Full Judgment Text
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CASE NO.:
Appeal (civil) 1489 of 2001
PETITIONER:
M/s Indcon Structurals (P) Ltd
RESPONDENT:
Commissioner of Central Excise, Chennai
DATE OF JUDGMENT: 17/04/2006
BENCH:
Ashok Bhan & Lokeshwar Singh Panta
JUDGMENT:
J U D G M E N T
Lokeshwar Singh Panta, J.
This Statutory Appeal is filed by M/s Indcon Structurals
(P) Limited under Section 35L(b) of the Central Excise Act,
1944 (hereinafter referred to as "the Act") against the Final
Order No. 1557/2000 dated 14th November, 2000 of the
Customs, Excise and Gold (Control) Appellate Tribunal (for
short "the CEGAT"), Chennai, in appeal No. E/1554/94-D-
MD, setting aside the Order dated 16th May, 1994 recorded by
the Collector of Central Excise (Appeals), Madras.
The appellant-Company is engaged in manufacture of
flooring cement tiles using cement, sand, blue metal and
gravel along with pigment. These are in the form of tiles used
for constructing the floor itself or the wall, as the case may be.
The appellant-Company filed classification list claiming
the benefit of Notification No. 59/90-CE on the ground that
the cement tiles in question are not floor coverings in rolls or
in the form of tiles as per the description against serial No. 4 of
sub-heading 6807.00 of the Table annexed with the
Notification. The Superintendent of Central Excise, Range-
IXA, Madras, IX Division, issued a show-cause notice dated 6th
November, 1992 to the appellant-Company (hereinafter
referred to as the "assessee-Company") directing it to pay the
excise duty on the cement tiles as the said goods are not
eligible to avail the benefit of the Exemption Notification
No.59/90-CE. The assessee-Company in its reply submitted
that cement tiles manufactured by them are used to construct
the floor itself and it is not floor coverings in terms of the
description of the goods under sub-heading 6807.00. The
Assistant Collector of Central Excise, Madras, IX Division \026 the
adjudicating authority, on careful examination of the records
and the submissions made before it by both the parties and
after taking into consideration the Section Notes/Chapter
Notes of Chapters 39, 57, 59 and 68, felt it necessary to
conduct an on-the-spot study since the issue for adjudication
was in regard to the product classification. The adjudicating
authority accordingly visited the factory premises of the
assessee-Company and studied the manufacturing process of
cement tiles. Finally, the adjudicating authority came to the
conclusion that cement tiles manufactured by the assessee-
Company are covered under sub-heading 6807.00 as such the
benefit of exemption Notification No. 59/90 dated 20th March,
1994 is available to the Company.
The Revenue preferred an appeal against the said order
of the adjudicating authority before the Collector (Appeals).
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The First Appellate Authority confirmed the order of the
adjudicating authority holding that the cement tiles
manufactured by the assessee-Company are not floor
coverings and the benefit of the Notification has been rightly
extended to the Company.
Being aggrieved against the order of the appellate
authority, the Revenue filed an appeal before the CEGAT. The
Member (Technical) of the CEGAT has found no infirmity or
perversity in the said order and dismissed the appeal of the
Revenue, but the second Member (Judicial) has recorded
separate order differing with the order of Member (Technical)
and set aside the order of the appellate authority.
The matter came to be referred to the third Member for
solving the difference of opinion between the Members of the
Bench. The third Member (Technical) agreed with the views
expressed by Member (Judicial) and accordingly the appeal
filed by the Revenue was accepted and the benefit of
concession of the excise duty was denied to the assessee-
Company. Hence, the assessee-Company has filed this appeal
before this Court challenging the correctness and validity of
the order of the CEGAT.
We have heard the learned counsel for the parties on
either side. Mr. V. Lakshmikumaran, the learned counsel for
the assessee-Company, submitted that the assessee-Company
is the manufacturer of the cement tiles, which are used as
flooring in the form of floor itself and these are not floor
coverings as projected by the Revenue.
Per contra, Mr. B. Dutta, the learned Additional Solicitor
General appearing on behalf of the Revenue, submitted that it
is not in dispute that the product of the assessee is in the form
of tiles, but these tiles are used for floor coverings and as such
the majority members of the CEGAT have rightly denied the
benefit of exemption to the assessee-Company.
Thus, the core question involved in the present appeal is
whether the cement tiles, manufactured by the assessee-
Company, are used for floor coverings in the form of tiles for
the purpose of assessment of the rate of excise duty under
Notification No. 59/90 or the goods are exempted from
payment of such duty as claimed by the assessee-Company.
Notification No. 59/90-CE dated 20th March, 1990 has been
issued by the Central Government in exercise of the powers
conferred under sub-section (1) of Section 5A of the Central
Excises and Salt Act, 1944 (1 of 1944), exempting certain
goods specified in column (3) of the Table annexed thereto and
under Sub-heading No. (3) of the Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986) specified in column (2) of
the said Table, from so much of that portion of the duty of
excise leviable thereon which is specified in the said Schedule
as is in excess of the amount calculated at the rate specified in
the corresponding entry in column (4) of the said Table. Table
of the Notification, relevant for the purpose of deciding the
present appeal, reads as under:-
Table
Sl.
No.
Sub
Heading
No.
Description of gods
Rate of
Duty
1.
XXX
XXXX
XXX
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2.
XXX
XXXX
XXX
3.
XXX
XXXX
XXX
4.
6807.00
All goods excluding the
following, namely:-
(i) Floor coverings in rolls
or in the form of tiles
(ii) XXXX
15%
ad valorem
It is by now well-settled that the words and expressions
in taxing Statutes, unless defined in the Statute itself, have to
be construed in the sense in which the persons dealing with
them understand, i.e., as per the trade understanding,
commercial and technical practice and usage. We find that
the expressions "floor coverings in rolls or in the form of tiles"
are not defined in the Central Excises and Salt Act, 1944 or in
the Central Excise Tariff Act or in the Exemption Notification
No. 59/90, but it has acquired a definite trade and business
understanding. The record shows that the adjudicating
authority in its order has recorded categorical finding that in
support of the claim, the assessee-Company has produced on
record certificates of the well-known Architects or Engineers
and Town Planners, Interior Design Engineers and
Consultants and users to the effect that the cement tiles
manufactured by the assessee-Company are totally different
from floor coverings. Some samples pertaining to floor
coverings and other products, including cement tiles, were
produced by the assessee-Company as material evidence for
comparative analysis before the adjudicating authority at the
time of inspection of the factory premises. The adjudicating
authority on such inspection had studied the process of
manufacture of cement tiles and found that cement, sand,
blue metal, gravel were mixed in pre-determined proposition
along with pigments and then the mixture was poured into
moulds, compacted and allowed to set automatically through
vibration table. The adjudicating authority further noticed
that the cement tiles were demoulded, cured, surface treated
and are marketed in the brand name of Eurocon tiles. These
tiles are capable of using for wall application of both
external/internal wall tiling, which form an integral part of the
wall on which they are cemented. The adjudicating authority
also studied the product in question with reference to its
characteristics, temperature resistance, structural properties
and durability. The authority has also perused Section Notes/
Chapter Notes of Chapters 39, 57, 59 and 68 dealing with the
goods floor coverings and flooring materials. On going through
the expressions given for the products, floor coverings/wall
coverings under Chapter Headings 39, 57 and 59, which are
made out of plastics, coir/textiles, the adjudicating authority
has observed that floor coverings have got a distinct identity
from the floor materials as the floor covering materials are
totally different products which are commonly used as an
additional coverage to an existing floor/wall, only for the
purpose of beautification and decoration. The authority also
observed that floor coverings are quite replaceable in nature
since they are mechanically placed on the floor and could be
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reusable also, whereas the tiles such as
mosaic/granite/cement tiles which are basically embedded to
the floor is normally on lifetime basis and further that such
tiles once laid on the floor are almost impossible to remove
without breaking or causing damage to the floor itself. The
major differences that exist between the floor materials and
floor covering materials along with specifications maintained
by ISI No. 1237/1980 for cement tiles and ISI No. 11206/1984
and ISI No. 809/92 for other floor covering materials would go
to show that basically the specifications so maintained by ISI
for cement tiles and for other floor covering materials are not
akin in nature. On close examination of the entire material on
record, the adjudicating authority has come to the definite
conclusion that the cement tiles manufactured by the
assessee-company are in no way akin to floor covering
materials and these are covered within the nomenclature of
’floor tiles’ and, therefore, the assessee-Company is entitled to
the benefit of Exemption Notification No. 59/90.
The appellate authority as noticed earlier has confirmed
the order of the adjudicating authority and held that the
cement tiles in question are not ‘floor coverings’ and the
benefit of the notification has been rightly extended to the
assessee-Company. The Member (Technical) of the CEGAT
has also come to the conclusion that the cement tiles in
question are flooring materials and become constituent part of
the floor or wall or stairways. These tiles cannot be termed as
‘floor coverings’. In support of his findings, the Member
(Technical) has taken into consideration notes of the IS
specifications and various certificates issued by the qualified
Architects, Engineers, Valuers and Interior-Designers dealing
in the said goods. The other two Members of the CEGAT, in
our view, have failed to consider the nomenclature of the
words and expressions "floor coverings in rolls or in the form
of tiles" as used under sub-headings 6807.00 in the
description of goods specified in Table annexed with the
Exemption Notification. The majority Members in recording
different view than the one taken by the adjudicating
authority, the first appellate authority and the Member
(Technical), CEGAT, have only observed that no restricted
meaning could be given to the expression "floor coverings" as
to include only those items which could be just separate or
placed on the floor and to put the items that are affixed to the
floor to cover the same out of its purview. The second Member
(Technical) in his separate order, supporting the order of the
Member (Judicial), has mainly relied upon an earlier decision
in Niraj Cement Structurals v. Collector of Central Excise,
Mumbai [1998 (101) E.L.T. 284 (Tribunal)]. We have gone
through the said decision of the Tribunal but, in our
considered view, the same is of no assistance or help to the
Revenue in peculiar facts and circumstances of the present
case. In that case, the assessee was manufacturer of tiles
covered by the same Notification No.59/90-CE and description
of the goods were also under the same sub-heading. In that
case the product manufactured by the Company was used as
‘floor coverings’ inasmuch as the tiles were placed on the floor
covering the cable running underneath the floor. Thus, the
findings of the Tribunal in the Niraj Cement case (supra)
cannot be uniformly applied to the products in question
manufactured by the assessee-Company.
In the facts and circumstances narrated hereinabove, the
noted contentions of the learned Additional Solicitor General
do not merit acceptance. The objection of the Revenue that
the cement tiles manufactured by the assessee-Company are
covered under the expression "floor coverings in rolls or in the
form of tiles" is misconceived.
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We, therefore, hold that as per the trade understanding
and usages, cement tiles, the subject-matter of the present
case, is a form of floor itself and, therefore, entitled to the
benefit of Exemption Notification No. 59/1990.
Accordingly, we allow this appeal and set aside the orders
of the majority Members of the CEGAT. Consequently, the
order of the Member (T) maintaining the order of appellate
authority which, in turn, has confirmed the order of the
adjudicating authority are all held as reasonable and
sustainable. The parties are left to bear their own costs.