COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, MUMBAIversusM/S. BELL GRANITO CERAMICA LTD.

COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, MUMBAI                             A
                         v.
          M/S. BELL GRANITO CERAMICA LTD.

                              MAY 9, 2006

          [ASHOK BHAN AND MARKANDEY KATJU, JJ.]                                B
Central Excise Act, 1944; Ss. 11-A, JJAB, JJAC, 35-L{b)/Central Excise
Rules, 1944; Rules 9(2), 1I (A), 11 (B) and 11 (CJ/Central Excise and Tariff
Act, 1985; Tariff Headings 6901.90; 6906.09 and 6906.10:

     Classification-Tiles-Glazed/unglazed-Tariff Headings 6901.90 or           c
6909.09 and 6906.10-Differential amount of excise duty-Levy of-Held:
Merely because tiles are polished and having shiny look, they cannot be
termed as glazed tiles-Polishing and glazing are distinct and separate
processes-Glazed tiles could be produced when a coating of melted glass
applied on the surface-Since no coating was done on the tiles in question,     D
these cannot be termed as glazed tiles-Hence, Tribunal rightly held that the
assessee is not liable to pay differential amount ofduty-Since there was no
suppression of facts, .:xtended period of limitation in terms of proviso to
Section II A of the 1944 Act would not apply.

      The respondent manufactures ceramic tiles, polished and unpolished.      E
Both categories of tiles were claimed by the assessce to be classifiable
under the tariff heading 6901.90 of the Central Excise Tariff Act and the
classification was approved by the Revenue. Later, the Revenue enquired
into the matter and came to the conclusion that the polished and glossy
tiles and classifiable under the heading 6906.10 and 6906.90 respectively      F
and liable for higher rate of excise duty. Accordingly, a demand notice
was issued for recovery of the differential amount of duty on such tiles
for a specified period. The Authorities confirmed the demand of differential
amount of duty holding that the tiles manufactured by the assessee were
glazed tiles within the meaning of Chapter sub-heading 6901.10 of the
Act, and directed for recovery of differential amount of duty along with       G
interest under Section llAB of the Act and also imposed penalty on the
assessee under Section lIAC of the Act read with Rule l 73Q(l) of the
Central Excise Rules. The Authorities also ordered confiscation of plant/
Machinery etc. used in connection with the manufacture, production,
storage and removal of the goods. Appeal against the order of the              H
                                    133
    134                 SUPREME COURT REPORTS [2006] Sl.JPP. 2 S.C.R.

A   authorities was allowed by the Tribunal holding that there was no
    suppression of facts and hence the extended period of limitation under
    the proviso to Section l lA of the Act would not apply. Hence the present
    appeal.

          Dismissing the appeal, the Court
B
          HELD : 1. There is no dispute that the goods in question are
    classifiable under Chapter heading 69 of the Central Excise Tariff Act,
    1985. However, sub-heading 69.05 is for unglazed tiles while sub-heading
    69.06 is for glazed tiles. Hence, if the assessee's tiles are unglazed, they
    would be classifiable under heading 69.05, but if glazed, would be
c   classifiable under heading 69.06. [136-F)

         2.1. Simply because the tiles are polished or having a shiny look,
    they cannot become glazed tiles. The expression "glazed tiles" is used in
    common parlance in connection with tiles on which there is a coating of
D   melted glass. There is a clear distinction between glazing and polishing.
    The mere fact of polishing does not lead to the conclusion that the tiles
    are glazed. [136-G-H, 137-Al

         Encyclopedia of Science & Technology and Industrial Ceramic' by
    Felix Singer and Sonja S. Singer, referred to.
E
         2.2. It is clear that vitrification and glazing are two distinct and
    separate processes - the former being a process to which the ceramic
    body is subjected before it is made, while the latter is a process to which
    the said body is subjected after being made. Thus, polishing and glazing
    are distinct and separate processes. The assessee is not coating or applying
F   substances on the tiles which it makes, and hence its tiles cannot be
    termed as 'glazed tiles'. Moreover, the Tribunal has held that there was
    no suppression. This being a finding of fact, it is not appropriate to
    interfere with the same in this appeal. On merits as well as limitation,
    the view taken by the Tribunal is correct. The proviso to Section I IA of
G   the Act will not apply in this case. [137-G-H, 138-D[

        Collector of Central Excise v. Chemphar Drugs & Liniments, (1989)
    40 EL T 276, relied on.

         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2728 of
H   2001.
COMMR OF C.E & CUSTOMS, MUMBAI'· MIS BELL GRANITO CERAMI CA LTD. [MARKANDEY KATJU,J.]   J35

     From the Judgment and Order No. C.1./3070/WZB/2000 dated 12.9.2000                       A
of The Customs, Excise & Gold (Control) Appellate Tribunal, West Zone,
Mumbai in Appeal No. E/2703-R/99/Bom.

     A.K. Panda, Sr. Adv., Ashok K. Srivastava, P. Parmeswaran, Advs.,
with him for the Appellant.
                                                                                              B
    Ramesh Singh, Ms. Bina. Gupta, Ms. Inklee Barooah, Ms. Simanti
Chakrabarti, Advs., for the Respondent.

      The Judgment of the Court was delivered by

      MARKANDEY KATJU, J.:                                                                    c
     This is an appeal filed by the Commissioner of Central Excise &
Customs, Vadodra under Section 35-L(b) of the Central Excise Act, 1944
against the final judgment and order dated 12'h September, 2000 passed by
the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT), West
Zone, Mumbai.
                                                                                              D

      Heard learned counsel for the parties and perused the record.

      Two questions are involved in this appeal - (i) the classification of the
tiles manufactured by the appellant and consequential liability of the
                                                                                              E
appellant to pay differential duties on the same; and (ii) whether the notice
issued demanding excise duty is barred by limitation under Section 11-A of
the Central Excise Act (hereinafter referred to as 'the Act').

      The respondent manufactures ceramic tiles. Some of the tiles are
described as polished while others as unpolished. The classification for both                 F
the polished and unpolished tiles was claimed under heading 6901.90 of the
tariff and the classification was approved by the Department. However,
subsequently, the Department enquired about the classification of the tiles
manufactured by the assessee and was of the opinion that since the polished
tiles are glossy with a shiny surface unlike the unpolished tiles which have
a dull surface, such polished and glossy tiles are classifiable under the
                                                                                              G
heading 6906.10 and others classifiable under heading 6906.90 and bore a
higher rate of excise duty 30% as against 25%. The Department, therefore,
issued notice dated 20. I 0.1998 proposing to recover the differential duty on
the goods cleared between 30.10.1995 and 31.8.1998. Penalty under Section
 11-A was also proposed, as well as confiscation of land, building, plant etc.                H
    136                   Sl iPREME COURT REPORTS [2006] SUPP. 2 S.C.R.

A   used in the manufacture of these goods.

          In the proceeding before the Commissioner, the assessee admitted that
    the classification initially claimed and approved under heading 6901.90 was
    incorrect, and that the correct classification should be under the heading

B
    69.05. He also, inter uliu. raised the plea of the bar of limitation. However,
    the Commissioner, by ·order dated 24.5.1999 held that the tiles manufactured
                                                                                        ...
    by the assessee are glazed tiles within the meaning covered by Chapter sub-
    heading 6901.10 of the Schedule to the Central Excise Tariff Act, 1985. The
    Commissioner held that the assessee is liable to pay duty amounting to Rs.
    7,39.91,215.85 under the proviso to Section 11-A of the Act, read with Rule

c   9(2) of the Central Excise Rules. 1944 (hereinafter referred to as 'the Rules').
    He also directed recovery of interest under Section 11 AB of the Act and also
    imposed a penalty of Rs. 7,39,91,216 on the assessee under Section I !AC
    of the Act read with Rule l 73Q( 1) of the Rules. The Commissioner also
    ordered confiscation ofland, building. plant and machinery used in connection
    with the manufacture, production, storage and removal of the goods.
D
           Aggrieved, the assessee filed an appeal before the Customs, Excise and
    Gold (Control) Appellate Tribunal (CEGAT) which was allowed by the
    impugned judgment and order dakd 12.9.2005. The Tribunal held both the
    points in dispute in favour of the assessee. It held that there was no
    suppression of facts and hence the extended period of limitation under the
E   proviso to Section 11 A of the Act will not apply. The Tribunal also held that
    tiles in question were not glazed tiles.

         There is no dispute that the goods in question are classifiable under
    chapter heading 69 of the Central Excise Tariff Act, 1986 (for short "The
F   Tariff Act"). However, sub-heading 69.05 is for unglazed tiles while sub-
    heading 69 .06 is for glazed tiles. Hence, if the assessee ·s tiles are unglazed,
    they would be classifiable under heading 69.05 but if glazed, would be under
    heading 69 .06.

          Learned counsel for the Revenue contended that the tiles which have
G   a glossy and polished look are glazed tiles. With respect, we cannot agree.
    In our opinion. simply because the tiles are polished or having a shiny look,
    they cannot become glazed tiles. The expression "glazed tiles" is used in
    common parlanct> in connection with tiles on which there is a coating of
    melted glass. In our opinion, there is a clear distinction between glazing and
H   polishing. The mere fact of polishing does not lead to the conclusion that
COMMR OFC.E. & CUSTOMS, MUMBAI'· MIS BELLGRANITO CERAMIC A LTD. [MARKANDEY KAT!U, l.]   \3 7

the tiles are glazed.                                                                          A
     As observed by the Tribunal in Paragraph 22 of its order, in the
manufacture of the appellant's tiles there is no coating of glaze materials
applied on the surface of the body of the tiles. The appellant's tile are
subjected to the process of mechanical polishing only, with the help of rollers
and abrasives. On the other hand, glazing is an application of a coating of                    B
melted glass upon the ceramic body.

     In our opinion, simply because the tiles in question are polished or
having a shiny look, they do not become glazed tiles. Glazed tiles, as already
mentioned above, are produced when a coating of melted glass is applied
on the surface of the body of the tiles. In fact, glazed tiles normally are not
                                                                                               c
polished at all.

      The Indian Standard Glossary of Terms relating to ceramic ware, gives
the following definition : "Glaze : A ceramic coating matured to glassy state
on a fonned ceramic article, or the materials or mixture from which the                        D
coating is made".

     In The McGraw Hill Encyclopedia of Science & Technology 'Glazing'
is defined as "the application of finely ground glass, or glass forming
materials, or a mixture of both, to a ceramic body and heating (firing) to a
temperature where the material or materials melt, forming a coating of glass                   E
on the surface of the ware".

      In the book 'Industrial Ceramic' by Felix Singer and Sonja S Singer
published by Oxford & IBH Publishing Co. Pvt. Ltd., it is stated: "Glazes
are thin layers of glass fused on to the surface of the body; they are applied
to bodies to make them impervious, mechanically stronger and resistant to
                                                                                               F
scratching chemically more inert and more pleasing to the touch and eye".

     It is clear that vitrification and glazing are two distinct and separate
processes - the former being a process to which the ceramic body is
subjected before it is made, while the latter is a process to which the said                   G
body is subjected after being made. Thus, polishing and glazing are distinct
and separate processes and hence the submission of the learned counsel for
the Revenue cannot be accepted. The assessee is not coating or applying
substances on the tiles which it makes, and hence it's tiles cannot be tenned
as 'glazed tiles'. Moreover, the Tribunal has held that there was no
                                                                                               H
    138                  SUPREME COURT REPORTS [2006) SUPP. 2 S.C.R.

A   suppression. This being a finding of fact, we cannot interfere with the same
    in this appeal.

          In Collector ofCentral Excise v. Chemphar Drugs & Liniments. ( 1989)
    40 EL T 276, the Supreme Court observed that the extended period under
    the proviso to sub-section 11 A will apply only if something positive other
B   than mere inaction 'or failure on the part of the manufacturer or producer
    or conscious or deliberate withholding of information is required before it
    can be saddled with any liability under proviso. This Court further observed
    that whether in a particular set of facts and circumstances there was any fraud
    or collusion or willful misstatement or suppression or contravention of any
c   provision of any Act, is a question of fact depending upon the facts and
    circumstances of a particular case. Where the Department had full knowledge
    of the facts about manufacture of the goods of the assessee, it cannot be said
    that there was any supperssion. We respectfully agree with this view.

          Thus, we are of the opinion that on both the points involved in this tase,
D   i.e. on merits as well as limitation, the view taken by the Tribunal is correct.
    We hold that the proviso to Section l IA will not apply in this case, and we
    also hold that the assessee did not manufacture any glazed tiles.

         Resultantly, there is no force in this appeal and the same is accordingly
    dismissed. No costs.
E
    S.K.S.                                                      Appeal dismissed.