2015 (4) TMI 455 - SC - Central Excise

Classification of blended marble vinyl flooring - Classification under heading 3918.10 or sub-heading 6807 - Held that - From the order of the CEGAT 2003 (6) TMI 46 - CESTAT, MUMBAI it becomes clear that the CEGAT also accepted that the test in Bhor Industries 1980 (10) TMI 60 - HIGH COURT OF GUJARAT AT AHMEDABAD was not be applicable any longer. Therefore, the CEGAT resorted to note 3(b) of General Interpretation Rules which is applied to the facts of the present case. Even Mr.A.K. Sanghi, learned senior counsel for the Department, does not dispute this position and emphasizes that it is General Interpretation Rules which are applicable. We find that as per Note 3(b) of the General Interpretation Rules, the test is essential character of the product and in the facts of the present case it is to be examined as to whether the said essential character is that of plastic or the limestone. - Though no technical material was placed by either side before the Courts below, the CEGAT noted that use of limestone to the extent of 84.10% and use of plastic only as a binder clearly indicated that characteristic of lime stone that confers upon the material its use, in the present case. We may also remark that the Department could not produce any evidence in support of its contention that the goods are known as plastic tiles in the market and therefore this ground was rightly rejected. It may be reiterated that the onus lies on the Department to show that the goods were to be classified under sub-heading 3918.10, which onus the Department has failed to discharge. - Decided against Revenue.

Summary

Issues: Classification of goods under Central Excise Tariff - Heading 6807 vs. 3918.10

Issue 1: Classification of goods under Central Excise Tariff - Heading 6807 vs. 3918.10

The case involved a dispute regarding the classification of blended marble vinyl flooring under the Central Excise Tariff. The respondent, a manufacturer, contended that the goods should be classified under Chapter 68 sub-heading 6807, while the Department argued for classification under heading 3918.10 as plastic tiles. The Assistant Commissioner initially classified the goods under 3918.10 based on a chemical test indicating the presence of polymers of vinyl chloride. However, the Commissioner (Appeals) reversed this decision, emphasizing that the essential character of the tiles was derived from limestone and cement, constituting over 85% of the material, with plastic used primarily as a binder. The Commissioner (Appeals) highlighted similarities with a previous case and noted the lack of flexibility in the tiles manufactured by the respondent compared to PVC tiles. The CEGAT upheld the Commissioner (Appeals) decision, rejecting the Department's argument and emphasizing the essential character of the product as limestone due to the high percentage of its use and lack of evidence supporting the goods being known as plastic tiles in the market.

In the analysis, it was observed that the Assistant Commissioner's reliance on the predominance physically of materials test was deemed outdated due to changes in tariff rules. Despite noting the composition of the tiles, including the low percentage of plastic and high content of limestone, the Assistant Commissioner erred in focusing solely on the presence of plastic as the main characteristic. This error was rectified by the Commissioner (Appeals), who correctly assessed the essential character of the tiles based on the predominant materials used, similar to a previous case. The CEGAT also concurred with this view, applying General Interpretation Rules and emphasizing the essential character of the product as limestone due to the significant use of this material compared to plastic. The Department's failure to provide evidence supporting the classification under heading 3918.10 further weakened their argument, leading to the dismissal of their appeal.

In conclusion, the judgment affirmed the classification of the blended marble vinyl flooring under Chapter 68 sub-heading 6807, highlighting the importance of assessing the essential character of the product based on the predominant materials used. The decision emphasized the onus on the Department to prove the correct classification, which they failed to do in this case, resulting in the dismissal of their appeal.