1996 (6) TMI 251 - AT - Central Excise

Issues Involved:
1. Classification of products "Aprons and Cots" under the Central Excise Tariff.
2. Applicability of Heading 4009.99 versus Heading 8448.00 for the classification.
3. Relevance of the Bombay High Court judgment in the case of M/s. Precision Rubber Ltd. v. CCE.
4. Interpretation of Section and Chapter Notes of the Central Excise Tariff Act.

Issue-wise Detailed Analysis:

1. Classification of Products "Aprons and Cots" under the Central Excise Tariff:
The primary issue in both appeals was the classification of "Aprons and Cots" under the Central Excise Tariff. The assessee argued for classification under Heading 4009.99 (Tubes and Pipes of unhardened vulcanised rubber), while the Revenue contended for classification under Heading 8448.00 (Parts and accessories suitable for use solely or principally with textile machinery).

2. Applicability of Heading 4009.99 versus Heading 8448.00:
The assessee claimed that Aprons and Cots should be classified under Heading 4009.99, attracting a nil rate of duty. The Revenue argued that these products, being articles of unhardened vulcanised rubber and component parts of textile machinery, should be classified under Heading 8448.00, attracting a duty rate of 15% ad valorem. The Revenue's argument was based on the manufacturing process and the specific use of these products in textile machinery, asserting that they no longer retain the essential characteristics of tubes and pipes.

3. Relevance of the Bombay High Court Judgment in the Case of M/s. Precision Rubber Ltd. v. CCE:
The assessee heavily relied on the Bombay High Court's judgment in the case of M/s. Precision Rubber Ltd. v. CCE, where similar products were classified under the erstwhile Tariff Item 16A(2). The Collector (Appeals) in Trichy rejected this contention, stating that the decision was based on the erstwhile tariff and did not apply to the current case. The Tribunal, however, noted that the change in tariff did not alter the essential nature of the goods and upheld the relevance of the Bombay High Court's judgment.

4. Interpretation of Section and Chapter Notes of the Central Excise Tariff Act:
The Tribunal examined the Section and Chapter Notes to determine the correct classification. Note 1(a) of Section XVI excludes articles of unhardened vulcanised rubber used in machinery from Chapter 84, while Note 2 of Chapter 40 excludes parts of mechanical appliances made of hard rubber. The Tribunal concluded that since the items in question are component parts of textile machinery, they should be classified under Heading 8448.00, which specifically covers parts of textile machinery.

Separate Judgments Delivered:

Majority Opinion (S.K. Bhatnagar, Vice President, and K. Sankararaman, Member (T)):
The majority held that Aprons and Cots, being parts of textile machinery, should be classified under Heading 8448.00. They emphasized that these products have acquired the characteristics of component parts of textile machinery and do not retain the essential character of tubes and pipes. The majority also noted that the Bombay High Court's judgment was based on the old tariff and did not apply to the new tariff with different headings and notes.

Dissenting Opinion (S.L. Peeran, Member (J)):
The dissenting opinion upheld the assessee's contention, agreeing with the Bombay High Court's judgment that the products continue to have the character of tubing despite the manufacturing processes. The dissent argued for classification under Heading 4009.99, emphasizing the principle of harmonious construction and the legislative intent expressed in the relevant notifications.

Final Order:
In terms of the majority order, the assessee's appeal was rejected, and the Revenue's appeal was allowed, classifying the products under Heading 8448.00.

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