Bhan, J. -
(1.)THESE appeals pertain to the same issue. For the sake of convenience, the facts are taken from Civil Appeal No. 1836 of 2001.
(2.)THE assessee-appellant (for short "the appellant") being aggrieved by the final order No.526/2000/C dated 7.12.2000 passed by the Central Excise and Gold (Control) Appellate Tribunal, New Delhi (for short "the Tribunal") in Appeal No.E/2154/2000-C has filed the present appeal under Section 35- L of the Central Excise Act, 1944 (for short "the Act"). THE Tribunal by the impugned order has set aside the order of the Commissioner (Appeals) classifying 'Denatured Salt' under the Chapter Heading 25.01 and held that 'Denatured Salt' is classifiable under the Chapter Heading No.38.24 of the Central Excise Tariff Act, 1985 (for short "the Tariff Act"). FACTS
Appellant is a limited company incorporated under the Companies Act, 1956 and is engaged in the manufacture of Hydra- zine falling under the Chapter Heading No.28.25 of the Tariff Act. Appellant, during the course of manufacture of the final product produces residuary by-product, i.e., 'Denatured Salt'. Appellant filed classification list claiming classification of the said product under the Heading No. 25.01 carrying'Nil'rate of duty.
Divisional Preventive Officers of the Central Excise visited the plant of the appellant and observed that the raw materials used by the appellant are Urea, Caustic Soda (Sodium Hydroxide) and Chlorine Gas. The process of manufacture followed by the appellant, as stated in the show cause notice based on the report of the prevent staff is as under: Caustic Soda and Chlorine Gas are reacted in a closed tank and transferred to another tank. In the said othertank Urea is mixed. The mixture is then heated upto 100 centigrade with the help of steam. Chemical reaction starts in the tank and on completion of it, Hydrazine in liquid form gets generated. It is removed to another tank through pumps. From this tank, the materials in limited quantities are taken to evaporator tank where Hydrazine evaporates along with water and passes through a condenser and is collected. The remaining material in the evaporator tank is taken into centrifuge. In the centrifuge, out of the remaining materials, solids and liquids are separated. The liquid form centrifuge is again passed through the evaporator tank and, in turn, through condenser to collect Hydrazine. This process is continued for all remaining liquids and is a continuous process for further retrieval of Hydrazine. The residue solid which remains in the centrifuge is taken out from its bottom and it is in the form of white crystalline powder and which is sold by the appellant as Denatured Salt. It is this product whose classification is in dispute in the present case.
(3.)ON the basis of the report submitted by the Preventive staff, the Deputy Commissioner of Central Excise, Chandigarh issued two show cause notices dated 28.2.1997 and 12.3.1997 requiring the appellant to show cause as to why : (a) Central Excise Duty amounting to Rs. 12,21,863/- should not be recovered under Rule 9(2) of the Central Excise Rules, 1944. (b) Interest on the said duty be not recovered under Section 11AB of the Act. (c) Penalty should not be imposed under Section 11AC, Rules 9(2) and 173Q of the Central Excise Rules, 1944. (d) The appellant's product should not be classified under Chapter Heading No.38.23 against 25.01 as claimed by the appellants.
Appellant in reply to the show cause notices took a number of points, relevant ones of which are: 1). That in the common parlance the product in dispute is described as Denatured Salt. 2). That the end use of the product is also as a replacement of the common salt. 3). That the classification of a mixture is to be decided according to the dominance of the constituent. 4). That Chemical Examiner report supports that the product is a salt in denatured form, i.e., impure and is not usable as edible salt, because it contains sodium carbonate which is not fit for human consumption. 5). That only those residual products are classifiable under Heading No.38.24 which are not elsewhere specified or included. 6). That it is not necessary that sodium chloride should be an input for the manufacture of Denatured Salt. 7). That it is not the intention of the legislature that first salt should be produced and thereafter it should be denatured because the legislation was fully aware that impure/ inedible salt is available whether natural or through some chemical process that is why it appear on the HSN. 8). That even six month's period is not avail able to the department for the raising of the demand and the entire demand is without the authority of law.