Decided on October 01,1991

Nageswara Pozzolana Works Pvt. ... Appellant


S.L. Peeran, Member (J) - (1.) IN this appeal, the appellants are challenging the correctness and validity of the order -in -appeal dated 6 -11 -1986 by which the Collector of Central Excise (Appeals), Madras has rejected the appeal of the assessee seeking classification of their product 'Possolime' under TI 68 of First Schedule of Central Excises and Salt Act, 1944 and confirmed the classification of the product under TI 23(1) instead of TI 23(2) of the First Schedule of Central Excises and Salt Act, 1944 done by the Assistant Collector of Central Excise, Guntur vide his order -in -original dated 6 -5 -1986. The Revenue is also aggrieved by the said order -in -appeal and have filed cross -appeal seeking classification of the product under TI 23(1) of the First Schedule of Central Excises and Salt Act, 1944.
(2.) THE appellants contend that they are a SSI unit set up for manufacture of lime and pozzolana mixture and commenced production on 23 -7 -1982 and since then, they have been selling the said mixture in the market under the trade name 'Pozzolime'. They contend that they manufacture the said product in accordance with ISI specification for lime pozzolana mixture (IS 4098 - 1983). They contend that the said standard was prepared by the Building Limes Sectional Committee of the ISI and not by its Cement and Concrete Sectional Committee which prepared ISI specification for all varieties of cement. They contend that knowhow for the manufacture of pozzolime was obtained by them from Central Road Research Institute, New Delhi under licence given by National Research Development Corporation, New Delhi. They contend that they have been selling the said product pozzolime only as a product of lime and not as a variety of cement.
(3.) THEY further contend that on 4 -9 -1982, Superintendent of Central Excise, Macherla Range, visited their unit and drew samples of pozzolime for the purpose of classification of the product and to decide whether the product merited classification under the TI 23(2). On the basis of the Chemical Examiner report the Superintendent by his letter dated 19 -4 -1983, informed them that the product fell under TI 68 and not under TI 23(2) as it mainly composed of lime, silicious matter and gypsum and that it did not merit classification as 'Sagol cement' or 'Ashmoh'. The Superintendent also granted exemption as the product fell under TI 68 and the value of the clearances was below Rs. 30 lakhs. They contend that they cleared upto 31 -3 -1983 for the period 1982 -83, pozzolime worth about Rs. 2,11,105.75 P. and for 1984 -85, the clearances were upto Rs. 12,90,000/ - and for the period 1985 -86, it was around Rs. 9,35,000/ -. They contend that in view of this clearances and the classification made under TI 68, they were exempted from taking out a licence under the Act. However, they submitted proforma application of Pozzolime. The Superintendent of Central Excise on 9 -4 -1985 endorsed as follows - "Verified sales for the year 1984 -85 and also agreed with the declaration". They contend that they had given the process of manufacture also in the said declaration and also claimed exemption under Notification No. 77/83 dated 1 -3 -1983. They filed monthly returns from 1985 onwards till March, 1986. The Superintendent by his letter received by them on 23 -7 -1985 that monthly returns were required to be filed and accordingly, they complied by filing the monthly statements from August 1985 onwards and also gave information for the months of April, May and June, 1985. However, a show cause notice dated 18 -10 -1985 read with the corrigendum, was issued by Assistant Collector demanding duty of Rs. 2,82,264.40 P. for the period 1 -4 -1985 to 30 -9 -1985 under Rule 9(2) of Central Excise Rules, 1944 and alleged violation of Rules 174, 52A, 226, 173B, 173C, 173F and 173G of the Central Excise Rules, 1944 in as much as it had manufactured and cleared a variety of cement known as 'Pozzolime' falling under TI 23 by resorting to misdeclaration of its product pozzolime a mixture classifiable under TI 68 and claiming exemption under Notification No. 77/83 -C.E., dated 1 -3 -1983. The appellants filed their reply on 28 -10 -1985 denying the allegation. They have contended that the process by which pozzolime is manufactured is that first limestone is calcinated and the resultant product is the first base material and is called 'burnt lime'. The second base material is obtained by powdering shale (a type of clay) and by calcinating it in down draught kilns at about 100 C for more than 8 hours and cooling the resultant product and crushing it in jaw crushers. The second base material is called 'pozzolina material' and it is lime reactive. Burnt lime and pozzolina material are mixed in the ratio of 5.5 : 4.5 by weight. To that mixture is added 3% by weight of gypsum and all are inter -mixed by hand and ground to powder of 150 mesh specification in roller mills. The product pozzolime obtained thus is packed and sold in 40 kg bags. ;

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