2005 (1) TMI 128 - AT - Central Excise

Summary

Issues involved: Classification of rubber-coated tyre cord fabrics under Central Excise Tariff - Conflict between Tribunal decisions - Interpretation of Heading 5902 - Whether rubber coating and calendering processes constitute part of tyre cord fabric manufacturing.

Analysis:
1. Classification Issue: The case involved a dispute between tyre manufacturers and revenue officers regarding the correct excise classification of rubber-coated tyre cord fabrics. The respondents claimed classification under Heading 5906, while the revenue authorities argued for classification under Heading 5902 of the Central Excise Tariff. The Commissioner (Appeals) initially ruled in favor of the respondents, citing previous Tribunal orders supporting their classification. However, the Revenue filed appeals challenging this classification before the Bangalore Bench of the Tribunal.

2. Conflict in Tribunal Decisions: The Bangalore Bench noted conflicting decisions in the cases of Good Year (India) Ltd. and South Asia Tyres Ltd., where the Tribunal classified rubber-coated and calendered tyre cord fabric under Heading 5902. Due to these conflicting decisions, the Bangalore Bench referred the matter to the Larger Bench, leading to the current judgment.

3. Interpretation of Heading 5902: The Tribunal analyzed Heading 5902, which covers tyre cord fabric of high tenacity yarn. The respondents argued that this heading encompasses all tyre cord fabrics, whether processed or not, with processes like rubber coating and calendering considered part of the manufacture of tyres, not tyre cord fabrics. They emphasized that the HSN Notes support their interpretation, stating that tyre cord fabric includes fabrics dipped or impregnated with rubber or plastic.

4. Decision and Reasoning: After reviewing submissions from both sides, the Tribunal held that the rubber-coated tyre cord fabric is not classifiable under Heading 5902. The Tribunal reasoned that processes like rubber coating and calendering occur after the completion of tyre cord fabric manufacturing, forming part of the manufacture of tyres or other products. As these processes are not incidental to tyre cord fabric manufacturing, the fabric subjected to such processes falls outside the scope of Heading 5902. Consequently, the Tribunal ruled in favor of the assessees, rejecting the revenue's appeals.

5. Final Decision: With the classification issue resolved in favor of the assessees, the Tribunal concluded that the appeals of the revenue authorities failed on this issue and were therefore rejected. The judgment solely focused on the classification matter, with no other issues raised or addressed.