1991 (9) TMI 84 - HC - Central Excise

Issues Involved:
1. Classification of Plastic Battery Tops under Tariff Item 42 or Tariff Item 68.
2. Classification of Plastic Battery Tops under Tariff Heading 85.06.
3. Validity of directions and show cause notices issued by the respondents.
4. Interpretation of Notes 2 and 5 of Section XVI of the Central Excise Tariff Act, 1985.
5. Applicability of Section 11A(1) of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Classification of Plastic Battery Tops under Tariff Item 42 or Tariff Item 68:

The petitioners contended that Plastic Battery Tops (cap seals) manufactured by them should be classified under Tariff Item 68, not Tariff Item 42. The respondents argued that these products should fall under Tariff Item 42 as "pilfer proof caps for packaging." The court examined the definition of "pilfer proof caps," which are intended to protect against substitution, adulteration, or pilfering. The court concluded that Plastic Battery Tops are not designed to prevent pilferage but to protect against leakage and corrosion, and therefore, cannot be classified under Tariff Item 42. The court referenced the Customs, Excise and Gold (Control) Appellate Tribunal's decision in Top-O-Past, Baroda v. Collector, Central Excise, Vadodara, which held that battery tops are covered by Residuary Tariff Item 68.

2. Classification of Plastic Battery Tops under Tariff Heading 85.06:

The respondents contended that Plastic Battery Tops should be classified under Tariff Heading 85.06 as parts of primary cells and primary batteries. The court found this contention devoid of substance. It analyzed Notes 2 and 5 of Section XVI of the Central Excise Tariff Act, 1985, which outline how parts of machines should be classified. The court concluded that Plastic Battery Tops are not parts of any machine and therefore cannot be classified under Heading 85.06. The court emphasized that battery tops are not cited in the headings of Chapter 84 or 85, and thus, cannot be classified under these headings.

3. Validity of Directions and Show Cause Notices Issued by the Respondents:

In Special Civil Application No. 5313 of 1984, the petitioners challenged the directions issued by the respondents to apply for a license under Tariff Item 42. The court ruled that as Plastic Battery Tops are not covered by Tariff Item 42, the show cause notice dated 20th September 1984 does not survive. Similarly, in Special Civil Application No. 5487/84, the court quashed the directions issued by the respondents to obtain a license under Tariff Item 42. In Special Civil Application No. 7247 of 1988, the court quashed the orders passed by the Assistant Collector and the Collector, Central Excise, which classified Plastic Battery Tops under Tariff Heading 85.06.

4. Interpretation of Notes 2 and 5 of Section XVI of the Central Excise Tariff Act, 1985:

The court analyzed Notes 2 and 5 of Section XVI to determine the classification of parts of machines. Note 2 outlines the rules for classifying parts of machines, while Note 5 defines the term "machine." The court concluded that Plastic Battery Tops do not fall under any of the headings of Chapter 84 or 85 and are not parts of any machine. Therefore, these notes do not support the respondents' contention that Plastic Battery Tops should be classified under Heading 85.06.

5. Applicability of Section 11A(1) of the Central Excises and Salt Act, 1944:

In Special Civil Application No. 533/91, the petitioners challenged the show cause notice issued under Section 11A(1) of the Central Excises and Salt Act, 1944. The court noted that the petitioners had consistently contended that their product is not covered under Tariff Item 42 or Tariff Heading 85.06. The court found no justification for issuing a show cause notice for a period exceeding six months and ruled that the show cause notice does not survive, given the court's conclusion that Plastic Battery Tops cannot be classified under sub-heading 85.06.

Conclusion:

The court ruled in favor of the petitioners, concluding that Plastic Battery Tops are not covered by Tariff Item 42 or Tariff Heading 85.06. The court quashed the directions and show cause notices issued by the respondents and directed them not to proceed with adjudication based on these classifications. The petitions were allowed, and the rules were made absolute with no order as to costs.

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