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2005 (1) TMI 107 - SC - Central ExciseWhether the goods manufactured by the Respondents fall under Tariff Item 94.01 or Tariff Item 40.08? Held that - It is an admitted position that the goods manufactured by the Respondents are cut in the shape of seats and are used only in seats. They are thus cushions of seats and are parts of seats. They then fall under Tariff Heading 94.01 and Tariff Heading 40.08 thus get excluded. This view is also supported by H.S.N. Explanatory Note, which states that Tariff Entry 94.01 would cover all seats including seats of vehicles. It is thus held that the goods of the Respondents would fall under Tariff Heading 94.01. Appeal allowed.
Issues: Classification of goods under Tariff Item 94.01 or 40.08
In this case, the main issue revolves around the classification of goods manufactured by the Respondents under Tariff Item 94.01 or Tariff Item 40.08. The Respondents produced goods made of vulcanised rubber, cut to the shape of seats for motor vehicles or two-wheelers. Initially classified under Tariff Heading 40.08, a show cause notice was issued for reclassification under Tariff Item 94.01. The Board clarified that goods for motor vehicles fall under Tariff Heading 94.01, while those for two-wheelers fall under Tariff Heading 87.14. The Appeals to the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) were dismissed, leading to the Supreme Court's review. The Court analyzed Chapter Notes 1(a) and 2 of Chapter 94, which exclude certain articles like mattresses and cushions, and specify classification for floor or ground use. Similarly, Chapter Notes 2(e) and 9 of Chapter 40 exclude articles from Chapter 90 and define specific product characteristics. The Respondents argued their goods are cushions under Chapter 40, while the opposing counsel contended they are seats falling under Tariff Item 94.01. The Court agreed that goods shaped as seats specifically fall under Tariff Heading 94.01, as per the Harmonized System of Nomenclature (HSN) Explanatory Note, and are excluded from Tariff Heading 40.08. Moreover, the Court considered Chapter Note 1(h) excluding two-wheeler seats from Chapter 94 and Chapter Note 87.04 for parts of two-wheelers, clarifying the classification. The Respondents' argument based on Chapter Note 2 of Chapter 94, regarding seat design, was rejected, as vehicle seats also qualify as floor or ground placements. Chapter Note 9 of Chapter 40 was deemed irrelevant to the case. Additionally, the Court highlighted the importance of judicial discipline, referencing past Tribunal judgments on similar classification issues. It emphasized that unless a judgment is referred to a larger Bench, decisions by coordinate Benches should be followed. The Court overturned the CEGAT judgment and ruled in favor of classifying the Respondents' goods under Tariff Heading 94.01, based on binding precedents and proper interpretation of the tariff headings. Therefore, the Appeals were allowed, setting aside the CEGAT judgment, with no order as to costs.
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