2014 (12) TMI 232 - AT - Central Excise

Classification of goods - Whether the canvas canopies specially designed for lorries, tool bags and web equipment of textile material are classifiable under sub-heading 6306/6307 and hence fully exempt from duty under Notification No. 30/2004-C.E. or the same are classifiable as accessories of motor vehicle under heading 8708 - Held that - As regards the canvas canopies specially designed for lorries, we find that these canopies made from canvas tarpaulin, are basically the tarpaulins cut into special shapes for covering goods loaded into open lorries of different models. All tarpaulins are covered by heading 6306 of the Central Excise Tariff. This heading of Central Excise Tariff is identical to heading 6306 of the HSN. In terms of HSN explanatory notes to HSN heading 6306, tarpaulins are used to protect goods stored in the open or loaded in ships, wagons, lorries, etc. against bad weather, that they are generally made of coated or uncoated man-made fiber fabrics, or heavy to fairly heavy canvas (of hemp, jute, flex or cotton) and are waterproof, that tarpaulins are generally in the form of rectangular sheets, hemmed along sides and may be fitted with eyelets and that the Tarpaulin which are specially shaped (e.g. for covering hayricks, decks of small vessels, lorries etc.) also fall in this heading provided they are flat. The canvas Tarpaulins, in question, are specially shaped for different model of lorries and though the Department s contention is that the same are not flat, no evidence in this regard has been produced. In our view, therefore, these Tarpaulin would be correctly classifiable under heading 6306 and not as parts or accessories of motor vehicles under heading 8708. When a heading in Central Excise Tariff is patterned on HSN, the HSN explanatory note would have persuasive value for ascertaining the scope of the corresponding heading in the Excise Tariff heading and accordingly in this case, the canvas canopies specially shaped for lorries of different models would be classifiable under sub-heading 6306 and accordingly the same would be eligible for exemption under Notification No. 30/2004-C.E. - Decided in favour of assessee.

Summary

Issues:
Classification of goods under Central Excise Tariff, eligibility for duty exemption under Notification No. 30/2004-C.E., imposition of penalties and confiscation of goods.

Analysis:

1. Classification of Goods:
The appellant was engaged in manufacturing canvas canopies, tool bags, and web equipment of textile material, classifying them under sub-headings 6306 and 6307 of the Central Excise Tariff. The Department contended that these items were parts or accessories of motor vehicles under heading 8708, making them ineligible for duty exemption under Notification No. 30/2004-C.E. The dispute centered around whether the canvas canopies were correctly classified under heading 6306 or as accessories of motor vehicles under heading 8708.

2. Penalties and Confiscation:
A show cause notice was issued demanding Central Excise duty, interest, and penalties, along with the confiscation of seized goods. The Additional Commissioner confirmed the duty demand, imposed penalties, and ordered the confiscation of goods. Appeals were filed against this order, leading to further adjudication by the Commissioner (Appeals).

3. Appellant's Arguments:
The appellant argued that the canvas canopies, tool bags, and web equipment were fully exempt from duty under Notification No. 30/2004-C.E. as textile items of Chapter 63. They emphasized that the canvas canopies were flat and specially designed for various models of vehicles, falling under heading 6306. The appellant cited relevant case law and HSN Explanatory Notes to support their classification under heading 6306 for duty exemption.

4. Department's Defense:
The Department defended the classification of canvas canopies as accessories of motor vehicles under heading 8708, contending that they were not flat. They reiterated the findings of the Commissioner (Appeals) and argued against the appellant's claim for duty exemption under Notification No. 30/2004-C.E.

5. Judgment and Analysis:
After considering both sides' submissions and perusing the records, the Tribunal analyzed the classification of the goods. They found that the tool bags and web equipment of textile material fell under heading 6307, making them eligible for duty exemption under Notification No. 30/2004-C.E. The Tribunal also examined the canvas canopies specially designed for lorries, concluding that they were correctly classifiable under heading 6306 as tarpaulins. The Tribunal relied on HSN Explanatory Notes and relevant case law to support their decision, setting aside the impugned order and allowing the appeals.

In conclusion, the Tribunal's judgment focused on the correct classification of goods under the Central Excise Tariff, eligibility for duty exemption, and the application of relevant legal principles and case law to determine the classification of canvas canopies, tool bags, and web equipment.