1995 (3) TMI 199 - AT - Central Excise

Issues Involved:
1. Classification of Sheet Moulding Compound (SMC) and Dough Moulding Compound (DMC) under the Central Excise Tariff.
2. Applicability of Exemption Notification No. 133/86 to SMC and DMC.
3. Whether SMC should be classified under sub-heading 3920.39 or 3907.91.
4. Whether the matter should be remanded for de novo consideration or the appeal should be rejected.

Detailed Analysis:

1. Classification of Sheet Moulding Compound (SMC) and Dough Moulding Compound (DMC) under the Central Excise Tariff:
The dispute revolves around the classification of SMC and DMC. The Assistant Collector initially classified these products under sub-heading 3907.91 of the Central Excise Tariff, 1985, granting the benefit of the exemption notification. However, upon appeal, the Collector modified this classification, classifying SMC under sub-heading 3920.39, attracting a duty of 60%, and DMC under sub-heading 3907.91 for a concessional rate of duty at 40% ad valorem under Notification No. 53/88.

2. Applicability of Exemption Notification No. 133/86 to SMC and DMC:
The appellants argued that both DMC and SMC are moulding compounds made from polyester and polystyrene resins and should be classified under sub-heading 3907.91, qualifying for the concessional rate of duty at 15% ad valorem under Notification No. 133/86. They contended that the products are essentially the same, with DMC in dough form and SMC in sheet form, and thus should not be classified differently.

3. Whether SMC should be classified under sub-heading 3920.39 or 3907.91:
The primary issue is whether SMC, in the form of sheets, should be classified under sub-heading 3920.39 or 3907.91. The appellants argued that SMC is a primary bulk form and should be classified under 3907.91, similar to DMC. They relied on various trade notices, government instructions, and tribunal rulings to support their claim. However, the respondent contended that SMC, being in sheet form, should be classified under 3920.39 as it does not fit the definition of "primary forms" under Chapter Note 6(a)(ii).

4. Whether the matter should be remanded for de novo consideration or the appeal should be rejected:
There was a difference of opinion between the members of the tribunal. One member suggested remanding the matter for de novo consideration, allowing the appellants to present further evidence to support their claim that SMC and DMC are moulding powders of polyester resin and should be classified under the same sub-heading. The Vice President, however, held that the classification of SMC under 3920.39 was correct and the exemption notification was not applicable, thus rejecting the appeal.

Final Decision:
In view of the majority opinion, the tribunal set aside the impugned order and remanded the matter to the Assistant Collector for de novo consideration in accordance with the law. The Assistant Collector is to re-examine the classification of SMC and DMC, considering fresh evidence and expert opinions, ensuring compliance with the principles of natural justice.

Conclusion:
The judgment highlights the complexities involved in the classification of products under the Central Excise Tariff and the applicability of exemption notifications. The tribunal's decision to remand the matter for de novo consideration underscores the importance of thorough examination and adherence to legal principles in resolving such disputes.

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