1998 (6) TMI 268 - AT - Central Excise

Summary

Issues:
Classification of rubberised/calendered dipped fabrics under Central Excise Tariff Act - Additional Excise duty levy - Precedent Tribunal decisions - Board's clarification - Commissioner's order - Appellants' classification claims - Duty liability redetermination - Penalty imposition.

Analysis:

1. Classification of Rubberised/Calendered Dipped Fabrics:
The appellants, engaged in manufacturing tyres falling under Chapter 40 of the Central Excise Tariff Act, faced an issue regarding the levy of additional Excise duty on rubberised/calendered dipped fabrics cleared for captive consumption. The dispute revolved around the classification of these goods under Heading 59.05 versus 59.02. The appellants claimed classification under Heading 59.05, while the proceedings initiated against them sought classification under 59.02, specifically sub-heading 5902.10 covering tyre cord fabrics of high tenacity yarn.

2. Precedent Decisions and Board's Clarification:
The Senior Counsel for the appellants argued that two Tribunal decisions - Falcon Tyres Limited and Vikrant Tyres Ltd. - had previously established that calendered fabric used in tyre manufacturing should be classified under Heading 59.05. Additionally, the Board's clarification, based on Trade Notice No. 62/87 and Circular No. 10/87-CX, supported the classification of dipped fabrics under Heading 59.05. However, the Commissioner's order did not consider these precedent decisions and the Board's clarification, relying instead on the appellants' classification claims in earlier lists.

3. Legal Precedents and Departmental Instructions:
The Senior Counsel emphasized the Supreme Court's stance, as highlighted in the case of Collector v. Usha Martin Industries, that the Revenue cannot take a position contrary to the Board's instructions. The Court reiterated that when the classification is unclear and two opinions exist, the benefit of doubt should favor the assessee. Therefore, the Senior Counsel contended that the goods should be assessed under Chapter 59.05 based on the Tribunal decisions and the Board's instructions, negating the need for additional Excise duty.

4. Tribunal's Decision and Duty Liability Redetermination:
After considering the arguments, the Tribunal acknowledged the settled classification of calendered/rubberised tyre cord fabrics under Heading 59.05, as per the decisions in Falcon Tyres and Vikrant Tyres cases. Despite the Commissioner's oversight in addressing the precedent decisions and the Board's clarification, the Tribunal clarified that the departmental authorities must adhere to established classifications. The Tribunal ruled in favor of the appellants, directing the redetermination of duty liability under Heading 59.05 and overturning the penalty imposed on them.

5. Conclusion:
In conclusion, the Tribunal allowed the appeals, confirming the correct classification of the products under Heading 59.05 and instructing the Commissioner to reassess the duty liability accordingly. The Tribunal emphasized the significance of judicial pronouncements and Board clarifications in determining classification, highlighting that the appellants' claims should not dictate the classification when binding precedents exist. The order also nullified the penalty imposed on the appellants, bringing closure to the dispute.

6. Disposition:
The appeals were disposed of in favor of the appellants, emphasizing the importance of following established classifications and legal precedents in resolving disputes related to Excise duty levy on rubberised/calendered dipped fabrics.