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2005 (1) TMI 110 - SC - Central ExciseWhether Dipped Nylon Tyre Cord Warp Sheet (hereinafter referred to as the Dipped Tyre Cord Fabric ) is a High Tenacity Yarn in terms of Tariff Heading 59.02? - Held that - The Tribunal was wrong in equating Dipped Tyre Cord Fabric with Rubberised Tyre Cord Fabric. The judgments in Falcon Tyres (1996 (9) TMI 242 - CEGAT, NEW DELHI) and Vikrant Tyres (1996 (11) TMI 424 - CEGAT, NEW DELHI) dealt with classification of Rubberised Tyre Cord Fabric with reference to Chapter Heading 40.05 vis-a-vis Chapter Heading 59.05 (now 59.06). Therefore, the abovementioned prior judgments have no application to the controversy in hand. Lastly, the Tribunal has not examined the scope of HSN Heading 59.02. Moreover, the Adjudicating Authority has not examined the matter in the light of Note-4 to Chapter-59. It has not examined the problem in the context of Note-4 to Section XI and there is no evidence of marketability of Dipped Tyre Cord Fabric. Although, the adjudication order is a well reasoned order, we want the Adjudicating Authority to also examine the matter in the light of the above Note-4 to Chapter 59 and Note-4 to Section XI. We have also given an opportunity to the department to lead evidence, both on the process as well as on marketability. The basic question which the Adjudicating Authority is required to decide is - whether Dipped Tyre Cord Fabric is an independent product in terms of manufacture and marketability? Accordingly, the question of excisability and the questions of classification of Dipped Tyre Cord Fabric are remitted to the Commissioner (Adjudication), Goa for a fresh determination in accordance with law. The controversy regarding classifiability of Rubberised Tyre Cord Fabric is no more res integra. The said product is classifiable under Chapter Heading 59.06. We do not find any infirmity in the impugned judgment of the Tribunal on this point.
Issues Involved:
1. Classification of Dipped Nylon Tyre Cord Warp Sheet (Dipped Tyre Cord Fabric) under Tariff Heading 59.02. 2. Classification of Rubberised Nylon Tyre Cord Warp Sheet (Rubberised Tyre Cord Fabric) under Tariff Heading 59.06. Detailed Analysis: 1. Classification of Dipped Tyre Cord Fabric: The primary issue was whether Dipped Tyre Cord Fabric is classifiable under Tariff Heading 59.02 as a High Tenacity Yarn. The department issued twelve show cause notices to the assessee, M/s. M.R.F. Ltd., demanding additional excise duty on the ground that Dipped Tyre Cord Fabric is an excisable product under Tariff Heading 59.02. The Commissioner (Adjudication) concluded that Dipped Tyre Cord Fabric is an independent product resulting from the dipping process, which is a stage prior to rubberizing, and thus falls under Tariff Heading 59.02. The Tribunal, however, classified Dipped Tyre Cord Fabric under Tariff Heading 59.05 (now 59.06), equating it with Rubberised Tyre Cord Fabric, and relied on previous judgments in Falcon Tyres Limited and Vikrant Tyres Limited. The department argued that Dipped Tyre Cord Fabric should be classified under Tariff Heading 59.02, emphasizing that the product description under HSN Heading 59.02 includes Tyre Cord Fabrics, whether or not dipped in rubber or plastics. They also argued that the Tribunal did not properly examine the "process of dipping." The assessee contended that Dipped Tyre Cord Fabric is not an independent product and is not marketable. They argued that the product loses its identity after dipping and that there was no evidence of its marketability. The Supreme Court noted that the classification should depend on the rubber content of the product. If the parameters in Note-4 of Chapter 59 are met, the product would fall under Chapter Heading 59.06; otherwise, it would fall under Chapter Heading 59.02. The Tribunal's reliance on previous judgments was misplaced as those cases did not address the classification of Dipped Tyre Cord Fabric specifically. The matter was remitted to the Commissioner (Adjudication), Goa, to examine the classification in light of Note-4 to Chapter 59 and Note-4 to Section XI, and to determine the marketability of Dipped Tyre Cord Fabric. 2. Classification of Rubberised Tyre Cord Fabric: The issue was whether Rubberised Tyre Cord Fabric is classifiable under Chapter Heading 59.02 or 59.06. The department issued show cause notices proposing to classify Rubberised Tyre Cord Fabric under Chapter Heading 59.02, while the assessee contended it should be under Chapter Heading 40.05 due to the rubber content exceeding the prescribed limit. The Commissioner, Chennai, concluded that Rubberised Tyre Cord Fabric is classifiable under Chapter Heading 59.05 (now 59.06), a decision upheld by the Supreme Court in previous judgments. However, the Commissioner (Adjudication) in conjoint proceedings took a contrary view, classifying it under Chapter Heading 59.02. The Tribunal set aside the Commissioner's order, following the judgments in Falcon Tyres and Vikrant Tyres, classifying Rubberised Tyre Cord Fabric under Chapter Heading 59.06. The Supreme Court confirmed that the classification of Rubberised Tyre Cord Fabric is no longer in dispute and should be under Chapter Heading 59.06. Judgment: - The Supreme Court dismissed the appeals related to the classification of Rubberised Tyre Cord Fabric, confirming it under Chapter Heading 59.06. - The appeals related to the classification of Dipped Tyre Cord Fabric were allowed, and the matters were remitted to the Commissioner (Adjudication), Goa, for fresh determination in accordance with the law, considering the marketability and the specific notes in Chapter 59 and Section XI. - No order as to costs in all the civil appeals.
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