S.L. Peeran, Member (J)

1. In both these appeals, common issue of facts and law is involved. Hence, they are taken up together for disposal as per law.

Appeal No. 2900/88-C

2. This appeal arises from order-in-appeal dated 17-12-1987 passed by the Collector of Central Excise (Appeals) Madras. The question that arises for consideration in this appeal is the grant of benefit of exemption from payment of duty as per Notification No. 179/85-C.E., dated 1-8-1985 as amended by Notification No. 78/86-CE.

The appellants Neyveli Lignite Corporation, a Government of India Enterprise, is producing lignite as well as Agglomerated Lignite which falls under sub-heading 2702.00 and claimed exemption under Notification No. 179/85 as amended by Notification No. 78/86 which exempts goods falling under sub-heading 2702.00.

3. A show cause notice dated 27-2-1987 was issued by Superintendent of Central Excise, Virudhachalam under Section 11A of the Central Excises and Salt Act, 1944 read with Rule 9(1) of Central Excise Rules, 1944 demanding a duty of Rs. 19,30,227.65 P. on Raw Briquette Chips and lignite dust alleged to have been cleared by the appellants from 1-9-1986 to 31-1-1987 without payment of duty. It is further alleged that the appellants are holder of L-4 licence No. 4 of 75 in their Briquetting and Carbonisation plant manufacturing Raw Briquette chips (RB Chips) and lignite dust. It is stated that raw briquette chips which are obtained in the B C Plant after the process of crushing and drying raw lignite but before the process of carbonisation, retain the characteristics of lignite and hence are classifiable under sub-heading 2702.00 of CET Act, 1985. It is further stated that Notification No. 179/85 as amended by Notification No. 78/86, exempts goods falling under sub-heading 2702.00 if only they are manufactured in a mine whereas R.B. chips and lignite dust are manufactured in the Briquetting and Carbonisation plant which is licensed under the Factories Act and hence R.B. chips and lignite dust cannot avail the benefit of exemption under the above notification and accordingly, chargeable to duty at 12% ad val.

4. The appellants sent a reply on 5-3-1987 by which they have contended that they received lignite from mines in B C plant for producing the end products of coke and Tar Chemicals. They contended that in the process, lignite dust is collected from spillages of conveyors and other equipments and stored as heaps. This dust is sold to outside parties. They further contended that it does not have the properties of lignite especially moisture and cal. value. It is a waste product received by B C plant and it is not equal to raw lignite as recovered from mines. Hence they claimed exemption under the Notification No. 179/85 as amended by Notification No. 78/86 and sought exemption from payment of duty. They further contended that with regard to raw briquette chips, this is a semi coke product having been dried to 8% - 11% from 54% and carried out pressurising the lignite and the properties are completely far from lignite but closer to coke properties like physical form, cal. value etc. They contended that the chemical analysis are different from lignite but closer to coke and, therefore, to be treated as semi coke. Hence they claimed exemption under the said notification.

5. The Assistant Collector, after hearing the appellants, rejected their contention and held that B C plant is located in the N.L.C. complex and the same is licensed under the Factories Act and, therefore, the goods under Central Excise Control cannot be considered to be as part and parcel of NLC Mines. He has further held that if it were to be so, then there would be no reason to have a separate licence for the B C Plant, therefore, he held that the products R.B. chips and lignite dust are classifiable under sub-heading 2702.00 of CET 1985 and not being eligible for exemption under Notification No. 179/85 as amended by Notification No. 78/86-C.E.

6. The Collec