The Ahmedabad bench of Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) has held that the classification of old and used lead acid batteries based on their technical nature cannot be challenged without any evidence. In the absence of any investigation, the technical nature of the product poses a challenge for classification.
The appellant, Triveni Shipbreakers is engaged in shipbreaking activity and selling of the goods obtained by breaking up old and used ships/vessels. During the Audit of the records of the appellant, it was observed that the appellant had cleared old and used lead acid batteries and classified the same under CTH No. 8507 as non–excisable goods whereas the department is alleging that the same be classified under Chapter 78 of the Central Excise Tariff Act 1985.
Shri Sarju Mehta, Chartered Accountant appearing on behalf of the Appellant at the outset submitted that the Show Cause Notice has demanded the Excise Duty by classifying the goods as Lead Acid Batteries under Chapter 78 whilst the Appellant had submitted that the said goods are non–excisable as it falls under the coverage of Electric Accumulators under CETH 8507.
He submitted that it is an established trade practice to sell goods that are a byproduct of ship breaking activity and that the appellant cannot scrap the lead-acid as they are not permitted to do so under Pollution Control Norms. He further submits that the appellant has paid the alleged amount totalling Rs. 15,855/- under protest. Shri P. Ganeshan, Superintendent (AR) appearing on behalf of the Revenue reiterated the findings of the impugned order.
The main issue to be decided in the present case is whether the said goods shall be classified as Lead Acid Batteries under Chapter 78 as upheld by the Revenue or as Electric Accumulators under CTEH 8507 as claimed by the Appellant.
A two-member bench comprising of Mr Ramesh Nair, Member ( Judicial ) and Mr Raju, Member ( Technical ) observed that the lower authorities had not appreciated the nature and characteristics of the batteries in question before classification. As regards the submissions made by the Appellant the batteries that have been sold are an outcome of ship breaking and not that of manufacturing therefore it has not been sufficiently established that the said goods be classified as scrap altogether.
It was evident that the Show Cause notice was issued without first determining the nature of the product. In the absence of any such investigation, the technical nature of the product poses a challenge for classification. The appellant claimed that the adjudicating authority had not produced any evidence supporting their claim.
The Tribunal remanded the matter back to the adjudicating authority to reconsider the issue afresh by going into all the claims by the appellant as regards the nature of the product. The CESTAT set aside the impugned order and allowed the appeal by way of remand to the adjudicating authority.
Shri Sarju Mehta, Chartered Accountant appeared for the Appellant and Shri A.R. Kanani, Superintendent (Authorized Representative) for the Respondent
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