G. Sankaran, Member (T)

1. This is an appeal filed by the Collector of Central Excise, Rajkot (the appellant) against Order No. T-30/RKT-1/85 dated 11-2-1985 passed by the Collector of Central Excise (Appeals), New Delhi (at Bombay) in favour of M/s. Madhu Chemicals, Bhavnagar (the respondent).

2. The facts of this case, in brief, are that the respondent firm holds an excise licence for the manufacture of "all other goods not elsewhere specified"- Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (CET, for short). It was engaged in the manufacture of Precipitated Silica and had submitted a classification list on 1-4-1982, effective from the same date, for the said product which was approved by the Superintendent of Central Excise, under Item 68, CET. However, on 9-8-1982, the respondent wrote to the Department claiming that as per Notification Mo. 23/55 dated 29-4-1955, the product would correctly fall under Item 14, CET (and not Item 68) and was entitled to unconditional exemption from duty under that notification. This was followed by another letter of 20-9-1982. The Assistant Collector, Bhavnagar, after hearing the respondent, passed an order dated 26-5-1984 rejecting the claim. In this Order, the Assistant Collector observed that Notification No. 23/55 covered inter alia only "silica" but not precipitated silica unlike the term "chalk (including not precipitated chalk)". He further held that the mere use of precipitated silica as extender or filler in paints or pigments would not qualify precipitated silica to be considered as paint or pigment. He ordered that the product be classified under Item 68, CET and rejected the respondent's claim for payment of duty under protest. In appeal, the Collector (Appeals) referred to the report of Chemical examiner which said that precipitated silica was an extender pigment or filler and an order (S/49-978/84 C.L. of September 84) passed by the Collector of Customs (Appeals) holding that precipitated silica was entitled to the benefit of the notification and upheld the claim of Madhu Chemicals. It is against this order that the appellant is presently before us.

3. The grounds argued in the appeal are:-

(i) The benefit of Notification 23/55 is applicable to mineral silica which, is rendered suitable for use as extender (filler) pigment by simple physical processing such as selective mining, cleaning, pulverisation and sieving. It does not apply to precipitated silica which is manufactured by chemical conversion of silicon compounds (sodium silicate, in the instant case) by reaction with sulphuric acid and steam;

(ii) The benefit of the notification is applicable only to mineral silica employed as extender or suspender and not to any other form of silica which is a synthetically produced chemical. Only mineral silica which has undergone physical processing so as to have uses such as extender or filler or diluent will attract the notification. It is a mistake to equate mineral silica with precipitated silica which is a synthetic silica.

4. Shri B.R. Tripathi, learned Senior Departmental Representative, appearing on behalf of the appellant, submitted at the outset that Notification No. 23/55 did not mention the tariff item under which precipitated silica fell. The correct classification of precipitated silica was under Item 68, CET, for, it was not a mineral product but a manufactured product. In this connection, he drew our attention to the manufacturing process which was given as a note in the Collector's appeal. The notification in question covered the specified mineral products as such or subjected to certain treatments, mainly physical in nature. The subject precipitated silica was, however, the result of chemical processing and manufacture and had wide application in rubber industry, toothpaste etc. It was very costly. Therefore, Item 68, CET was apt. Shri Tripathi then referred to the Tribunal's decision in Collector of Central Excise, Meerut v. Searsole Chem