TaxTMI 
TaxTMI 
2009 (5) TMI 415
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....-10-2004 alleging that the appellants did not manufacture mosaic tiles and therefore they would not be entitled for the benefit of the exemption. Consequently, show cause notice for differential duty was imposed. In the show cause notice the following allegations were made:- (i) The appellants had never used mosaic chips in the manufacture of tiles, except for the month of January, 2002 and November, 2002; (ii) The chemical examination report supported the department's case about the absence of chips in the paving tiles in question; (iii) The reported presence of stone chips in the wearing layer were due to the presence of marble chips used in the manufacture of Jumbo Interlocking blocks; (iv) Though the appellants have purchased mosaic chips from February, 2004 and the issue of mosaic chips for the manufacture of jumbo blocks started only in August, 2004; (v) The quotations/correspondences of the products in question did not refer to the tiles as mosaic tiles and the dealers and end users had confirmed that the products in question were not mosaic tiles; (vi) The appellants had started mentioning the word mosaic in their product brochures only after October, 2004. 3. In vie....
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....e commercially referred to as mosaic tiles. Our attention was invited to the decision of the Tribunal in the case of Empire Industries Ltd. v. CCE - 1985 (19) E.L.T. 572 (Tri.) wherein it was held that the glass mosaic tiles would not be covered as article of glass but would be covered as tiles. This view was upheld by the Supreme Court in 1995 (77) E.L.T. A103 (S.C.). In the case of Mridul Enterprises v. CCE - 1988 (37) E.L.T. 279 the Tribunal held that the unicolour glass tiles manufactured from glass powder remains classified as mosaic tiles under TI 23D only after noting that the said product was considered as mosaic tiles in the commercial parlance. In the case of Shon Ceramics Pvt. Ltd. v. CCE - 1991 (52) E.L.T. 608 (Tri.) it was held that the product to be considered as mosaic tiles as per the explanation to the main heading in Tariff Item 23D, the tiles commercially should be considered mosaic tiles and also chemical contents of mosaic tiles are not to be considered while deciding the classification under Item 23D. This decision was also upheld by the Supreme Court as reported in 1996 (83) E.L.T. A179 (S.C.). Again in the case of Mridul Enterprises v. CCE - 2000 (123) E.L.T....
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....er geometric shape. The Tribunal in the Mridul Enterprises case reported in 1988 (37) E.L.T. 279 held that even unicoloured glass tiles are mosaic tiles. Once it has been decided by the judicial fora that the content of a tile is irrelevant to decide what the tile is commercially known as mosaic tiles or not, the entire discussion of the commissioner regarding the absence of mosaic chips notwithstanding the factual position that the stone chips have indeed been used is irrelevant. All that is relevant is whether the tiles manufactured and sold by the appellants have been bought and sold as mosaic tiles and whether the people dealing with it considered that to be mosaic tiles. The Commissioner in para 58.6 has rejected all evidence provided by the appellants regarding the commercial parlance on the ground that all these evidences proceed on the basis that the products of the appellants contains mosaic chips whereas the product of the appellants as per the chemical Examiner's report does not contain Mosaic chips/stone chips. The Supreme Court in the case of Kedia Agglomerated Marbles Ltd. recognizes an ordinary mosaic tiles without chip, even without chips as mosaic tiles. The Depart....
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....ed the goods as 'Grooved Mosaic Tiles'. It was submitted that the same dealers on enquiry made by the appellants have subsequently given letters stating that the goods can be called as mosaic tiles for external use. The said evidence was also produced before the adjudicating authority during the time of personal hearing. The appellants have produce evidences/affidavit from other dealers, an end user as well as an Architect (expert) along with the written submissions to show that the goods are referred to as "Mosaic Tiles for exterior use' in the trade parlance. Further, the percentage of dealers contacted and investigations conducted is miniscule and not representative at all. In view of that, the entire demand is unsustainable inasmuch as the number of dealers who have not been investigated far higher and with respect to whom no investigation has been conducted by the Department. In respect of interlocking tiles, the Commissioner in para 58.2 of the impugned order has held that it cannot be called as a tile itself, since the thickness of the tile is 6.5 cms or 65 mm which is higher than the BIS standard size of 22 mm to 25 mm. It was submitted that the interlocking tiles when join....
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.... and the payment of duty has been accepted. Once the classification as 'cement tiles for mosaic' is acceptable to the department for the purpose of collection of duty, it is submitted that the department cannot also reject the claim for exemption of duty on the ground that the products are not mosaic tiles. (5) The ld. Advocate has drawn our notice to several decisions of other adjudicating authorities in similar matters. In the case of M/s. Basant Flooring Pvt. Ltd., the product involved is paving tiles (interlocking pavers) described in invoice as mosaic tiles. Show cause notice was issued alleging that the exemption would not be available to paving tiles on the ground that the same is not known commercially as mosaic tiles. Reliance was placed on purchase orders wherein it was described as paving tiles. Proceedings were initiated against the appellants. Reliance was placed on the decision of the Supreme Court in the case of M/s. Kedia Agglomerated Marbles Ltd. The proceedings had dropped by the adjudicating authority the order has not been challenged and has attain finality. Further, in the case of M/s. Golden India Tiles Company Ltd. The invoice described the tiles as Terrazo ....
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....n the following cases: (i) Pushpam Pharmaceuticals Co. v. CC, Bombay [1995 (78) E.L.T. 401 (S.C.)] (ii) CCE, Vadodara v. Pioneer Scientific Glass Works [2006 (197) E.L.T. 308 (S.C.)]. (iii) Anand Nishikawa Company Ltd. v. CCE [2005 (188) E.L.T. 149 (S.C.)]. (iv) CCE, Bombay v. Bell Granite Ceramics [2006 (198) E.L.T. 161 (S.C.)]. Neither the show cause notice nor the impugned order pin point the precise document/declaration filed by the appellants, wherein a misstatement has been made. The mere act of claiming of benefit of exemption cannot be treated as the case of misdeclaration. Reliance was placed on the following decisions:- (a) Pahwa Chemicals Pvt. Ltd. v. CCE [2005 (189) E.L.T. 257 (S.C.)]. (b) Ballarpur Industries Ltd. v. UOI [1994 (74) E.L.T. 795 (Del.)] (7) The appellants had not committed any act or commission or omission or suppression as alleged. The appellants were under bona fide belief that the tiles merit classification as tiles commercially known as mosaic tiles and are eligible for exemption available from time to time. The decision of the departmental authorities in the cases cited by the appellants held similar products to be eligible for duty concessio....
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.... the Chemical Examiner, Cochin in para 58.2. His conclusion is that the presence of mosaic chips or stone chips are essential to form surface decoration and to called tiles as mosaic tiles. In the absence of these materials, the product cannot be called as mosaic tiles. He has also referred to interlocking blocks and their thickness and he has stated that by no stretch of imagination the interlocking blocks can be called as tile, let along a mosaic tile. He has also referred to the portions in which the tiles are known as paving tiles, interlocking blocks, wall tile and step tiles, anti skid paving tiles, super chequered tiles, super rock tiles, super terra rock tiles, super shot blasted blocks and tiles. Nowhere in the product brochure, the product has been described as mosaic tiles by the manufacturers namely, M/s. Comtrust. In para 58.3, he has referred to the brochure pertaining to super chequered tiles, wherein the ISI mark as IS 13801.1993. He has stated that the said standards pertain to chequered cement concrete tiles. These products are not described as mosaic tiles anywhere in the said standard. This also goes to show that the product chequered cement concrete tiles are n....
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....was collected. In the order passed by the Commissioner of Central Excise, Mumbai-III, the investigation did not seek any opinion from the trade regarding how the products was known in the market whereas, the manufacturer produced affidavits from the trade and the products are known as mosaic tiles in the market. Accordingly, the Commissioner classified the goods as mosaic tiles. In the case decided by the Asst. Commissioner, Hubli Division, the assessee produced technical and commercial evidences to show that the tiles manufactured by them were mosaic tiles. In the case decided by the Addl. Commissioner, Bangalore, the exemption was given to the product as the unit was located in the rural area. Therefore he has stated that the facts and circumstances of the present case are substantially different. In the present case the Department has proved by way of expert opinion, affidavits from the trade, manufacturing process and the records maintained by the party and admissions by the officials of the notice company themselves that the product manufactured by them are not commercially known as mosaic tiles and they have not used either mosaic chips or stone chips. Further in para 58.8 th....
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.... cannot be given. The Commissioner has relied on, first of all, the Chemical Examiner's report, then the statement of the some of the dealers who purchased the said items and also the statements of the General Manager of the company. He has also taken into consideration the chemical examiner's report and the view that the mosaic tiles should necessarily contain stone chips, which are absent according to him in the impugned products. Consequently, he had stated and come to the conclusion that the impugned items cannot be called as mosaic tiles. Hence, the benefit of the exemption Notification cannot be given. He has confirmed the demand and he has also justified the invocation of the longer period. He has imposed penalties. This is the gist of the decision. 7. Now, the main raw materials required in respect of the products are cement, dolomite, colouring oxide, chips, cement dust and stone dust. The tile generally consists of two layers one is called upper layer. The raw materials are according to the appellant cement, dolomite coloring oxide chips. The bottom layer, raw materials required are cement, stone dust. The goods were subjected to examination by the Chemical Examiner. The....
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....chased and they are sieving it and from that they are getting the stone chips. Therefore, in our view the conclusion of the Commissioner that the appellant had not used stone chips is not based on a sound evidence. Further, the Commissioner has relied on the statements of some of the dealers, who have said commercially this product is not known as mosaic tiles. Later on, when the party approached the same dealers, they had stated that these tiles are only known as mosaic tiles. They have also referred to the composition of the tiles saying that if these materials are used, it has to be considered as mosaic tiles. One user has given his opinion that mosaic is a very generic term and the products are called by different names depending upon the manufacturer. This point also has been enunciated in the, Apex Court's decision, in the case of Kedia Agglomerated which has been relied on by the ld. Advocate for the appellants. According to the decision of the Hon'ble Supreme Court, it has been held 1. the commercial understanding of the product is relevant 2. Use of the unique trade name to describe the tiles without using the term 'mosaic' does not disentitle the tiles from duty exemption....
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....een considered as mosaic tiles and benefits have been given the benefit of exemption notification. For examples, in the case of M/s. Basant Flooring Pvt. Ltd., the impugned items were similar to the paving tiles, which are interlocking pavers. Revenue proceeded against the appellant and then it was decided to drop the proceedings and this has not been appealed against by the Revenue. In the case of M/s. Golden India Tiles Company Ltd., the goods were described as Terrazo tiles,. In this case also, the proceedings were dropped. In the Nitco Tiles Ltd. Case, chequered tiles, rockard designer tiles and decorative interlocking paver tiles were described as exterior mosaic tiles. Action was initiated by the Revenue. In all these cases, relying on the decision of the Hon'ble Apex Court in the case of M/s. Kedia Agglomerated Marbles Ltd. the action has been dropped. Moreover, the appellants also have produced certain evidences to show that these items are generally known as mosaic tiles. In other words, "mosaic tiles" is very generic name and each manufacturer in order to distinguish products from others would describe the product in a different manner. On that basis the benefit of Exempt....