KURLON LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) AT the stage of considering the stay application, we have heard the respective parties on merits and disposed of the substantive appeal, after hearing the ld. Counsel for the appellant and the ld. authorised representative for the respondent/Revenue. The appeal is preferred against the adjudication order dated 20 -3 -2013 classifying the goods in issue manufactured by the appellant under Tariff Item No. 3909 50 00 of the Central Excise Tariff Act, 1985; rejecting the claim for benefits under exemption Notification No. , dated 10 -6 -2003 on the ground that the manufactured goods are covered under Annexure -I to the Notification and hence, ineligible for exemption; confirming the demand of central excise duty of Rs. 4,57,29,853/ - under Section 11AB of the C.E.A., 1944 on the assessed value of Rs. 44,39,79,164/ - consumed captively during January, 2011 to September, 2011; assessing liability to interest under Section 11AB and Section 11AA of the 1944 Act; and imposing penalty of an equivalent to the duty demand, under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11AC of the Act, for contravention of Rules 4, 6, 8 to 10 and 12 of the Central Excise Rules, 1944; i.e. with an intent to evade remittance of duty.

(2.) THE assessee is the appellant and is engaged in manufacture of poly -urethane foam and products and polyurethane foam products and others falling under Tariff Items 3921 13 10 and 3926 90 91, respectively of CETA, 1985. Vide the letter dated 18 -1 -2010, the appellant filed a declaration claiming exemption under Notification No. , dated 10 -6 -2003, from the whole of the duty of excise in respect of excisable goods manufactured and cleared from an area notified in Annexure -II to the said Notification. In this declaration, the appellant asserted that the finished products intended to be manufactured by them were (i) Polyurethane foam & products falling under sub -heading 3921 13 10 and (ii) Polyurethane foam products and others falling under sub -heading 3926 90 91. The declaration did not mention about emergence of distinct and marketable goods in the form of irregular blocks of polyurethane foam, allegedly falling under Heading No. 3909 50 00.

(3.) LD . Counsel for the appellant has drawn our attention to the relevant Tariff Entries to support the contention that the so -called intermediate product (irregular blocks of polyurethane) also falls within Chapter Heading 39.21. Ld. Counsel has also drawn our attention to the fact that even before the adjudicating authority, reliance was placed on Board Circular No. 10/89, dated 10 -2 -1989, which clearly spelt out the meaning - "A block of regular geometric shape for the purpose of classification of a product under Heading No. 39.21. Drawing on an opinion provided by the Deputy Chief Chemist, CRCL, New Delhi, the Board clarified that regular geometric shape would be a shape following or exhibiting a principle. A principle in this context would mean a plan of action. The predetermined shape of the polyurethane foam product/article in the mould is the result of such principle or plan of action. All this would imply that if the shape of the polyurethane foam product/article obtained in the mould is predetermined or pre -planned, such a product/article would be of a regular geometric shape only. In conclusion, the Circular clarified that if the polyurethane foam products obtained are in the form of blocks of regular geometric shape, that is to say, are similar to each other in dimension like height, breadth, length and curvature whether or not printed or otherwise surface -worked, uncut or cut into rectangles (including squares) but not further worked (even when not cut, they become articles ready for use), then by virtue of Note 10 of Chapter 39, such products would merit classification under Heading No. 39.21, from 28 -2 -86 onwards.