1988 (1) TMI 247 - AT - Central Excise

Issues Involved:
1. Classification of scooter/motorcycle saddles under Central Excise Tariff.
2. Applicability of Tariff Item 15A(4) vs. Tariff Item 68.
3. Interpretation of manufacturing process and its impact on classification.
4. Relevance of commercial parlance in determining classification.

Detailed Analysis:

1. Classification of Scooter/Motorcycle Saddles under Central Excise Tariff:
The primary issue revolves around whether the saddles manufactured by the respondent company should be classified under Tariff Item 15A(4) as "articles made of Polyurethane foam" or under Tariff Item 68 as it stood before 28-2-1986. The manufacturing process involves using polyol and polyisocyanate, which are poured into moulds, heated, and allowed to expand into the shape of the mould. The original authority classified the saddles under Tariff Item 15A(4), while the lower appellate authority classified them under Tariff Item 68, emphasizing their specific use as motor vehicle accessories.

2. Applicability of Tariff Item 15A(4) vs. Tariff Item 68:
The original authority's classification under Tariff Item 15A(4) was based on the Supreme Court's judgment in M/s. Dunlop India Ltd. v. Union of India and Others, which stated that the use of a commodity is not material for classification if not specified in the tariff item. The lower appellate authority, however, held that specific classification with reference to their make or use should be considered, not the general description. The department appealed, reiterating the original grounds for classification under Tariff Item 15A(4).

3. Interpretation of Manufacturing Process and Its Impact on Classification:
The manufacturing process, known as single shot injection moulding, differs from the process used for making polyurethane foam slabs and blocks. The learned Jr. D.R. argued that the product is flexible polyurethane foam and should be classified under Tariff Item 15A(4). However, the learned advocate for the respondent company contended that the product is directly moulded into the desired shape and does not involve the formation of polyurethane foam as an intermediate product. This argument was supported by the Supreme Court's judgment in Geep Flash Light Industries Ltd. v. Union of India and others, which held that articles made of plastics must be wholly made of the material specified.

4. Relevance of Commercial Parlance in Determining Classification:
The learned advocate for the respondent company emphasized that the product is known as saddles in the market and is sold in shops dealing with motor vehicle parts, not in shops selling polyurethane foam articles. The Supreme Court's judgment in Atul Glass Industries supported this view, stating that the identity of an article is associated with its primary function. The functional character of the product as a seat or saddle for a scooter/motorcycle should determine its classification. The Andhra Pradesh High Court's judgment in State of Andhra Pradesh v. T.V. Sundaram Iyengar & Sons Ltd. and the Supreme Court's judgment in Siemens Engineering Manufacturing Company Ltd. v. Union of India and others further supported the argument that predominant use should be a criterion for classification.

Conclusion:
The Tribunal concluded that the product, being a seat or saddle for scooters/motorcycles, is classifiable under Tariff Item 68 as it stood before 28-2-1986. The appeals were dismissed, affirming the lower appellate authority's classification. The judgment emphasized the importance of commercial parlance and the functional character of the product in determining its classification.

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