2015 (9) TMI 880

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....anufactured by the respondent-assessee which is known as "Calcined China Clay". According to the Revenue, it needs to be classified under Chapter sub-heading 3824.90 to the Schedule to Central Excise Tariff Act, 1985, whereas the assessee maintains that the appropriate classification is under Chapter Heading 25.05. In the show cause notice dated 16.09.2003 that was issued by the Commissioner of Central Excise and Customs to the assessee, it was alleged that the assessee was not manufacturing "China Clay" but was indulging in the manufacture of dutiable and excisable commodity, viz., 'Calcined China Clay'. Thus, the product 'China Clay' was sought to be differentiated from 'Calcined China Clay'. The basis given in th....

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....ice mentioned that since the product in question was calcined, it no longer be covered under Chapter Heading 25. As per the Revenue, such a product was to be classified under Chapter Heading 38.24. Before we proceed further, we reproduce the description of goods under Chapter Heading 25.05 as well as Chapter Heading 38.24: "25.05 Mineral substances, not elsewhere specified (including clay, earth colours, natural abrasives, sulphurs, slate and stone), lime; plasters with a basis of calcium sulphate, whether or not coloured, but not including plasters specially prepared for use in dentistry. 2505.10 Kaolin and other kaolinic clays, whether or not calcined; other clays, andalusite, kyanite and sillimanite, whether or not calcined; mullite;....

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....ppearing for the Revenue, remained the same which were the basis of passing the Order-in-Original predicated on the submissions made in the Show Cause Notice as already noticed above. In the nutshell, it was emphasised that since the product-clay was calcined, as per Chapter Note 2, that is already reproduced above, it could not be included in Chapter Heading 25.05. The aforesaid contention is rejected by the CESTAT, and in our opinion, rightly so. In order to appreciate the reasons given by the CESTAT, we may have to address the history of Chapter 25, i.e., the provision which prevailed before the provision in question came into existence in 1990. Before the new provision was introduced in 1990, the same Chapter 25 which dealt with these ....

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....n when it is calcined. Therefore, it follows from the above that the context here requires such a product to remain included under Chapter 25.05 even when it is calcined. We find that the amended/ new provision in the form of Chapter Note 2 as well as Entry 25.05 was made to bring it in tune with HSN Notes which have been produced for our perusal. Chapter Note 1 of Chapter 25 of HSN Notes, which deals with mineral products is as under: - "1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only product which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, pow....