1996 (8) TMI 302 - SC - Central Excise

Whether pillion seats for scooters, driver and passengers seats for auto-rickshaws and seats for tractors and jeeps as latex foam sponge will be falling under Item 16-A(1) of the Central Excise Tariff or under Item 34-A? Held that - In so far as the period prior to 1-3-1982 is concerned, we are of the view that the Tribunal erred in its reasoning. The seats were specifically moulded latex foam sponge for use in given vehicles. They could be used only for the purpose for which they were made, for particular scooters, auto-rickshaws, tractors and jeeps, and this functional aspect was of significance. The seats having been moulded for use as parts of these motor vehicles, the entry that more specifically applied was Tariff Item 34-A. Subsequent to 1-3-1982, became the amended Tariff Item 16-A(1) included articles made of latex foam sponge, and that, as would appear from the record before us, was the entry that more specifically applied.

Summary

Issues: Classification of automobile seats under Central Excise Tariff - Applicability of Tariff Item 16-A(1) and 34-A

In this judgment, the Supreme Court addressed the issue of the classification of automobile seats under the Central Excise Tariff, specifically whether the seats should be classified under Tariff Item 16-A(1) as 'latex foam sponge' or under Tariff Item 34-A as 'parts and accessories of motor vehicles not otherwise specified.' The Tribunal had upheld the classification of the seats under Item 16-A(1) and rejected the contention that they should be classified under Item 34-A.

The Tribunal found that there was no substantial transformation of the latex foam sponge used in manufacturing the seats. It was observed that the seats retained the characteristics of latex foam sponge and had not undergone a significant change that would warrant classification under a different tariff item. The functional aspect of the seats, being specifically designed for use in scooters, auto-rickshaws, tractors, and jeeps, was deemed significant in determining the appropriate classification.

The appellants provided detailed information on the production process of the seats, highlighting the specific formulations and manufacturing methods used for different types of automobile seats. The process involved compounding raw materials, mechanical foaming, pouring into molds, vulcanizing, and inspection. The seats were custom-made for specific vehicle types, emphasizing their functional use as integral parts of the vehicles.

Reference was made to a previous judgment regarding the classification of automobile seat covers as accessories of motor vehicles. It was argued that if seat covers were considered accessories, the seats themselves should be classified as parts of the vehicle. The Revenue contended that the classification favored by the Tribunal, under Tariff Item 16-A(1), should be maintained, especially considering the post-amendment inclusion of articles made of latex foam sponge under that item.

The Court concluded that for the period before 1-3-1982, the seats should be classified under Tariff Item 34-A as parts and accessories of motor vehicles, given their specific design and functional use in particular vehicles. However, post-amendment, the seats fell under Tariff Item 16-A(1) as articles made of latex foam sponge. Accordingly, the Court allowed the appeals for the relevant periods, setting aside the Tribunal's order and directing the necessary refunds, subject to statutory provisions. No costs were awarded in the matter.