2010 (4) TMI 736 - AT - Central Excise

MRP based valuation - Classification - Notification No. 11/2006-C.E. (N.T.) dated 29-5-2006 - Demand - It is a sealed legal position that mere end use is not determinative factor for classification of goods - It is also undisputed that the appellant has been clearing these tubes on payment of appropriate central excise duty on the transaction value as arrived at under Section 4(1)(A) of the Central Excise Act 1944 - It is to be noted that the table to the notification very clearly indicates chapter heading sub-heading or tariff item of First Schedule for the purpose of coverage under the Section 4A - these products would fall under the categories of Parts components and assemblies of automobiles - Notification No. 9/2010 will have prospective effect only - Appeals are rejected

Summary

Issues Involved:
1. Condonation of delay in filing the appeal by the Revenue.
2. Classification and valuation of butyl rubber inner tubes under the Central Excise Act.
3. Applicability of Section 4A for valuation based on retail sales price (RSP) for inner tubes.
4. Interpretation of Notification No. 11/2006-C.E. (N.T.) and subsequent amendments.
5. Non-imposition of penalty on the appellant by the Revenue.

Detailed Analysis:

1. Condonation of Delay:
The Revenue filed an application for condonation of an 11-day delay in filing the appeal. After hearing both sides, the Tribunal found the delay to be marginal and condoned it, admitting the appeal for disposal.

2. Classification and Valuation:
The appellants manufacture butyl rubber inner tubes classified under Chapter sub-heading 40.13 of the Central Excise Tariff. The dispute arose over whether these inner tubes should be valued based on their transaction value under Section 4 or their retail sales price (RSP) under Section 4A of the Central Excise Act, 1944. The department contended that the inner tubes are parts of automobiles and should be assessed under Section 4A, while the appellants argued that their products are excluded from Chapter 87, which covers parts and accessories of automobiles.

3. Applicability of Section 4A:
The Tribunal examined whether the products manufactured by the appellant would be covered under Section 4A of the Central Excise Act, 1944. The relevant entry at Sl. No. 97 of Notification No. 11/2006-C.E. (N.T.) was considered, which prescribes valuation based on RSP for parts, components, and assemblies of automobiles. The Tribunal concluded that inner tubes, being essential for the functioning of tyres in automobiles, fall under the category of "parts, components, and assemblies of automobiles" and thus should be valued under Section 4A.

4. Interpretation of Notification No. 11/2006-C.E. (N.T.):
The appellants argued that the term "any heading" in the notification should be interpreted as "any heading of Chapter 87," which specifically covers parts of automobiles. However, the Tribunal found that "any heading" implies any heading of the Central Excise Tariff Act, 1985, and not limited to Chapter 87. The Tribunal also noted that the subsequent amendment by Notification No. 9/2010, which clarified the exclusion of specific vehicles, would have prospective effect only and does not impact the period in question.

5. Non-imposition of Penalty:
The Revenue appealed against the non-imposition of penalty on the appellant. The Tribunal upheld the lower authorities' decision that the appellant should not be penalized, as the issue involved the interpretation of a notification. The Tribunal concurred with the lower authorities' findings and confirmed the demand of duty and interest but rejected the imposition of penalties.

Conclusion:
The Tribunal rejected the appeals filed by both the appellant/assessee and the Revenue, upholding the impugned orders. The Tribunal confirmed that the inner tubes manufactured by the appellant fall under the category of parts, components, and assemblies of automobiles and should be valued based on their RSP under Section 4A of the Central Excise Act, 1944. The Tribunal also upheld the decision not to impose penalties on the appellant.