2006 (4) TMI 2 - SC - Central Excise

Whether the cement tiles, manufactured by the assessee-Company, are used for floor coverings in the form of tiles for the purpose of assessment of the rate of excise duty under Notification No. 59/90 or the goods are exempted from payment of such duty as claimed by the assessee-Company? Held that - The objection of the Revenue that the cement tiles manufactured by the assessee-Company are covered under the expression floor coverings in rolls or in the form of tiles is misconceived. Thus as per the trade understanding and usages, cement tiles, the subject-matter of the present case, is a form of floor itself and, therefore, entitled to the benefit of Exemption Notification No. 59/1990. Thus this appeal allowed and set aside the orders of the majority Members of the CEGAT. Consequently, the order of the Member (T) maintaining the order of appellate authority which, in turn, has confirmed the order of the adjudicating authority are all held as reasonable and sustainable. The parties are left to bear their own costs.

Summary

Issues:
1. Interpretation of Notification No. 59/90-C.E. regarding classification of cement tiles.
2. Determination of whether cement tiles are considered floor coverings for excise duty purposes.

Analysis:
The case involved a Statutory Appeal under Section 35L(b) of the Central Excise Act, 1944, challenging the Final Order of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) setting aside the Collector of Central Excise's order. The appellant, a cement tile manufacturer, claimed the benefit of Notification No. 59/90-C.E. by arguing that their product was not classified as floor coverings. The adjudicating authority, after a thorough examination, concluded that the cement tiles fell under sub-heading 6807.00 and qualified for the exemption under the Notification.

The Revenue appealed the decision to the Collector (Appeals), who upheld the adjudicating authority's ruling. However, the CEGAT had a split decision, with the Member (Judicial) differing from the Member (Technical). The matter was referred to a third Member, who sided with the Member (Judicial), denying the benefit of excise duty concession to the appellant. Consequently, the appellant approached the Supreme Court challenging the CEGAT's decision.

During the proceedings, arguments were presented regarding whether the cement tiles manufactured by the appellant were to be considered as floor coverings for excise duty assessment under Notification No. 59/90. The Court emphasized that the trade understanding and usages were crucial in interpreting the term "floor coverings in rolls or in the form of tiles." The Court examined the manufacturing process, characteristics, and usage of the cement tiles to determine their classification.

The Court observed that the cement tiles manufactured by the appellant were distinct from traditional floor coverings and were more akin to 'floor tiles' used as an integral part of the floor or wall. It was noted that the specifications and characteristics of cement tiles differed significantly from typical floor coverings. The Court disagreed with the Revenue's argument that the tiles should be classified as floor coverings, ultimately ruling in favor of the appellant.

In conclusion, the Court allowed the appeal, setting aside the CEGAT's majority decision. The orders of the Member (Technical) and the appellate authority were deemed reasonable and sustainable. Each party was directed to bear their own costs in the matter.