1995 (7) TMI 159 - AT - Central Excise

Summary

Issues Involved:
1. Classification of hose assemblies under the Central Excise Tariff.
2. Applicability of Chapter and Section Notes for classification.
3. Relevance of previous judicial decisions.
4. Evidentiary value of additional documents in classification.

Issue-wise Detailed Analysis:

1. Classification of Hose Assemblies under the Central Excise Tariff:

The primary issue in these appeals is the classification of hydraulic hose assemblies manufactured by M/s. Larsen & Toubro Ltd. The company claimed classification under Heading 84.31 as parts of excavators, while the Central Excise department classified them under Heading 4009.92. The Assistant Collector confirmed the department's classification and demanded differential duty, a decision upheld by the Collector of Central Excise (Appeals), Bangalore.

2. Applicability of Chapter and Section Notes for Classification:

The advocate for the respondent argued that the hose assemblies are specifically designed for excavators, making them parts of machinery under Section XVI. He contended that Note 2(a) to Section XVI should classify the goods as component parts of machinery, and that Note 2(b) to Chapter 40 should not apply since it is limited to hardened rubber. The advocate also cited the non-interchangeable nature of the hose assemblies to support their classification as parts of excavators.

The department countered that if the legislature intended to exclude items of rubber other than hard rubber from Chapter 40, Note 2(d) would not be restricted to hard rubber. They argued that the classification should be based on Chapter 40 notes, not Section XVI, and that the explanatory notes to the Harmonized System of Nomenclature (HSN) clarify that tubes, pipes, and hoses remain under Chapter 40 even if provided with fittings and cut to size.

3. Relevance of Previous Judicial Decisions:

The Tribunal referred to its previous decision in the Track Parts Corporation case, which had considered the classification of rubber hose in detail. The Tribunal concluded that the classification under Heading 40.09, sub-heading 4009.50, was correct, as these hoses are made of vulcanized rubber other than hard rubber with fittings. The Tribunal emphasized that parts of mechanical appliances of hard rubber are excluded from Chapter 40, but not those made of other types of rubber.

The Tribunal also addressed the advocate's reliance on the Aerolex Hose decision, noting that the Supreme Court had set aside the Aerolex decision but that the Track Parts decision stood independently.

4. Evidentiary Value of Additional Documents in Classification:

In a related appeal involving M/s. Aerolex Hose (P) Ltd., the Supreme Court remanded the matter to the Tribunal for a fresh decision after considering additional evidence. The respondent provided a certificate from the Rubber Board indicating that the hose assemblies were made of hardened vulcanized rubber. However, the Tribunal found that the certificate did not establish that the hose assemblies in dispute were made from the same hose tested by the Rubber Board. The Tribunal noted that the samples were sent for testing after the original orders were passed and that the respondent had not claimed at any stage that the hose assemblies were made of hardened rubber.

Conclusion:

The Tribunal confirmed the classification of the hose assemblies under sub-heading 4009.92, rejecting the company's appeal. The Tribunal also set aside the Collector (Appeals)' order in the Aerolex Hose case and restored the Assistant Collector's order, classifying the goods under sub-heading 4009.92. The Tribunal emphasized that the specific description in Heading 40.09 should be preferred over the general description in Heading 84.31, and that the essential character of the hose assemblies as tubes, pipes, and hoses with fittings justified their classification under Chapter 40.