1998 (12) TMI 355 - AT - Central Excise

Summary

Issues Involved:
1. Classification of pre-cured Tread Rubber Plates and Sheets.
2. Eligibility for exemption under Notification No. 47/76 dated 9-3-1976.
3. Interpretation of Chapter Note 9 to Chapter 40 of the Central Excise Tariff Act.
4. Effective date of the classification list.

Detailed Analysis:

1. Classification of Pre-cured Tread Rubber Plates and Sheets
The core issue revolves around the correct classification of pre-cured Tread Rubber Plates and Sheets used for resoling, repairing, or retreading rubber tyres. The respondents classified these items under sub-heading 4008.21, claiming they were plates, sheets, and strips of vulcanized rubber. The Assistant Collector, however, classified them under sub-heading 4016.99, arguing that the goods were "other" articles of vulcanized rubber due to further processing.

The Department argued that the goods, after initial emergence as plates, sheets, or strips, were further processed by moulding, which changed their shape and cross-section to a trapezoid, thus disqualifying them from sub-heading 4008.21. The respondents contended that the goods were not further worked after the initial extrusion and that the final shaping was done by the customer during retreading.

2. Eligibility for Exemption under Notification No. 47/76
The respondents claimed exemption under Notification No. 47/76 dated 9-3-1976, which was contingent on the classification of the goods under sub-heading 4008.21. The Assistant Collector's classification under 4016.99 denied them this exemption. The Collector (Appeals) overturned this decision, aligning with the respondents' classification and granting the exemption.

3. Interpretation of Chapter Note 9 to Chapter 40
The interpretation of Chapter Note 9 to Chapter 40 is pivotal. Before its amendment in 1990, Note 9 stated that plates, sheets, and strips should not be "otherwise cut to shape or further worked." The Department argued that the goods were further worked after extrusion, disqualifying them from sub-heading 4008.21. The respondents maintained that the goods were only surface worked, which was permissible under Note 9.

The Tribunal examined whether the goods were "further worked" after extrusion. The manufacturing process involved placing the extruded material in a die and pressing it with a hydraulic press to create vulcanized grooved material. This process was deemed as further working, thus supporting the Department's classification under 4016.99.

4. Effective Date of the Classification List
The respondents filed multiple classification lists, with the original list pending since 7-4-1989. They argued that the classification should be effective from 6-11-1989, the date of the latest list. The Collector (Appeals) held that the classification list could be effective retroactively from 1-4-1989, as initially claimed by the respondents, but noted that they could have opted for provisional assessment under Rule 9B if they intended the classification to be effective only from 6-11-1989.

Separate Judgments:

Majority Opinion:
The majority, including Member (Judicial) and Member (Technical), concluded that the goods were further worked after extrusion, thus classifying them under sub-heading 4016.99. They set aside the Collector (Appeals)'s order and upheld the Assistant Collector's classification, denying the exemption under Notification No. 47/76.

Dissenting Opinion:
The Vice President dissented, arguing that the goods were only surface worked and not further worked. He upheld the Collector (Appeals)'s classification under sub-heading 4008.21 and granted the exemption under Notification No. 47/76.

Final Order:
In view of the majority opinion, all three appeals filed by the Department were allowed, classifying the goods under sub-heading 4016.99 and denying the exemption under Notification No. 47/76.