2010 (6) TMI 367 - AT - Central Excise

Manufacture - cutting of matting in roll form and stitching the edges so as to convert them into floor mats Tribunal in the case of Trans Asia Carpets Ltd. held that it is not manufacture - subsequent decision of Jyoti Carpet Industries Tribunal has held that mattings other than car mattings are liable to duty under sub-heading 5703.90 - two divergent views of the Tribunal - matter before Larger Bench to resolve the difference

Summary

Issues:
Classification of floor mats made from tufted carpets rolls under the Central Excise Tariff Act, 1985; Benefit of exemption under Notification No. 8/2002 for 'floor mats'; Classification of 'car mats' under CET sub-heading 8708.00; Extension of SSI exemption under Notification No. 8/2002; Imposition of interest, penalties, and confiscation of floor mats.

Analysis:
The Appellate Tribunal, in the case at hand, dealt with the classification and exemption issues related to floor mats made from tufted carpets rolls. The Commissioner (Appeals) had upheld a duty demand on these floor mats and denied the benefit of exemption under Notification No. 8/2002. The Tribunal noted the plea of the assessees that the process of cutting matting in roll form and stitching the edges to convert them into floor mats did not amount to "manufacture," citing the case of Trans Asia Carpets Ltd. v. Commissioner of Central Excise, Meerut. However, a subsequent decision in Jyoti Carpet Industries v. Commissioner of Central Excise, Jaipur-1 held that 'mattings other than car mattings' are liable to duty under a specific sub-heading, while 'car mattings' are classified differently. This led to a divergence in Tribunal views on whether the conversion of mattings into smaller size mattings constitutes manufacture. The Tribunal acknowledged the need for a Larger Bench to resolve this discrepancy and decided to forward the relevant papers to the Hon'ble President for consideration.

In conclusion, the judgment highlighted the conflicting interpretations within the Tribunal regarding the classification and manufacturing status of floor mats made from tufted carpets rolls. The decision to refer the matter to a Larger Bench demonstrates the Tribunal's commitment to resolving such discrepancies and ensuring consistency in legal interpretations. The issues of duty demand, exemption eligibility, and classification of floor mats and car mats under specific sub-headings were thoroughly analyzed, emphasizing the need for clarity and uniformity in legal determinations within the realm of Central Excise laws.