1983 (5) TMI 240 - AT - Central Excise

Summary

Issues Involved:
1. Classification of PVC Conveyor Belting under Central Excise Tariff.
2. Applicability of Tariff Item No. 19 versus Tariff Item No. 68.
3. Relevance of manufacturing process and materials used.
4. Interpretation of Tariff Entries and Trade Parlance.
5. Impact of previous judgments and notifications on the case.

Detailed Analysis:

1. Classification of PVC Conveyor Belting under Central Excise Tariff:
The primary issue revolves around whether the PVC Conveyor Belting manufactured by the Company falls under Tariff Item No. 19 or Tariff Item No. 68 of the Central Excise Tariff. The Company argued that their product should be classified under Tariff Item 68, whereas the Excise Authorities classified it under Tariff Item No. 19.

2. Applicability of Tariff Item No. 19 versus Tariff Item No. 68:
The Company contended that their product, described as "P.V.C. Fire Resistant Anti-Static Solid Woven Coal Conveyor Belting," should be classified under Tariff Item 68. The Excise Authorities, however, classified it under Tariff Item No. 19 (III), which pertains to cotton fabrics impregnated, coated, or laminated with preparations of artificial plastic materials. The Company argued that their product was not known in trade or commercial sense as cotton fabric and that the classification under Tariff Item No. 19 was unjustifiable.

3. Relevance of Manufacturing Process and Materials Used:
The manufacturing process and the materials used were crucial in determining the classification. The Company provided a detailed description of the manufacturing process, highlighting that the product consisted of 21% cotton yarn, 60% PVC mix, and other materials. The Excise Authorities focused on the base fabric, asserting that the manufacturing process of the base belting was akin to that of fabrics, thereby justifying the classification under Tariff Item No. 19.

4. Interpretation of Tariff Entries and Trade Parlance:
The judgment emphasized the importance of interpreting tariff entries in their trade or market sense. The Supreme Court's judgment in the case of Porritts & Spencers (Asia) Ltd. was cited, which established that in a taxing statute, words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance. The Company argued that their product, known in the market as conveyor belting, could not be considered cotton fabric.

5. Impact of Previous Judgments and Notifications on the Case:
The Company referred to the Government of India's judgment in the case of Dunlop India, where an identical product was classified under Tariff Item No. 68. The Tribunal noted that the facts in Dunlop's case were identical to the present case and found no justifiable reasons for the reluctance of the Government in not accepting the Company's revision petition. The Tribunal also referred to the Gujarat High Court judgment in the case of Hind Engineering Co., which supported the Company's contention that the process of super-imposition of rubber on canvas brought about such a basic change in its character that it could not be considered cotton fabric.

Majority Order:
The majority order held that the product of the Company could not be brought within the ambit of Tariff Item No. 19. It emphasized that the end product, which was conveyor belting, could not be considered cotton fabric as contemplated and provided under Tariff Item No. 19. The Tribunal accepted the Company's submission that its product was identical to that of Dunlop and upheld the classification of the product under Tariff Item No. 68. The appeal was allowed, and the concerned Revenue authorities were directed to give effect to the order and allow consequential relief within two months.

Dissenting Order:
The dissenting order argued that the process of manufacture and the composition of the base fabric were crucial in determining the classification. It held that the base fabric, comprising solely of twisted cotton yarn, would come within the ambit of the expression "cotton fabrics" as defined in Item No. 19 CET. The dissenting member concluded that the PVC conveyor belting fell within the ambit of sub-item III of Item No. 19 CET and thus, the appeal deserved to be rejected.

Conclusion:
The majority order allowed the appeal, directing the classification of the Company's product under Tariff Item No. 68, while the dissenting order held that the product fell under Tariff Item No. 19 (III). The detailed analysis and reasoning provided by both sides highlight the complexities involved in tariff classification and the importance of considering trade parlance and manufacturing processes in such determinations.