1990 (7) TMI 220 - AT - Customs

1993 (7) TMI 220 - AT

Issues Involved:

1. Classification of 'vulcanising solution' under the Central Excise Tariff Act, 1985.
2. Applicability of Notification 377/86 for exemption.
3. Demand of differential duty for the period 1-11-1986 to 30-9-1987.
4. Discrepancy in classification for the periods before and after 10-2-1987.

Detailed Analysis:

1. Classification of 'vulcanising solution':

The respondents initially classified 'vulcanising solution' under sub-heading 4006.90, which was approved by the Assistant Collector. They later filed a revised classification list under sub-heading 4005.00, seeking exemption under Notification 377/86. The Assistant Collector, however, classified the product under sub-heading 4005.00 and demanded differential duty. The Collector of Central Excise (Appeals) modified this order, applying the Tribunal's decision in Elgi Polytex Ltd., classifying the product under Heading 35.06 as an adhesive based on rubber compound.

The Tribunal upheld this classification for the period post 10-2-1987, stating, "We uphold the classification of the product under consideration under Heading 35.06."

2. Applicability of Notification 377/86 for exemption:

The Assistant Collector issued a show cause notice questioning the exemption claim under Notification 377/86. The respondents argued that the product merited classification under sub-heading 4006.90 as a finished article, hence eligible for exemption. However, the Assistant Collector rejected this claim, leading to the demand for differential duty.

3. Demand of differential duty for the period 1-11-1986 to 30-9-1987:

The Assistant Collector demanded differential duty at 40% ad valorem for the period from 1-11-1986 to 30-9-1987, amounting to Rs. 25,61,791.72. The Collector (Appeals) modified this order, but the Tribunal upheld the demand for the period before 10-2-1987 under sub-heading 4005.00, stating, "the demand of duty from 1-11-1986 to 9-2-1987, as demanded in the show cause notice dated 31-3-1987, being within six months preceding the date of show cause notice is clearly sustainable under Section 11A of the Central Excises and Salt Act, 1944."

4. Discrepancy in classification for the periods before and after 10-2-1987:

The Tribunal noted the introduction of Tariff Heading 35.06 from 10-2-1987 and applied it for the period post this date. For the period prior to 10-2-1987, the classification was debated between sub-headings 4005.00 and 4006.90. The Technical Member opined in favor of 4005.00, while the Judicial Member favored 4006.90. The President resolved this by referencing the Elgi Polytex case, classifying the product under sub-heading 3501.90 for the period before 10-2-1987, stating, "The appropriate heading would therefore be 3501.90 during the period prior to 10-2-1987."

Conclusion:

The appeal was dismissed for the period beginning from 10-2-1987, with the classification under Heading 35.06. For the period prior to 10-2-1987, the classification was resolved under sub-heading 3501.90, as per the President's order. The demand for differential duty for the period 1-11-1986 to 9-2-1987 was upheld. The final order stated, "Appeal should be deemed to have been disposed of in terms of the Hon'ble President's order dated 21-5-1990."

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