1998 (2) TMI 305 - AT - Central Excise

Summary

Issues:
Waiver of duty amounting to Rs. 5,13,78,080/-, Classification of goods under Chapter Heading 59.02 or 40.05, Entitlement to Modvat credit under Rule 57B(1)(i) and Explanation to Rule 57A, Interpretation of Tariff Entry for Tyre Cord Warp Sheets, Compliance with pre-deposit requirements pending appeal.

Analysis:

The judgment before the Appellate Tribunal CEGAT, Madras involved an application for the waiver of duty amounting to Rs. 5,13,78,080/-. The representative for the appellant argued that the additional excise duty was demanded incorrectly, as the goods in question, rubber-coated tyre warp sheets, should be classified under Heading 40.05 instead of 59.02. The appellant claimed entitlement to Modvat credit under Rule 57B(1)(i) and the Explanation to Rule 57A, emphasizing that the product was an intermediate product in the manufacture of tyres. Reference was made to a previous Commissioner's order classifying the same product under Heading 59.06, supported by decisions in other cases (1996 (88) E.L.T. 450 and 1997 (90) E.L.T. 178), arguing for a different classification. The appellant contended that they were entitled to Modvat credit for the product used in the manufacture of dutiable tyres.

The learned SDR, representing the respondents, referred to a Circular of the Board and the Tariff Entry, asserting that the goods should be classified under Chapter Heading 59.02, specifically covering Tyre Cord Warp Sheets. The SDR highlighted that the department had appealed against the Commissioner's decision relied upon by the appellant and argued that the Tariff Entry was clear when read with HSN Explanatory Notes. The contention that "dipped" did not include coated fabrics was also raised during the proceedings.

Upon considering the submissions from both sides, the Tribunal acknowledged the contentious nature of the matter. While noting the conflicting Commissioner's orders and the relevance of the HSN in interpreting Tariff Entries, the Tribunal recognized the need to determine the correct position. The Tribunal observed that the appellant had an arguable case, despite the department appealing the previous Commissioner's decision. In light of the circumstances, the Tribunal directed the appellant to deposit Rs. 1,50,00,000/- by a specified date, emphasizing the recurring nature of the issue and allowing both parties to file early hearing petitions due to the significant revenue involved.

In conclusion, the Tribunal's decision required the appellant to comply with the directed deposit to dispense with the pre-deposit of the balance duty and penalty amount, with recovery stayed pending the appeal process. The judgment aimed to balance the interests of justice and the substantial revenue implications, providing a mechanism for ongoing resolution of the classification and duty waiver issues.