PERFECT REFRACTORIES Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are two Appeals filed by M/s. Perfect Refractories and M/s. Perfect Stoneware Pipes arising out of a common order dt. 15.5.92 passed by the Collector, Central Excise, involving the issue whether the crushed clay manufactured by Appellants No. 2 which is used in the manufacture of glazed stoneware pipes by the Appellant No. 2 is excisable and dutiable.

(2.) SHRI G. Shiv Das, Ld. Advocate, submitted that crushed clay and Batch Mixture are the same things; that the impugned product is not marketable; that no evidence is adduced by the department to prove that the Batch Mixture prepared by the Appellants No. 2 is capable of being bought and sold in the market; that the bills relied upon by the Department are of fireclay lumps and not Batch Mixtures of the composition made by the Appellant No. 2, that the mixture so prepared is not a standardised item available in the market. The Ld. Advocate also referred to the affidavits and letters of the manufacturer and dealers of salt glazed stoneware pipes according to which there is no commodity as "Batch Mixtures/Crushed clay" known in the market and that batch Mixture/Crushed clay is neither marketable nor is actually sold in the market. He also relied upon the decision in the case of Burn Standard Co. Ltd. v. C.C.E. Raipur, 1998 (24) RLT 537 (T) wherein it was held that "No evidence has been brought on record by the Revenue that this paste of clay is marketable in the paste form..marketability of a dry powder clay is not relevant for the purpose of considering the marketability of the paste of clay.." He further submitted that demand is hit by limit specified in Section 11 -A(1) of the Central Excise Act as the issue involved is a pure issue of interpretation, that show cause dated 19.9.90 had been issued to M/s. Perfect Sanitarywares Ltd. demanding duty on batch mixture manufactured during the process of manufacture of salt glazed stoneware pipes and fittings; that the Collector, Indore held that the product is not dutiable under Heading 25.05 of C.E.T.A.; that it follows from this that the Department was aware that crushed clay was one of the intermediaries in the manufacture of salt -glazed stoneware pipes; that in February 1990 when the officers visited their factory, they were given all the information including the inputs and there was thus no suppression of facts; that further there is no positive act on their part to avoid payment of duty and as held by the Supreme Court in C.C.E. v. Chemphar Drugs and Liniments something positive other than mere inaction or failure on the part of the manufacturer conscious or deliberate withholding of information is required before it is saddled with any liability beyond the period of six months. He, further, mentioned that even on the question of crushing of line stone the matter has been held in assessee's favour in Bheraghat Mineral Industries v. Divl. Dy. Commissioner of Sales Tax and in Super Engineering Co. v. C.C.E., Rajkot ; that though the decision in Raymond Cement Works v. C.C.E. is against them, there are two different view and the Tribunal has consistently taken the view that proviso to Section 1 -A cannot be applied in such a situation.

(3.) FINALLY , the Ld. Advocate submitted that even if the impugned product is held to be excisable, no excise duty is leviable in view of Explanation HI to Notification No. 175/86; that the impugned goods and finished goods both are specified goods under Notification No. 175/86 as these have been classified under Heading 25.05 and 69.04 of the Schedule to the Central Excise Tariff Act; that as per Annexure III where any specified goods (inputs) are used for further manufacture of specified goods within the factory of production, the clearances of such inputs for such use shall not be taken into account for the purpose of calculating the aggregate value of clearances. He mentioned that the sole ground for demanding duty on fire -brick and fireclay mortar manufactured by the Appellant No. 1 is thus incorrect; that it is immaterial that the stoneware pipes were cleared availing the exemption under a separate Notification No. 51/86 so long it is listed in Annexure to Notification No. 175/76. Reliance was placed on the decision in the case of J.C. Engineering v. C.C.E. , (ii) C.C.E., v. Gadgets India Ltd. , (iii) Universal Electrical Industries v. C.C.E. and (iv) Dukat and Co. (P) Ltd. v. CCE .