1999 (9) TMI 477 - AT - Central Excise

Summary

Issues: Classification of scrap rubberised bead wire and bead wire rings under Central Excise Tariff headings 40.04 or 72.04.

Analysis:
1. Issue Identification: The central issue in this case is the classification of scrap rubberised bead wire and bead wire rings removed from cut tyres under the Central Excise Tariff, specifically whether they fall under heading 40.04 or heading 72.04.

2. Manufacturing Process: In the manufacture of tyres, stainless steel wires are rubberised to form the rim of the tyre. When defective tyres are cut, there is waste of rubberised bead wire and bead wire rings. The question is whether this waste should be classified as waste arising in the working of rubber or as waste and scrap from the manufacture or mechanical working of metals and metal goods.

3. Legal Interpretation: Note 6 to Chapter 40 of the Central Excise Tariff defines waste, parings, and scrap as rubber waste from the manufacture or working of rubber and rubber goods. On the other hand, Note 6 to Section XV deals with waste and scrap of metal, specifying metal waste and scrap from the manufacture or mechanical working of metal and metal goods.

4. Decision Rationale: The court held that since the appellants are manufacturers of rubber products, any waste generated in the process should be considered as rubber waste or scrap. Even though stainless steel wires are involved, they are coated with rubber in the manufacturing process of rubber products, not in metalworking. Therefore, the scrap rubberised bead wire falls under heading 40.04.

5. Classification of Bead Wire Rings: Similarly, the court reasoned that the bead wire rings removed from defective tyres should also be classified under heading 40.04 as they are part of the tyre manufacturing process, not metalworking. The appellate authority's contrary view was deemed incorrect, and the court reversed it, holding that both the scrap rubberised bead wire and bead wire rings fall under sub-heading 40.04 of the Central Excise Tariff.

6. Judgment Outcome: Consequently, the appeals were allowed with consequential benefits granted to the appellant. The court's decision clarified the classification of scrap rubberised bead wire and bead wire rings under the Central Excise Tariff, providing a clear interpretation based on the nature of the manufacturing process involved.