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2007 (9) TMI 28 - SC - Central ExciseClassification Department contended that assessee goods (Latex based adhesive) fall under Heading 35.06 of CET not under Heading 40.01 Held that assessee goods classifiable under Heading 40.01
Issues: Classification of Latex based Adhesive under Central Excise Tariff headings '35.06' and '40.01'.
In this judgment, the Supreme Court addressed the dispute concerning the classification of Latex based Adhesive manufactured by the assessee. The Department argued that the product should be classified under tariff heading '35.06' as it is sold as an adhesive to leather footwear manufacturers. However, the Court analyzed the relevant tariff headings and noted that '35.06' pertains to prepared glues and adhesives, while '40.01' relates to rubber and similar substances. The Court highlighted Note 5(b) to Chapter 40, emphasizing that the classification should be based on the composition of the product, not the end-user. By applying the composition test and considering that the rubber content in the adhesive was over 90 percent, the Court concluded that the product falls under heading '40.01'. The Court rejected the Department's argument based on the process of manufacture and end-use, emphasizing that the composition test is crucial in classification matters. It clarified that the end-user test applies only if explicitly mentioned in the entry. By interpreting Note 5(b) and distinguishing between rubber-based adhesives and others, the Court determined that the Latex based Adhesive should be classified under heading '40.01'. The judgment underscored the importance of the composition test in classification disputes and upheld that the product in question, with over 90 percent rubber content, aligns with heading '40.01'. Ultimately, the Court dismissed the appeal, affirming that the Latex based Adhesive manufactured by the assessee falls under heading '40.01' of the Central Excise Tariff. The judgment concluded without imposing any costs, based on the reasons articulated regarding the classification issue.
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