Per Shri P.C. Jain :

Facts of the case are as follows :-

1.1 The appellants, herein, filed a classification list effective from 20.3.90 for the product 'vanadium sludge' claiming classification under heading 26.15 of CET attracting nil rate of duty as per Notification 19/88 dated 1.3.88.

1.2 Department issued a show-cause notice (s.c.n.) dated 26.11.90 as to why their claim be not rejected as the said heading would relate only to vanadium ores and concentrates only and sludge is neither of these.

1.3 (i) In reply, the appellants submitted that claim was made to bring uniformity with other manufacturers,

(ii) Vanadium sludge is not a base metal, hence cannot be classified under Chapter 81,

(iii) It is actually a residue and is properly covered by tariff heading 26.20,

(iv) Technical details were also submitted alongwith the manufacturing process.

1.4 Revenue, basing itself on the composition of the product, issued another letter dated 25.6.91 proposing classification under sub-heading 2841.90.

2.1 It is appropriate to set out the manufacturing process, as given in the order-in-original (O-in-O) dated 16.8.91, on which there is no controversy :

Crushed bauxite containing aluminium is digested under pressure and high temperature with caustic soda to bring the alumina content in solution. Undissolved oxides of iron, titaniam and silicon do not react with caustic are separated by settling and filtration and called as red mud. The filtered liquor obtained after separation of red mud is super saturated by addition of crystalline Aluminium hydroxide. The crystallised Aluminium hydroxide is further washed and calcined to get calcined Alumina.

The liquor stripped of alumina content is recycled for digestion of bauxite. The content of dissolved impurities such as vanadium keep on increasing with recycle. Hence a portion of this liquor is recycled in the system and another portion is concentrated by evaporation and cooled. Due to the cooling crystal of sodium vandate are formed. This is further separated by filtration and packed in HDPE bags for storage. The resultant solid product is mainly Sodium ortho vandate with impurities such as sodium hydroxide.

3.1 Assistant Collector, after considering the submissions of the appellant including the opinion of Professor Shri D.K. Bhattacharjee, Head of the Department of Chemical Technology, Calcutta University, held as follows:-

"Sodium Orthovandate is a separate chemically defined inorganic compound and it is obtained by the process of cooling and crystallisation. Hence it cannot be called as a residue or sludge. As in India vanadium metal is not obtained by mining this compound is an important vanadium resource. It is sold for further use to different customers at a rate of Rs. 1 lakh per M.T. or more than that as per contract. Hence it cannot be treated as a sludge under heading No. 26.20. It was classified under sub-heading 2841.90."

3.2 On Appeal, the appellants herein did not succeed before the lower appellate authority which observed that O-in-O was essentially based on the decision taken by Collectors in a Tariff conference.

Hence this Appeal before the Tribunal.

4.1 Ld. advocate, Shri N. Mookherjee submits that SZB has recently passed an order No. 1972/1996 in the appellants' own case (in respect of another unit) that it is classifiable under heading 26.20. It observed that having regard to the composition of sludge wherein V₂O₅ (Vanadium Pentoxide) is only in small proportion and there are other constituents in larger proportion, the product sludge cannot be considered a separate chemically defined compound. At best it can be considered as a mixture of a number of elements and compounds. Note 1 (a) of Chapter 28 will come into play, according to SZB, only if the item is first recognisable as separately defined compound and it has some impurities in it. On the other hand, Chapter note 3 of Chapter 26 was found to be applicable in this case because the material was claimed to be used for extraction