ARCHANA WADHWA, J. - (1.) The dispute in the present appeal relates to the classification of the product being manufactured by the assessee. Whereas the revenue has classified the appellants final product as "PU Foam Sheets"classifiable under Chapter Heading No. 3921 13 10 of First Schedule to Central Excise Tariff Act, which is not entitled to the Small Scale Exemption benefit in terms of Notification No. 8/2003-C.E., dated 1-3-2013, the appellants have contended that the product being manufactured by them is "Waste Scrap Foam Sheet"and is properly classifiable under Tariff Heading No. 3921 19 00, which is eligible for the benefit of Small Scale Exemption Notification No. 8/2003-C.E. It is seen that the proceedings initiated against the appellant were adjudicated by the Additional Commissioner, dropping the demands, vacating the show cause notice and holding classification in favour of the assessee. The said order was appealed against by the revenue before Commissioner (Appeals), who reversed the same. Hence the present appeal.
(2.) As per facts on record, the appellant's factory was visited by the Central Excise officers on 10-1-2013 to conduct verification of the actual process of manufacture and the nature of the manufactured product. Shri Naveen Kumar Jain, Proprietor of the unit in his statement dated 11-1-2013, deposed as under:- (i) that they were manufacturing and selling their final product viz. 'waste scrap foam sheet' since April'08 for which they purchased waste and scrap of PU Foam mixed with cloth, cotton &, plastic scrap; (ii) that these scraps after being shredded were put into the mixer and mixed and blended with Arandi oil, TDI and waste poly chemical; (iii) that after mixing, the material was put into chamber for pressing to manufacture Big Blocks; and (iv) that these blocks were then sliced into sheets of different sizes for sale purpose as per orders. (v) that cuttings of scrap, putting into the mixer, contained approximately 70% of cuttings of PU foam and rest were plastic scrap, cotton and cloth scrap cuttings which were mixed with chemicals; and (vi) that they also used to sell such waste and scrap. Shri Jain also told to the officers that since they were manufacturing PU Foam sheet from mix waste of PU Foam and their turnover was under exemption limit, whey were not paying Central Excise duty. Shri Naveen Kumar Jain, Proprietor of M/s. Vaishno in his further statement dated 14-3-2013 recorded under Section 14 of the Act, ibid, again affirmed the same facts. As such, he stated that since they are manufacturing Waste Scrap Foam Sheet, the exemption benefit of Notification No. 8/2003-C.E. stands rightly availed by them. However, the visiting officers seized the physically available stock of sheets and blocks under a panchnama dated 11-1-2013. Samples from the seized material were drawn under the test memo dated 22-1-2013 and were sent to the Chemical Examiner, Center Revenue Control Laboratory, New Delhi under the cover of letter dated 31-1-2013. The Chemical Examiner vide his report dated 18-2-2013 informed that the sample sent to the laboratory, was in the form of rectangular cut piece of sheet and it comprised of varying shapes and sizes of different colours of foam (made of polyurethane) along with plastic material bonded with adhesive. The percentage composition of the samples as reported by CRCL, New Delhi was as under : PU Foam = 91.3% Plastic material = 4.9% Adhesive material = balance
(3.) On the basis of the process of manufacture as also report of CRCL, a view was formed that the goods manufactured by the appellant was "PU Foam sheets"and not "waste scrap foam sheets", inasmuch as the same consisted of 91.30 PU Foam. Inasmuch as, the goods falling under Heading 3921 13 10 were excluded from the benefit of Small Scale Notification, the proceedings were initiated against the appellant by way of issuance of show cause notice dated 5-6-2013, alleging that they have manufactured and cleared article of PU Foam involving duty of Rs. 13,15,453/- during the period 2008 to 2013. Accordingly, notice proposed to confirm the said demand of duty, to impose penalty and to confiscate the seized goods.;