Water, Sand and Lime, then as per the above, the same is required to be classified under 6810; as per Rule 2(b) of GRI of the Tariff Schedule, any reference in the heading to a material or substance shall be taken to include a reference to mixture or combination of that material or substance with other materials or substance. Applying this, it may be possible that the mixture of Sand & Lime requires classification as ‘SLB’ under sub-heading 68101190 and hence, the same may stand out of or would not fit into the classification as ‘Cement bricks’ for the reason that the product in question is not a mixture of Sand & Cement or Lime & Cement but rather a mixture of Sand and Lime with Cement as additive. It is also a matter of record that this claim regarding the ‘mixture’ is undisputed. It is found that the Revenue has not denied the contentions of the Appellant regarding the manufacturing process and the fact that the machine for manufacture of AAC Block/Brick and SLB are one and the same, the same machinery is used in the mass production of SLB. Nomenclature of AAC Block making machine would not ipso facto mean that the same could not be used in the manufacture of SLB. Use of modern technology for ease of production would not make it a cement/concrete brick - There is also no examination as to the ingredients of Concrete brick vis-à-vis SLB. In any case, there being no evidence made available to justify the re-classification as ‘Cement Brick/Block’, we have to reject the Revenue’s attempt to re-classify the goods in question under CETH 68101110 as ‘Cement Brick’. Thus, what was manufactured by the Appellant is only SLB and hence, the denial of benefit of notification - the findings in the impugned orders not approved - appeal allowed. ISSUES: Whether the goods manufactured are classified as 'Sand Lime Bricks' (SLB) or as 'Concrete/Cement Bricks' under the Central Excise Tariff. Whether the benefit of Notification No.1/2011 – CE dated 01.03.2011 is applicable to the bricks manufactured. Whether the extended period of limitation is justified in the demand for differential duty for the period April 2013 to July 2013. RULINGS / HOLDINGS: On classification, the court held that the goods manufactured are 'only SLB' and not 'Concrete Bricks,' rejecting the Revenue's re-classification attempt under CETH 6810 1110 as 'Cement bricks' because the predominant ingredients are Sand and Lime, with Cement present only as an additive. The court allowed the benefit of Notification No.1/2011 – CE to the appellant, holding that denial of the benefit was 'uncalled for' given the correct classification as SLB. The court found no justification for invoking the extended period of limitation as there was 'nothing suppressed' and no mention of limitation in the Show Cause Notices. RATIONALE: The classification issue was resolved by applying the Harmonised System of Nomenclature (HSN) and the interpretative Rules of General Rules of Interpretation (GRI), particularly Rule 2(b), which treats references to materials as inclusive of mixtures or combinations thereof. HSN Explanatory Notes to Chapter 68, Heading 6810, describe sand lime articles made from a pasty mixture of sand, lime, and water, steam-treated in autoclaves, consistent with the appellant's manufacturing process and product composition. The court emphasized the chemical and manufacturing distinctions between SLB and concrete bricks, noting that SLB consist essentially of sand bound by hydrated calcium silicate formed by the reaction of lime and sand, whereas concrete bricks are primarily sand and cement bound together. The court rejected reliance on incomplete or inconclusive laboratory test reports and statements of industry competitors, noting the absence of expert conclusive evidence to support re-classification. The use of autoclave technology and AAC block machinery was held not determinative of classification, as the same machinery can be used for SLB manufacture, and the process alone does not convert the product into concrete bricks. The court referenced precedent that when tariff entries are used in a scientific or technical sense, common or commercial parlance definitions cannot override technical classification principles. Regarding limitation, the absence of any allegation of suppression or concealment and the failure to mention extended limitation in the Show Cause Notices led to rejection of the extended period demand.