1996 (6) TMI 239 - AT - Central Excise

Summary

Issues: Classification of rubber solution-coated fabric under Tariff Item 19.1(b) and Sub-Heading 5905.10.

Analysis:
The case involved the classification of a product manufactured by the respondents, which was a cotton fabric coated with rubber solution used for wrapping rubber insulated cables. The dispute centered around whether this rubber solution-coated fabric, without being vulcanized, should be classified under Tariff Item 19.1(b) as "Cotton Fabric subjected to the process of Rubberising" or under Sub-Heading 5905.10. The Original Authority initially classified the product under Tariff Item 19.1(b) until a specific date and under Sub-Heading 5905.10 thereafter, considering the content of rubber solution to be 20%.

The lower appellate authority, on appeal by the respondents, accepted the appeal, emphasizing that the product was not known or sold as rubberized cloth, and the rubber content was only about 20%. The authority ruled that the product did not meet the criterion of marketability set by the Supreme Court, citing Union Carbide's case. The Assistant Collector's classification was deemed incorrect based on these findings.

The Revenue appealed the decision, arguing that the product should be classified under Tariff Item 19.1(b) or Sub-Heading 5905.10 based on the process of rubberizing the cotton fabric, irrespective of the percentage of rubber content. The Revenue contended that the impugned order was legally incorrect and requested the appeal to be allowed.

The respondents, represented by their advocate, highlighted the manufacturing process where the rubber solution-coated fabric was used for a specific purpose and discarded after vulcanization. They argued that the product was not marketable as rubberized cloth and cited a government decision exempting fabric treated with rubber solution, if not vulcanized, from excise duty. The respondents relied on the Union Carbide case to support their position.

The Tribunal, after considering the arguments from both sides, agreed with the respondents' contention. It noted that the rubber solution-coated fabric was not a marketable rubberized cotton fabric until vulcanization, as the rubber remained on the cable post-curing. The Tribunal rejected the Department's appeal, concluding that the product did not qualify as a marketable rubberized fabric or cotton fabric subjected to rubberizing until the vulcanization process was completed.