1993 (4) TMI 166 - AT - Central Excise

Issues Involved:
1. Classification of "cloth based self-adhesive tapes" under the Central Excise Tariff.
2. Validity of the Chemical Examiner's report and its influence on classification.
3. Whether the product is an intermediate good and its implications on duty.
4. Correctness of the demand for differential duty.
5. Application of Notification No. 5/87-C.E., dated 15-1-1987.

Detailed Analysis:

1. Classification of "cloth based self-adhesive tapes" under the Central Excise Tariff:

The primary issue revolves around the classification of "cloth based self-adhesive tapes." The assessee claimed classification under sub-heading 5909.00, while the revenue confirmed classification under sub-heading 5906.90. The Assistant Collector initially approved classifications under chapter sub-heading 5901.10 but later issued show cause notices proposing classification under 5905.00 and 5906.90 based on Chemical Examiner's reports.

The Tribunal found that the product in question is not rubberized fabric or textile fabric impregnated, coated, or covered, thus ruling out classifications under 5905 and 5906. The Tribunal noted that the product is used for packing purposes by industrial users, fitting the description of chapter heading 5909.00, which includes "all other textile products and articles of a kind suitable for industrial use."

2. Validity of the Chemical Examiner's report and its influence on classification:

The Chemical Examiner's report incorrectly stated that Heading 59.05 had been deleted from the Central Excise Tariff 1990-91. Both lower authorities relied on this erroneous report without verification, leading to a misclassification. The Tribunal emphasized that the Chemical Examiner should not opine on classification but only provide chemical analysis results. The Assistant Collector's reliance on the Chemical Examiner's classification opinion was deemed inappropriate and not as per law.

3. Whether the product is an intermediate good and its implications on duty:

The assessee contended that the adhesive coated fabric is an intermediate product used captively for manufacturing adhesive tapes, which are not marketable and thus not subject to duty. They cited rulings from Bhor Industries Ltd. and Ambalal Sarabhai Enterprises to support this claim. However, the Tribunal did not specifically address this contention in the final judgment, focusing instead on the correct classification under the Central Excise Tariff.

4. Correctness of the demand for differential duty:

The Superintendent issued a show cause notice demanding differential duty of Rs. 11,441.86 based on the Chemical Examiner's report. The Assistant Collector confirmed this demand, but the Tribunal found contradictions between the orders dated 19-3-1991 and 16-4-1991. The Tribunal set aside the demand for differential duty, as the classification under 5906.90 was incorrect.

5. Application of Notification No. 5/87-C.E., dated 15-1-1987:

The assessee claimed the benefit of Notification No. 5/87-C.E., which grants exemption to rubberized textile fabrics under Heading 59.05. Since the Tribunal ruled that the product does not fall under Heading 59.05, the question of applying this notification did not arise.

Conclusion:

The Tribunal allowed the assessee's claim for classification under chapter heading 5909.00 of the Central Excise Tariff, 1985, and rejected the Revenue's cross appeal for the larger period of demand. The Tribunal emphasized the incorrect reliance on the Chemical Examiner's report and clarified the appropriate classification based on the product's use and description.

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