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CASE NO.: Appeal (civil)  1489 of 2001

PETITIONER: M/s Indcon Structurals (P) Ltd

RESPONDENT: Commissioner of Central Excise, Chennai

DATE OF JUDGMENT: 17/04/2006

BENCH: Ashok Bhan & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T

Lokeshwar Singh Panta, J.

       This Statutory Appeal is filed by M/s Indcon Structurals  (P) Limited under Section 35L(b) of the Central Excise Act,  1944 (hereinafter referred to as "the Act") against the Final  Order No. 1557/2000 dated 14th November, 2000 of the  Customs, Excise and Gold (Control) Appellate Tribunal (for  short "the CEGAT"), Chennai, in appeal No. E/1554/94-D- MD, setting aside the Order dated 16th May, 1994 recorded by  the Collector of Central Excise (Appeals), Madras.           The appellant-Company is engaged in manufacture of  flooring cement tiles using cement, sand, blue metal and  gravel along with pigment.    These are in the form of tiles used  for constructing the floor itself or the wall, as the case may be.         The appellant-Company filed classification list claiming  the benefit of Notification No. 59/90-CE on the ground that  the cement tiles in question are not floor coverings in rolls or  in the form of tiles as per the description against serial No. 4 of  sub-heading 6807.00 of the Table annexed with the  Notification.  The Superintendent of Central Excise, Range-  IXA, Madras, IX Division, issued a show-cause notice dated 6th  November, 1992 to the appellant-Company (hereinafter  referred to as the "assessee-Company") directing it to pay the  excise duty on the cement tiles as the said goods are not  eligible to avail the benefit of the Exemption Notification  No.59/90-CE.  The assessee-Company in its reply submitted  that cement tiles manufactured by them are used to construct  the floor itself and it is not floor coverings in terms of the  description of the goods under sub-heading 6807.00.  The  Assistant Collector of Central Excise, Madras, IX Division \026 the  adjudicating authority, on careful examination of the records  and the submissions made before it by both the parties and  after taking into consideration the Section Notes/Chapter  Notes of Chapters 39, 57, 59 and 68, felt it necessary to  conduct an on-the-spot study since the issue for adjudication  was in regard to the product classification.  The adjudicating  authority accordingly visited the factory premises of the  assessee-Company and studied the manufacturing process of  cement tiles.  Finally, the adjudicating authority came to the  conclusion that cement tiles manufactured by the assessee- Company are covered under sub-heading 6807.00 as such the  benefit of exemption Notification No. 59/90 dated 20th March,  1994 is available to the Company.           The Revenue preferred an appeal against the said order  of the adjudicating authority before the Collector (Appeals).  

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The First Appellate Authority confirmed the order of the  adjudicating authority holding that the cement tiles  manufactured by the assessee-Company are not floor  coverings and the benefit of the Notification has been rightly  extended to the Company.         Being aggrieved against the order of the appellate  authority, the Revenue filed an appeal before the CEGAT.  The  Member (Technical) of the CEGAT has found no infirmity or  perversity in the said order and dismissed the appeal of the  Revenue, but the second Member (Judicial) has recorded  separate order differing with the order of Member (Technical)  and set aside the order of the appellate authority.         The matter came to be referred to the third Member for  solving the difference of opinion between the Members of the  Bench.  The third Member (Technical) agreed with the views  expressed by Member (Judicial) and accordingly the appeal  filed by the Revenue was accepted and the benefit of  concession of the excise duty was denied to the assessee- Company.  Hence, the assessee-Company has filed this appeal  before this Court challenging the correctness and validity of  the order of the CEGAT.         We have heard the learned counsel for the parties on  either side.  Mr. V. Lakshmikumaran, the learned counsel for  the assessee-Company, submitted that the assessee-Company  is the manufacturer of the cement tiles, which are used as   flooring in the form of floor itself and these are not floor  coverings as projected by the Revenue.         Per contra, Mr. B. Dutta, the learned Additional Solicitor  General appearing on behalf of the Revenue, submitted that  it  is not in dispute that the product of the assessee is in the form  of tiles, but these tiles are used for floor coverings and as such  the majority members of the CEGAT have rightly denied the  benefit of exemption to the assessee-Company.         Thus, the core question involved in the present appeal is  whether the cement tiles, manufactured by the assessee- Company, are used for floor coverings in the form of tiles for  the purpose of assessment of the rate of excise duty under  Notification No. 59/90 or the goods are exempted from  payment of such duty as claimed by the assessee-Company.    Notification No. 59/90-CE dated 20th March, 1990 has been  issued by the Central Government in exercise of the powers  conferred under sub-section (1) of Section 5A of the Central  Excises and Salt Act, 1944 (1 of 1944), exempting certain  goods specified in column (3) of the Table annexed thereto and  under Sub-heading No. (3) of the Schedule to the Central  Excise Tariff Act, 1985 (5 of 1986) specified in column (2) of  the said Table, from so much of that portion of the duty  of  excise leviable thereon which is specified in the said Schedule  as is in excess of the amount calculated at the rate specified in  the corresponding entry in column (4) of the said Table.  Table  of the Notification, relevant for the purpose of deciding the  present appeal, reads as under:- Table Sl. No. Sub  Heading  No. Description of gods Rate of  Duty   1. XXX XXXX XXX

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 2. XXX XXXX XXX   3. XXX XXXX XXX   4. 6807.00 All goods excluding the  following, namely:- (i)     Floor coverings in rolls  or in the form of tiles (ii)    XXXX 15%  ad valorem

       It is by now well-settled that the words and expressions  in taxing Statutes, unless defined in the Statute itself, have to  be construed in the sense in which the persons dealing with  them understand, i.e., as per the trade understanding,  commercial and technical practice and usage.  We find that  the expressions "floor coverings in rolls or in the form of tiles"  are not defined in the Central Excises and Salt Act, 1944 or in  the Central Excise Tariff Act or in the Exemption Notification  No. 59/90, but it has acquired a definite trade and business  understanding.  The record shows that the adjudicating  authority in its order has recorded categorical finding that in  support of the claim, the assessee-Company has produced on  record certificates of the well-known Architects or Engineers  and Town Planners, Interior Design Engineers and  Consultants and users to the effect that the cement tiles  manufactured by the assessee-Company are totally different  from floor coverings.  Some samples pertaining to floor  coverings and other products, including cement tiles, were  produced by the assessee-Company as material evidence for  comparative analysis before the adjudicating authority at the  time of inspection of the factory premises.  The adjudicating  authority  on such inspection had studied the process of  manufacture of cement tiles and found that cement, sand,  blue metal, gravel were mixed in pre-determined proposition  along with pigments and then the mixture was poured into  moulds, compacted  and allowed to set automatically through  vibration table.  The adjudicating authority further noticed  that the cement tiles were demoulded, cured, surface treated  and are marketed in the brand name of Eurocon tiles.  These  tiles are capable of using for wall application of both  external/internal wall tiling, which form an integral part of the  wall on which they are cemented.  The adjudicating authority  also studied the product in question with reference to its  characteristics, temperature resistance, structural properties  and durability.  The authority has also perused Section Notes/  Chapter Notes of Chapters 39, 57, 59 and 68 dealing with the  goods floor coverings and flooring materials.  On going through  the expressions given for the products, floor coverings/wall  coverings under Chapter Headings 39, 57 and 59, which are  made out of plastics, coir/textiles, the adjudicating authority  has observed that floor coverings have got a distinct identity  from the floor materials as the floor covering materials are  totally different products which are commonly used as an  additional coverage to an existing floor/wall, only for the  purpose of beautification and decoration.  The authority also  observed that floor coverings are quite replaceable in nature  since they are mechanically placed on the floor and could be

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reusable also, whereas the tiles such as  mosaic/granite/cement tiles which are basically embedded to  the floor is normally on lifetime basis and further that such  tiles once laid on the floor are almost impossible to remove  without breaking or causing damage to the floor itself.  The  major differences that exist between the floor materials and  floor covering materials along with specifications maintained  by ISI No. 1237/1980 for cement tiles and ISI No. 11206/1984  and ISI No. 809/92 for other floor covering materials would go  to show that basically the specifications so maintained by ISI  for cement tiles and for other floor covering materials are not  akin in nature.  On close examination of the entire material on  record, the adjudicating authority has come to the definite  conclusion that the cement tiles manufactured by the  assessee-company are in no way akin to floor covering  materials and these are covered within the nomenclature of  ’floor tiles’ and, therefore, the assessee-Company is  entitled to  the benefit of Exemption Notification No. 59/90.           The appellate authority as noticed earlier has confirmed  the order of the adjudicating authority and held that the  cement tiles in question are not ‘floor coverings’ and the  benefit of the notification has been rightly extended to the  assessee-Company.  The Member (Technical) of the CEGAT  has also come to the conclusion that the cement tiles in  question are flooring materials and become constituent part of  the floor or wall or stairways.  These tiles cannot be termed as  ‘floor coverings’.  In support of his findings, the Member  (Technical) has taken into consideration notes of the IS  specifications and various certificates issued by the qualified  Architects, Engineers, Valuers and Interior-Designers dealing  in the said goods.  The other two Members of the CEGAT, in  our view, have failed to consider the nomenclature of the  words and expressions "floor coverings in rolls or in the form  of tiles" as used under sub-headings 6807.00 in the  description of goods specified in Table annexed with the  Exemption Notification.  The majority Members in recording  different view than the one taken by the adjudicating  authority, the  first appellate authority and the Member  (Technical), CEGAT, have only observed that no restricted  meaning could be given to the expression "floor coverings" as  to include only those items which could be just separate or  placed on the floor and to put the items that are affixed to the  floor to cover the same out of its purview.  The second Member  (Technical) in his separate order, supporting the order of the  Member (Judicial), has mainly relied upon an earlier decision  in Niraj Cement Structurals  v. Collector of Central Excise,  Mumbai [1998 (101) E.L.T. 284 (Tribunal)].  We have gone  through the said decision of the Tribunal but, in our  considered view, the same is of no assistance or help to the  Revenue in peculiar facts and circumstances of the present  case.  In that case, the assessee was manufacturer of tiles  covered by the same Notification No.59/90-CE and description  of the goods were also under the same sub-heading.  In that  case the product manufactured by the Company was used as  ‘floor coverings’ inasmuch as the tiles were placed on the floor  covering the cable running underneath the floor.  Thus, the  findings of the Tribunal in the Niraj Cement case (supra)  cannot be uniformly applied to the products in question  manufactured by the assessee-Company.           In the facts and circumstances narrated hereinabove, the  noted contentions of the learned Additional Solicitor General  do not merit acceptance.  The objection of the Revenue that  the cement tiles manufactured by the assessee-Company are  covered under the expression "floor coverings in rolls or in the  form of tiles" is misconceived.

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       We, therefore, hold that as per the trade understanding  and usages, cement tiles, the subject-matter of the present  case, is a form of floor itself and, therefore, entitled to the  benefit of Exemption Notification No. 59/1990.           Accordingly, we allow this appeal and set aside the orders  of the majority Members of the CEGAT.  Consequently, the  order of the Member (T) maintaining the order of appellate  authority which, in turn, has confirmed the order of the  adjudicating authority are all held as reasonable and  sustainable.  The parties are left to bear their own costs.