1999 (1) TMI 220 - AT - Central Excise

Issues Involved:
1. Classification of goods described as "made of vulcanised rubber other than hardened rubber in the form of plates, blocks, sheets, strips and cut to the shape of bus seats, vespa back seat, scooter seat" under TH 40.08 or TH 94.01.
2. Applicability of Chapter Notes to the classification.
3. Reliance on previous Tribunal judgments.
4. Validity of demands of duty and the issue of limitation.
5. Classification of scooter seats under TH 87.14.

Issue-wise Detailed Analysis:

1. Classification of Goods:
The primary issue in these appeals is whether the goods described as "made of vulcanised rubber other than hardened rubber in the form of plates, blocks, sheets, strips and cut to the shape of bus seats, vespa back seat, scooter seat" should be classified under TH 40.08 or TH 94.01. Initially, the classification lists were approved under TH 40.08, but a show cause notice was issued proposing revision to TH 94.01.

2. Applicability of Chapter Notes:
To understand the scope of the tariff headings, Chapter Note 9 of Chapter 40 and Chapter Notes 1(a), (h) of Chapter 94 and Note 3 of Chapter 94 are pertinent. Note 9 of Chapter 40 specifies that plates, sheets, and strips of vulcanised rubber, even if cut to shape, fall under TH 40.08. Conversely, Chapter Note 1(a) of Chapter 94 excludes cushions of rubber from TH 94.01.

3. Reliance on Previous Tribunal Judgments:
The respondents relied on Tribunal judgments in J.K. Foams and Ajay Rubber, which classified similar goods under TH 94.01. However, the appellants argued that the Tribunal's three-member bench in M.M. Rubber Co. Ltd. held that rubber slabs are merely cushions and not parts of motor vehicles. The appellants contended that the M.M. Rubber judgment applies equally to the current tariff, as there is no significant difference in the tariff heading descriptions and relevant chapter notes.

4. Validity of Demands of Duty and Limitation:
The appellants argued that the demands of duty are barred by time, as the show cause notices for demand of duty should be treated prospectively from the change in classification effective 13-9-1991. They cited several judgments supporting the proposition that changes in classification should take effect prospectively. The respondents countered that the show cause notices were issued within the six-month limitation period and were not based solely on the Board's clarification but were an independent action by the Commissioner.

5. Classification of Scooter Seats:
The appellants did not dispute that scooter seats covered with rexin are known in the market as seats of two-wheelers or scooters. Chapter Note 1(h) of Chapter 94 excludes articles of TH 87.14, which pertains to parts and accessories of vehicles under THs 87.11 to 87.13. Therefore, the scooter seats, being accessories of scooters under TH 87.11, are rightly classified under TH 87.14, which is excluded from Chapter 94.

Judgment:
1. Classification of Bus Seats: The Tribunal concluded that the product, as cleared by the appellants in the form of a "cushion" of bus seats of cellular rubber, falls under TH 40.08 and not under TH 94.01. The product cannot be considered a bus seat or part of a bus seat at the stage of clearance.

2. Limitation: The Tribunal held that the demands of duty are barred by time, as the classification change should be effective only from the date of the Board's Tariff advice on 23-10-1990. The show cause notices issued before this date cannot retrospectively change the classification.

3. Classification of Scooter Seats: The Tribunal affirmed the classification of scooter seats under TH 87.14, as they are accessories of scooters and fall under the relevant tariff heading.

Conclusion:
- The bus seats of cellular rubber are classified under TH 40.08.
- The scooter seats are classified under TH 87.14.
- The demands of duty in the three appeals are set aside due to the limitation issue.
- Appeals are disposed of accordingly.

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