IMPORTANT POINT
Lympo (in this case under the trade name Gujaraj Lympo ) was not classifiable under Tariff Item 23(1) (Cement) or 23(2) others but under T.I. 68 of Schedule to Central Excise and Salt Act, 1944.

Headnote:Central Excise and Salt Act, 1944-Tariff Item 23(1)-Portable Cement-T.I. 23(2) others and T.I. 68 residuary item-Classification of lympo manufactured by appellant-Whether correct? (No)-It is classification in T.I. 68-Result-Appeal allowed-Case law referred (Central Excise Tariff Act, 1985).
       Held : In our view, the Tribunal and the Collector have incorrectly interpreted the provisions of Tariff Item 23 of the First Schedule to the 1944 Act. The Tariff heading of the entry is Cement . Therefore when T.I. 25(2) speaks of "all others" it means "all other kinds or varieties of cement". It is axiomatic that if the product is not cement but can be used for some purposes like cement, such product is not cement. The test as enunciated by the Tribunal for determination of the question of classification is no doubt how the product is known to the trade. (See: Dunlop India Limited v. Union of India & Ors. (1976) 2 SCC 241). The appellant has produced evidence to show that lympo had never been known or indeed advertised as cement whether of a superior or inferior quality, but was known as a cement substitute. The respondents have produced nothing to show to the contrary. A substitute necessarily implies a difference in identity. When once it is admitted that lympo is a cement substitute, the Tribunal could not have come to the conclusion that lympo was cement or a variety of cement. In our view, there is no ambiguity in the definition of T.I. 23(1) or 23(2). Even if there were, on the principle that when two constructions can be equally drawn, the one favourable to the tax payer should be adopted, the Tribunal should have held in favour of the appellant. (Para 16)
       Held finally : For all these reasons, we set aside the impugned decision of the Tribunal and allow the appeal and hold that lympo was not classifiable under T.I. 23(1) or 23(2) but under T.I. 68 of the Schedule to 1944 Act. Since the appellant s case was dismissed in limine by the Tribunal and the respondent authorities, the further question whether the appellant was entitled to the benefit of Notification 116/75-CE dated 30th April 1975 had not been considered by them. With this judgment the respondent will consider the appellant s claim to exemption from excise duty under the notification treating the appellant s product for the period in question as classifiable under T.I. 68. The appeal is allowed accordingly without any order as to costs. (Paras 19 & 20)

JUDGMENT

Ruma Pal, J.-The issue in this case relates to the classification for the purposes of excise duty of a product manufactured by the appellant, which the appellant claims is a cement substitute and not cement. The product is Lympo which is a lime - pozzolana mixture which the appellant manufactures under the trade-name "Gajaraj Lympo". The respondent s claim that lympo is in fact a variety of cement and was exigible to duty as such.

2. The issue has arisen in the context of the Central Excise and Salt Act, 1944 prior to its amendment in 1965. Cement was then specified in Tariff Item (T.I.) 23 in the First Schedule of that Act and was exigible to duty. The relevant entry then read as follows.

Item No. 23-Cement

Item No. Tariff Description Rate of duty

(1) Grey portland cement (including ordinary Two hundred portland cement, and fifty ruees

portland-pozzolana per metrictonne

cement and portland slag cement), masonary cement, rapid hardening cement, low heat cement and waterproof (hydro- phobic) cement

(2) All others Forty per cent ad valorem

3. According to the appellant since its product was not cement, it was not classifiable under T.I. 23 and was classifiable under T.I. 68 which covered all other goods, not elsewhere specified excluding a few specified articles which are not material to the case before us.

4. The appellant s further case is that the manufacturing activity had been started in 1982 with technical assistance from the Khadi and Village Industries Commission in Patna, Bihar and, therefore, was also entitled to the benefit of notification No. 116/75-CE dated 30th April 1975 by which products of village industries falling under tariff Item 68 of the First Schedule to the Central Excise and Salt Act, 1944 were exempted from the whole of the duty of excise leviable thereon provided the Khadi and Village Industries Commission certified that the said products were the genuine products in the industry as specified in the Schedule to the Khadi and Village Industries Commission Act, 1956. The Director of KVIC by his letters dated 1/2.4.1981 and 2.3.1983 had, according to the appellant, certified that technical consultancy services were being extended to the appellant to establish a Lympo unit (Lime Pozzolana Mixture) and that lympo was the substitute of cement, it was a masonary binder and not cement and that the product fell under "Village Industry" as specified under the Khadi and Village Industries Commission Act, 1956. On the basis of this certificate, the appellant cleared the lympo manufactured, at Nil rate of duty.

5. On 31st July 1982, the Superintendent Central Excise, Ranchi directed the appellant to clear its product lympo by classifying the same under T.I. 23(2) upon payment of duty as specified against that tariff entry. Samples of the appellant s product were taken on 8th October 1982. One of the samples was given to the Chemical Examiner, Customs House, Calcutta which according to the respondent submitted a report that Lympo could be regarded as a type of cement. The report is not on record. By letter dated 3rd May 1983 issued by the Superintendent, Central Excise, Ranchi the appellant was again directed not to clear the product without payment of duty and proper licence treating its product as classifiable under T.I. 23(2). The appellant filed a writ application before the High Court at Ranchi vide C.W.J.C. No.691 of 1983 challenging the demand. The Court directed a fresh sample of the appellant s product to be drawn. This was done on 14th September 1983 and sent to the Director General, National Test House. Alipore, Calcutta. The Test certificate states:

"the said sample fails to meet the requirement as

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Judicial Analysis

SupremeToday

2002 Supreme(SC) 1044

IMPORTANT POINTLympo (in this case under the trade name Gujaraj Lympo ) was not classifiable under Tariff Item 23(1) (Cement) or 23(2) others but under T.I. 68 of Schedule to Central Excise and Salt Act, 1944.

Cases Referred (3)

Judicial Analysis

IMPORTANT POINT
Lympo (in this case under the trade name Gujaraj Lympo ) was not classifiable under Tariff Item 23(1) (Cement) or 23(2) others but under T.I. 68 of Schedule to Central Excise and Salt Act, 1944.