2000 (1) TMI 78 - AT - Central Excise

Summary

Issues involved:
Classification of Micro Cellular Rubber Sheets under sub-heading 4008.11 or 3921.19 of the Central Excise Tariff Act.

Detailed Analysis:

1. Classification Issue:
The main issue in this appeal is the classification of Micro Cellular Rubber Sheets manufactured by M/s. Popular Rubber Industries. The Central Excise Officers detained and later seized the goods, classifying them under sub-heading 3921.19 instead of 4008.11 as claimed by the appellants. The Commissioner's order directed the determination of duty payable and imposed a penalty, citing that the product's essential character is derived from Ethylene Vinyl Acetate (EVA) and not rubber, invoking Rule 3(b) of the Interpretation Rules.

2. Appellant's Arguments:
The appellant's advocate argued that the product should be classified as rubber, not plastic, based on the composition and usage of EVA in a small percentage. They contested the test reports' validity, emphasizing the need for proper testing procedures as per Chapter 40. The advocate also challenged the Commissioner's rejection of customer letters confirming non-purchase of EVA sheets and the calculation of duty based on complete footwear value.

3. Revenue's Arguments:
The Revenue supported the Commissioner's classification, highlighting the test report's indication of EVA dominance and plastic nature. They relied on Rule 3(b) for classification under sub-heading 3921.19.

4. Tribunal's Decision:
The Tribunal analyzed the classification criteria under Chapter 40 and noted discrepancies in the testing process, emphasizing the need for proper sampling and testing of raw materials. They found merit in the appellant's argument regarding the presence of impermissible materials in the test samples and remanded the matter for retesting. The Tribunal also criticized the non-speaking nature of the Commissioner's order, especially regarding customer letters and duty calculation, directing the Adjudicating Authority to reevaluate the duty quantum and issue a well-reasoned order.

5. Conclusion:
The Tribunal allowed the appeal by remanding the matter for retesting and a comprehensive reevaluation of duty liability, emphasizing adherence to natural justice principles and proper classification procedures. The decision highlighted the importance of accurate testing methods and proper classification criteria in determining excise duty liability.