TaxTMI 
TaxTMI 
2026 (3) TMI 742
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....ated steel plant at Durgapur, DSP is duly registered both under the Central Excise Act, 1944 read with the Central Excise Rules, 2002 and the Finance Act, 1994 (relating to service tax) read with the Service Tax Rules, 1994 respectively. 2.2 From the relevant materials on record, it would be seen that one of the products which manufactured in the said factory is commonly known as "Burnt Lime", which comes into existence on processing of limestone. This product is being regularly manufactured and cleared from the said factory since the year prior to 1986. DSP regularly files its returns under the Act. Manufacture and clearance as well as classification of the said goods were/are duly declared. During the said period and thereafter, until the time hereinafter stated, it is also an undisputed fact, evident from the relevant records that the Department, obviously after verification of all documents and legal provisions, came to the conclusion and consistently held that burnt lime manufactured by DSP is classifiable under Chapter Heading 25 of the Central Excise Tariff and is subject to nil rate of duty. 2.3 In the premises DSP was surprised to receive a show cause notice dated Au....
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....nsequently, the purported duty demands made in the said show cause notices were misconceived, contrary to law, untenable and unsustainable. The Commissioner of Customs, Central Excise & Service Tax, Durgapur Commissionerate, Durgapur, in the premises, requested to drop the proceedings initiated thereunder against DSP. 2.6 Thereafter a personal hearing was granted to DSP by the Commissioner on December 27, 2016 at which DSP's representatives duly appeared and made submissions, whereby the Commissioner purporting to classify burnt lime under Chapter Sub-heading 28259090 of the Central Excise Tariff, confirmed the wrongful and illegal demand of central excise duty on the said goods manufactured and cleared during the said period, amounting to a total of Rs.4,94,81,247/- under Section 11A(10) of the Act, along with interest thereon under Section 11AA of the Act against DSP. The Commissioner also purported to impose a penalty of Rs.4,94,81,247/- upon DSP under Section 11AC of the Act. 2.7 Being aggrieved by the said order of the Commissioner, the appellant is before us. 3. The ld. Counsel appearing on behalf of the appellant submits that the order has been passed by the Commiss....
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....ear terms directed that burnt lime is appropriately classifiable under Chapter Heading No. 2505 of the Central Excise Tariff. It is also a settled principles of law that such circulars issued by the Board in exercise of powers conferred upon it under Section 37B of the Act is binding on the Department unless contrary decisions of the Courts contrary thereto (which is absent herein). The issue also stands settled in favour of classification of burnt lime under Chapter Heading 25 of the Central Excise Tariff and not under Chapter 28 thereof by decision of the Tribunal. Wrongfully and illegally, however, the Commissioner in passing the said order in purporting to classify burnt lime under Chapter 28 (sub-heading 28259090) of the Central Excise Tariff has ignored the said binding provisions of the Board's circular and the decision of the Tribunal. This has also vitiated the said order and has rendered the same illegal, invalid and bad. 3.3 It is submitted that the Burnt lime containing calcium oxide of purity 85.9%, which is far less than the required percentage of more than 98%, therefore cannot be classified under Chapter 28 of the Central Excise Tariff and is, on the contrary, co....
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...., adjudication and appellate orders of the concerned authorities under the Act, including the jurisdictional Central Excise authorities, it would be seen that there is or can be no manner of doubt or dispute whatsoever that at all material point of time, long prior to the said period, the fact that burnt lime was being classified under Tariff Heading 25 of the Central Excise Tariff and manufactured and cleared on such basis by DSP from its factory is not only a fact known to both parties but has been the case of the Department itself on and from since 1986 until the issuance of the show cause notice in the year 2012. In such circumstances, as per settled principles of law, there can be no allegation, let alone finding, that there has been willful suppression of material facts by DSP with intent to evade payment of duty under the Act and thus contravening the provisions of the said Rules, including those specified in the show cause notices. Hence the condition precedent for invoking the extended period of limitation for issuance of the show cause notice under Section 11A of the Act is not satisfied. In the premises the show cause notice dated August 8, 2012 issued in respect of burn....
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....s reason also, illegal, invalid and bad. He, therefore, he prays for allowing their appeal by setting aside the impugned order. 4. The ld.A.R. for the Revenue, has justified the impugned order. 5. Heard both the parties and considered the submissions. 6. After hearing the parties, we find that the short issue involved in this matter is that whether the burnt lime manufactured by the appellant is liable to pay duty or not ? 7. It is also on record that the percentage of calcium oxide in the burnt lime is of 85.9% purity. The said issue where the calcium oxide is less than 98%, has been examined by this Tribunal in the case of M/s ITC Ltd. Vs. Principal Commissioner of Customs (Port), Kolkata reported in 2025 (7) TMI 648-CESTAT Kolkata, wherein this Tribunal has observed as under : "5. We find that a similar issue has been examined by this Tribunal in the case of M/s. JSW Steel Ltd. v. Commissioner of Customs, Cochin [2025 (5) TMI 455 - CESTAT, Bangalore] (Final Order No. 20529 of 2025 dated 28.04.2025 in Customs Appeal No. 21776 of 2016) wherein the Tribunal observed as under: - "5. Heard both sides. The only issue to be decided is whether the product "....
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.... 1. Except where the context otherwise requires, the headings of this Chapter apply only to: (a) separate chemical elements and separate chemically defined compounds, whether or not containing impurities: 2825 90 -Other: 2825 90 10 --- Tin oxide 2825 90 20 --- Cadmium oxide 2825 90 40 --- Calcium hydroxide 2825 90 50 --- Ammonium hydroxide 2825 90 90 --- Other 8. As per the HSN Notes, Chapter 2522 which includes "Quick Lime" is explained as: Quicklime (an impure calcium oxide) is obtained by calcining limestone containing very little or no clay. It combines very rapidly with water, giving off considerable heat and producing slaked lime (calcium hydroxide) is usually employed for soil improvement or in the sugar industry. Hydraulic lime is obtained by low temperature calcinations of limestone containing sufficient clay (although usually less than 20%) to ensure that the product sets under water. Hydraulic lime differs from natural cement in that it still contains appreciable amounts of un combined quicklime, which may be slaked with water." This heading excludes purified calcium oxide and calci....
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....s in the adjudication proceedings, we find that the chemical test conducted by the Central Revenue Control Laboratory (CRCL), Jawaharlal Nehru Custom House, on the samples of imported goods and its report dated 18.04.2018 indicate that the description of the goods as 'white lumps of irregular shapes & sizes along with waste powder. It is mainly composed of calcium oxide (quick lime) along with traces of Iron & Silicious matter'. On the percentage of chemical composition, the report stated that available lime 93.8%. Further, one another such chemical testing of imported goods by CRCL in report dated 16.05.2018, indicate that the imported goods contain '92.27% of calcium oxide and 0.96% of magnesium oxide'. Further, the HSN explanatory notes in the second para of B(11) also specify that calcium oxide of high degree of purity i.e., app. 98% or more would alone gets covered under the scope of sub-heading 2825. As seen from the test reports, the content of calcium oxide or lime is much less than the requisite 98%. Thus, we are of the considered view that in terms of the HSN explanatory notes, both on account of presence of specified material making it not in pure state a....
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....ent. 4.3 It is seen that the decision of Tribunal in the case of Bhadradari Minerals Pvt. Ltd. (supra) has been rendered in practically identical circumstances. The said decision relies on the HSN explanatory notes 11 under chapter heading 2825. The said chapter note provides as follows: "5.3 HSN Explanatory Note under Tariff Heading 28.25 also excludes Calcium Oxide which has a purity less than 98% from Chapter 28 in view of the fact that what is covered under 28.25 is Calcium Oxide of purity 98%. The relevant Chapter Note is reproduced below: "(11) Calcium Oxide, Hydroxide and Peroxide: This Heading covers only the oxide (CaO) and the hydroxide (CaOH), in the pure state (i.e.. containing practically no clay, iron oxide, manganese oxide, etc.) such as the product obtained by calcining precipitated calcium carbonate: The Heading also covers fused lime obtained by fusing ordinary quicklime in an electric furnace. This product has a high degree of purity (approximately) 98% calcium oxide: it is crystalline and generally colourless. It is used, in particular, for refractory linings for furnaces, in the manufacture of crucibles and for addition to co....