TaxTMI 
TaxTMI 
2006 (3) TMI 679
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....emsp;S/Shri B.V. Kumar, Advocate and M.N. Murthy, Vice-President (Finance), M/s. Rockwool India Limited, appeared on behalf of the applicants, while S/Shri G. Sree Harsha, Joint Commissioner, Hyderabad I Commissionerate and G. Gopala Krishna Rao, Superintendent of Central Excise (Adjudication), represented the Revenue, during the final hearing of the case at Chennai on 2-11-2004. 3. The facts of the case are set out in detail in the Admission Order (A.O) No. 19/2003(CE) dated 2-7-2003 [2007 (212) E.L.T. 268 (Sett. Com.)]. Briefly stated the facts relevant for settlement are that RIL are manufactures of products described by them as Rockwool products, availing classification under Chapter 68.03 of CET, and exemption under Notification No. 59/90-CE dated 20-3-1990 and Notification No. 60/91-CE dated 25-7-1991. The samples of the subject goods were drawn and sent to Chemical Examiner to ascertain the content of fly ash in the product. Based on the Chemical Examiner's report that the fly ash content in the samples were more than 25% laid down in the notification, the Asstt. Commissioner, vide Order in Original dated 30-4-1992, extended the benefit of the said Notification No. 60/....
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....eal against the above Order in Original, CEGAT, granted stay of recovery and waived pre-deposit of duty and penalties vide order 982 to 987/98 dated 16-10-1998. Now, as the matter was pending before CEGAT, RIL have filed the instant application in terms of Sec. 32PA of the Act, after withdrawing the appeal under the permission of CEGAT vide CEGAT's Final Order No. 1264/2002 dated 25-9-2002. RIL has admitted an additional duty liability of Rs. 81,11,962/- (as against 1,35,93,327/- demanded in the SCN and confirmed in Order in Original, by deeming the value as cum duty price, and seeking full immunity from interest, penalty, fine and prosecution under all the Central Acts, including the Income Tax Act, 1961. (Strictly, if cum duty benefit is extended the demand proposed in the SCN would work out to Rs. 1,23,42,158/-, of which they admit only Rs. 81,11,962/-). 6. The Advocate traced the history of RIL. He submitted that it was formed in the year 1989 with South Korean collaboration, and by 1995 the applicant firm had accumulated huge losses and proceedings were initiated before BIFR. Rehabilitation scheme proposed by BIFR could not be given effect to, as the promoter, Shri Venka....
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.... to make submissions as to why the duty amounting to Rs. 42,30,196/- for the period 17-3-90 to 24-7-91 is not payable by RIL. As for the period upto 24-7-91, the applicant claims that the subject goods is 'Rockwool'. In support, it is submitted that the Industrial License of the company was for the manufacture of rock wool. He also mentioned the definition of 'Rockwool', given in Mc Graw Hill Technical Dictionary, according to which 'Rockwool' covers slag and mineral wool and, vice-versa. He stated that Rockwool and mineral wool are synonymous. He also filed copies of the purchase orders to show that the orders are for Rockwool. He mentioned that the supplies were made to Andhra Pradesh State Electricity Board, Goa Shipyard Limited, and other private companies, which clearly indicate that the item marketed was Rockwool. He informed that the stand of the department is that 'Rockwool' is made only from rocks, which is presumptive and not based on any authority. The Advocate pleaded that it is a settled legal position that an exemption notification cannot be the basis for resolving of a classification dispute. He informed the Bench that at no stage sample/s were drawn to show that thi....
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....ently and cleared the same without payment of duty in contravention of Rule 9(2) of the Central Excise Rules, 1944, read with the proviso to Section 11A(1) of the Central Excise Act, 1944. The Hon'ble judge therefore, held that the prosecution could prove the charges leveled against Al, A2, A4 and A6 respectively and found guilty to this charge. 16. The Advocate reiterated that the present management was in no way concerned with the alleged irregularities that had taken place during the period 27-7-1991 to 28-2-1993, when A2 was the Managing Director of RIL and not the present management. RIL also submitted that the proceedings held before a Magistrate are different when compared to those before the Customs and Central Excise authorities and, under the circumstances, the submissions made on 2-1-2004 admitting the additional duty liability of Rs. 81,11,962.54 for the period 25-7-1991 to 28-2-1993 and Rs. 7,73,159 for the period 25-7-1991 to 10-12-1991 be accepted. The said amounts have been paid. 17. We have considered the pleas and perused the relevant records. While the Show Cause Notice has demanded a duty of Rs. 1,35,93,327/- from RIL, as already mentioned above the ....
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...., rock, glass, or a selected combination of these ingredients; produced by blowing, drawing or other means of fabricating into fine fibres; used for insulation, fire-proofing, and as a filter medium. Also known as mineral cotton; rock wool; silicate cotton; slag wool Rock Wool See Mineral Wool Slag Wool See Mineral Wool" On the other hand, the Revenue relied upon 'Materials Handbook', an Encyclopedia for Technical Professional, written by George S Braddy and Henry R. Clauser to show that the above three are different products. 20. The Bench observes in this context that so far as the period prior to 25-7-1991 is concerned, the issue falls in the narrow compass of whether the impugned product is Rockwool, which alone is exempt by notifications (50/86 and 59/90). It is true that the Central Excise Tariff Heading 6803 covers slag wool, rock wool and similar mineral wools. But this itself brings out that the said three products are similar, but have different identification. To this extent, the applicant's plea that an exemption to Rock Wool under the aforesaid notification would equally apply to Mineral Wool and Slag Wool is not acceptable. An exemption notification has to ....
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.... though the test findings here are in agreement with Rock Wool melt analysis test certificate enclosed, no prescribed method is given in any of the standard texts available here for determining the fly ash in such products." (emphasis supplied). Subsequently, the Asst. Chemical Examiner had visited the applicants' premises and according to the SCN "The record of proceedings in respect of his visit dated 1-4-1992, (Sl. No. 13 of Annexure I) inter alia state that the process of manufacture of rock wool products was observed with a specific reference to the feeding of raw materials such as coke, basalt, limestone and fly ash; ......that from the spot verification it was observed by the Asst. Chemical Examiner that, the content of fly ash in the final product is in line with the test report given by the Central Building Research Institute, Roorkee, which was submitted along with the original sample; that however confirmation of the above shall be finalized after testing the samples drawn during the said visit and report will be submitted shortly. The report was sent in ........This report refers to the raw materials used....... and states inter alia that the sample drawn during the vis....