FEBRUARY 03, 2015

By K N Ramanathan, Advocate

UNITS situated in Adityapur Industrial Area, Jamshedpur are engaged in the process of crushing, screening and grinding of quartz/quartzite mineral stone (boulder form) into Quartz/Quartzite grains and/or powder. There are about a dozen units situated in the said Industrial Area and around 4000 (approx.) units all over India engaged in similar activity. The Quartz and Quartzite mineral contains more than 95% of silica. The Quartz and Quartzite minerals are not mixed with each other since the silica content is low in Quartzite as compared to Quartz.

Quartz/Quartzite is classifiable under Chapter Heading 2506 of Central Excise Tariff Act as Mineral Products under Section V of CETA and attracts Nil rate of duty under Tariff.

Quartz/Quartzite mineral materials (mixed with grain and powder form) are sold to the users of Induction Furnace for use as Ramming Mass after adopting the following process at the premises of the users.

1. Quartz/Quartzite Grain Mix is firstly heated at a temperature of 200 degree Celsius to remove its moisture and mixed with the binder like Boric Acid (between 0.8% to 2.00% depending upon the size of the furnace and temperature). Such mixed material is ready for ramming in furnace lining.

2. The Quartz/Quartzite mineral material contains 95% of Silica (SIO2). The silica used as lining is acidic in nature. A former drum made of 3-5 mm steel plate is placed in furnace with sufficient gap for lining with Ramming material i.e. Boric acid mixed with Quartz/Quartzite grain which is filled up in the gap between the furnace wall and the steel drum with the help of a mechanical or manual rammer/vibrator. Thereafter the furnace is heated at a temperature between 800 to 1000 degree Celsius so that the Ramming material rammed in furnace wall becomes composite and the furnace is ready for use.

The field formation is of the view that Quartz/Quartzite grain mix is appropriately classifiable under chapter heading 3816 and attracts excise duty @ 12.36% in view of HSN explanatory note (1) of Chapter 25 which deals with the product washed, crushed, ground, powdered, screened etc. except the products which are not roasted, calcined, obtained by mixing. As the products Quartz grain mix and Quartzite grain mix is a mixture of grain and powdered form it is their view that these products are outside the purview of Chapter 25.

The matter was represented to the Board by our Association after interacting with other Associations of Industries in Rajasthan, Andhra Pradesh, Karnataka and various other States where similar activity is not treated as manufacturing process and attempts to get the units registered under Central Excise Act have been negated by the respective Central Excise authorities on the ground that the activity is "not manufacture".

It is our prayer that uniform application of law is required throughout India. Any contrary view will be against revenue especially if duty is paid admitting the product to be classifiable under Chapter 38 and the Revenue Department at some places latches on to the view that the goods do not merit classification under Ch. 38 but under Ch. 25 and attract Nil Tariff Rate and, therefore, duty ought not to have been paid by supplier and CENVAT Credit is not available to consignee.

Board may, therefore, not delay the issuance of clarification or for that matter consider issuing an order under Section 37B of CEA, 1944 and ensure uniformity in the assessment all over the country.

This will help the industries in streamlining their process and avoid frivolous litigation.