HINDALCO INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE,

JUDGEMENT

(1.) ISSUE raised in this appeal is classification of Vanadium Sludge. Appellant, engaged in the manufacture of aluminium, wants to classify it under Chapter Heading 26.20, while Department ordered classification under Chapter sub -heading 2841.90. When this appeal came up before a Bench of two Members, that Bench took note of confecting decisions rendered by coordinate Bench of two Members, that Bench took note of conflicting decisions rendered by coordinate Benches of this Tribunal in final order No. 1972/1996 passed by the South Regional Bench at Maras in appeal No. S/2475/93 -C and the decision of the East Regional Bench in Indian aluminium Company Ltd vs. Commissioner of Central Excise, 1998, (24) RLT 763. The East Regional Bench, after noting the final order passed by the South Regional Bench differed from the law stated therein and classified the goods under Chapter Heading 28.21 (SIC) to this conclusion, the East Regional Bench in the reported decision on Rule 3(b) of the General Rules for the Interpretation of the Harmonized System. In view of the difference of opinion expressed by the two coordinate Bench, the matter has been referred to a larger Bench for decision.

(2.) AS stated earlier, appellant before us, M/S. Hindalco Industries Ltd. are engaged in the manufacture of aluminium. Raw material for the production of aluminium is Bauxite. One such metal (Vanadium) which is obtained in the process is in the form of Sodium Orthovandate. The product is loosely called as Vanadium Sludge.It contains Sodium Orthovandate, mositures and small amount of Sodium Hydroxide as an impurity. The Sodium Orthovandate has chemical formula of Na3 VO4 12H2O. Customsers purchase this bye -product for extracting Vanadium Pent -Oxide. Appellant filed classification list seeking classification under Chapter sub -heading 2620.00 as residues containing metals or metallic compounds. From 1 -3 -1998 the bye -product, namely, Vanadium Sludge was classified under Heading 28.04 as inorganic bases and oxides, hydroxides and peroxides of metals. That classification list was approved by the Department and goods were cleared accordingly. While so, on 1 -3.1991 as if the goods are classifiable under Heading 28.41. Collector of Central Excise, Allahabad as per order dated 17 -12 -1992, confirmed the demand holding that Vanadium Sludge is Sodium Orthovandate falling under Chapter sub -heading 2841.90. The said order of the adjudicating authority was set aside by final order No. 124/98 dated 15 -12 -98 passed by this Tribunal in appeal No. E./703/93 -C. The adjudicating authority was directed to dispose of issues afresh after complying with the principles of natural justice. Thereupon, as per order -in -original MP(Demand)(43/992/2000 dated 31 -5 -2000, the Commissioner took the view that Vanadium Sludge is calssificable under Chapter sub -heading 2841.90 of the Central Excise Tariff Act. Consequently, the demand amounting to Rs.61,75,832.59 was confirmed. As sun of Rs. 62 lakhs has been imposed as penalty on the appellant. Appellant was also directed to pay interest under Section 11AB of the Central Excise Act, 1944.

(3.) BEFORE us learned counsel representing the appellant questioned the correctness of imposition of penalty and the direction to pay interest under Section 11AB of the Act as well. Learned counsel also questioned the correctness of the action taken by the adjudicating authority in invoking the extended period as contemplated by proviso to Section 11(1) of the Act. According to learned counsel, there was no concealment of any fact from the Department. All clearances effected subsequent to 1st March 1988 were pursuant to the classification list filed before the departmental officers. Thus, there was no concealment of any fact, much less with intent to evade payment of duty. Consequently, the show cause notice dated 24 -6 -1991 for the period from March, 1988 to October, 1990 was clearly without jurisdiction. The second show cause notice dated 22 -3 -1991 can be claimed.