- (1.) THE question that arises for consideration in the instant appeal relates to the classification of the product manufactured by the Respondent -Assessee which is known as "Calcined China Clay". According to the Revenue, it needs to be classified under Chapter sub -heading 3824.90 to the Schedule to Central Excise Tariff Act, 1985, whereas the Assessee maintains that the appropriate classification is under Chapter Heading 25.05. In the show cause notice dated 16 -9 -2003 that was issued by the Commissioner of Central Excise and Customs to the Assessee, it was alleged that the Assessee was not manufacturing "China Clay" but was indulging in the manufacture of dutiable and excisable commodity, viz., 'Calcined China Clay'. Thus, the product 'China Clay' was sought to be differentiated from 'Calcined China Clay'. The basis given in the show cause notice is that the China Clay manufactured and marketed by the Assessee had to undergo a number of processes, either physical or with use of chemicals like sulfuric acid and magnetic separators for removal of foreign materials and the Assessee had also introduced calcination process according to which the temperature was raised from 700 degree centigrade to 1200 degree centigrade to the cake lumps/powder of China Clay. The emphasis, thus, was on the calcination of China Clay, which according to the Commissioner, made it a different product. For this purpose, a reference was made to Note 2 of Chapter Heading 25 which reads as under: - "2. Except where their context otherwise requires, Heading Nos. 25.01, 25.03 and 25.05 cover only products which have been washed (even with chemical substances, eliminating the impurities without changing the structure of the product), crushed ground, powdered, levigated, sifted, screened, or concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallisation), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading or sub -heading."
(2.) AS per the Revenue, the aforesaid Note covers various products but specifically excludes those products which have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each Heading or sub -heading. It was on this basis, the show cause notice mentioned that since the product in question was calcined, it no longer be covered under Chapter Heading 25. As per the Revenue, such a product was to be classified under Chapter Heading 38.24. Before we proceed further, we reproduce the description of goods under Chapter Heading 25.05 as well as Chapter Heading 38.24: "25.05 Mineral substances, not elsewhere specified (including clay, earth colours, natural abrasives, sulphurs, slate and stone), lime; plasters with a basis of calcium sulphate, whether or not coloured, but not including plasters specially prepared for use in dentistry. 2505.10 Kaolin and other kaolinic clays, whether or not calcined; other clays, andalusite, kyanite and sillimanite, whether or not calcined; mullite; chamotte or dinas earths." "38.24 Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included."
(3.) THUS , the Show Cause Notice proceeded on the basis that as China Clay was calcined, it could not be included under Chapter Heading 25.05 and since Chapter Heading 38.24 mentions about some specified product including those consisting of mixture of natural products, it would fall under Chapter Heading 38.24.;