2014 (12) TMI 161 - AT - Central Excise

Waiver of pre deposit - Classification of goods - distinction between dipped tyre cord fabric and rubberised tyre cord fabric - marketability of goods - Held that - It is evident from the Show Cause Notice that the impugned goods are actually the goods obtained after stage 1 of rubberisation and before stage 2 of rubberisation and that is what has been referred to in the Show Cause Notice as dipped rubberised fabrics . The appellants dwelt on this issue at great length to contend that the Show Cause Notice was issued for rubberised tyre cord fabrics which is classifiable under 58.06 as rubber pre-dominates therein. In this regard, it is seen that in paras 13 (c) and 14 of the order-in-original, the adjudication authority makes it amply clear that the goods in question are obtained after dipping (stage-1) (in which certain amount of rubber gets deposited) and the dispute of classification in this case is limited to the classification of stage-1 dipped fabric only. The fact that there was no ambiguity in this regard in the appellants mind is evident from the fact that the quantity and value on which the duty has been demanded were given by the appellants themselves vide their letter dated 24.7.1998 and those quantity and values clearly pertained to the goods obtained after stage-1 (after dipping) and before their rubberisation (referred to as stage-2 in para 13(c) of the impugned order. Thus the appellants contention that the impugned goods were rubberised tyre cord fabrics obtained after stage 2 is an afterthought contrary to the evidence on record. Marketability of goods - Held that - Product has actually been transported by road by the appellants on payment of duty for being used several hundred kilometres away in the manufacture of excisable goods. This clearly shows that the product is not only classifiable as distinct commodity but is also stable and capable of being transported by road long distance and bought and sold. In view of the foregoing prima facie it is evident that the impugned goods are also marketable. - Thus prima facie the appellants have not been able to make a case for full waiver of pre-deposit - Partial stay granted.

Summary

Issues:
1. Classification of cord fabrics under Excise Duty
2. Marketability of the product

Classification of Cord Fabrics under Excise Duty:
The appellants filed a stay petition along with an appeal against an Order-in-Original confirming the demand of Additional Duty of Excise and imposing penalties based on four Show Cause Notices. The issue of classification of cord fabrics had been previously adjudicated up to the CESTAT level, where it was held that the issue stands settled by a Larger Bench judgment. However, the matter was remanded by the Supreme Court for re-examination by the adjudicating authority. The Supreme Court emphasized the need to determine whether the product was rubberized tyre cord fabric or dipped tyre cord fabric. The appellants argued that the Commissioner exceeded the scope laid down by the Supreme Court by focusing on dipped tyre cord fabrics instead of rubberized ones. They contended that the product becomes stable and marketable only after rubberization, making it classifiable under a specific heading.

Marketability of the Product:
The appellants argued that the product in question, dipped rubberized tyre cord fabrics, was not marketable until after rubberization and vulcanization. They referenced various legal judgments to support their position that mere transportation or storage of the product does not necessarily indicate marketability. On the other hand, Revenue contended that the product was indeed marketable as evidenced by the appellants' own unit transporting it for use at another unit. The Tribunal analyzed the process of obtaining the impugned product, noting that it was obtained after stage 1 of rubberization and before stage 2. The Tribunal concluded that the impugned goods, before rubberization, were dipped tyre cord fabrics and not rubberized ones, falling under a different classification. It was also observed that the product was transported for use, indicating marketability.

In the final analysis, the Tribunal found that the appellants had not established a case for a full waiver of pre-deposit. A deposit of a specified amount was ordered within a stipulated period, failing which the appeal would be dismissed. The detailed issues of classification and marketability were deemed to require further examination during the final hearing.