HINDALCO INDUSTRIES LIMITED Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) THE above appeal arises out of the order of the Collector of Central Excise, Allahabad by which he has confirmed a duty demand of Rs. 61,75,832.59 P. under the proviso to Section 11A(1) of the Central Excise Act, 1944 and imposed a penalty of Rs. 5 lakhs on the appellants.

(2.) BRIEFLY stated, the facts of the case are that the appellants are manufacturers of aluminium and products thereof, falling under Chapter 76 of the Schedule to the Central Excise Tariff Act, 1985. In the course of manufacture of aluminium, a by -product termed by the appellants as 'vanadium sludge' is obtained. Prior to the introduction of the new Tariff, this item was classified under TI 68 of the Schedule to the erstwhile Central Excise Tariff. With effect from 1 -3 -1986, the assessees submitted a classification list for this product under CET sub -heading 28.04 and paid duty at the rate of 15% ad valorem with effect from 1 -3 -1987, they submitted a classification list for this product under CET sub -heading 28.51 and paid duty at the same rate. After 1 -3 -1988, they submitted a classification list for the same product under Heading 26.15 and availed of the benefit of total exemption under Notification 19/88, dated 1 -3 -1988.

(3.) THE Department was of the view that the assessees had deliberately changed the classification of the goods from Heading 28.51 to 26.15 by wilful mis -statement and suppression of facts in order to wrongly avail of exemption under the above mentioned notification and thereby evaded duty on clearances between 1 -3 -1988 to October 1990. A sample of the so -called vanadium sludge was drawn and analysed by the Chief Chemist of the Central Revenue Control Laboratory and it was found to contain mainly sodium orthovanadate, moisture and some amount of Sodium Hydroxide as an impurity associated during the process of manufacture. Sodium orthovanadate has chemical formula Na3V12 H2O and it is a separate chemically defined inorganic compound. The Chief Chemist after a visit to the appellant's factory and observing the process of manufacture and after chemical analysis, opined that it is not a sludge (residue) covered under Chapter 26 and according to him, the product was actually sodium orthovanadate decahydrate classifiable "as salts of oxo -metallic or peroxometallic acid" falling under sub -heading 2841.90.