2005 (7) TMI 474 - AT - Central Excise

Summary

Issues: Classification of goods under Chapter 40 vs. Chapter 39, entitlement to exemption under Notification No. 18/95, validity of test reports under Chapter Note 4 of Chapter 40 of CET.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the dispute revolved around the classification of goods under Chapter 40 as 'rubber' by the appellants, whereas the Revenue classified them under Chapter 39 as 'plastic'. The Revenue contended that even if the goods were classifiable under Chapter 40, the appellants were not entitled to the exemption under Notification No. 18/95 for goods used in footwear manufacture due to lack of evidence. The applicants argued that the classification should be based on Chapter Note 4 of Chapter 40, which prohibits certain substances. They also highlighted discrepancies in the test reports relied upon by the Revenue, citing a previous Tribunal decision where a similar issue led to remand. The Revenue maintained that the test reports indicated the goods were not rubber and thus not classifiable under Chapter 40, also denying the applicants' entitlement to the exemption.

The Tribunal found that the test reports provided by the Revenue did not adhere to the protocol specified in Chapter Note 4 of Chapter 40 of the CET, indicating a strong prima facie case in favor of the applicants. Consequently, the Tribunal waived the pre-deposit of duty and penalty, allowing the stay petitions. The judgment emphasized the importance of following the prescribed testing procedures under Chapter Note 4 for accurate classification of goods and entitlement to exemptions, ultimately ruling in favor of the appellants based on the procedural non-compliance by the Revenue in testing the goods.