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TMI Blog2024 (2) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... ork of General Rules for Interpretation of the Schedule appended to Central Excise Tariff Act, 1985 and judicial determination, which forecloses admission in statements from having anything but peripheral influence on the exercise. In the absence of any exposition of description corresponding to the proposed classification, it is well nigh impossible to approve the manner in which the adjudicating authority has proceeded. Though there is elaborate discussion on the purported evidence, such as formulation found in private records, admission in statements that these reflected reality and samples sent for testing, the key to the findings are the reports of tests from Deputy Chief Chemist, Vadodara on the composition of the end product as being polyethylene. This, along with the conclusion that the product is not rubber , led to the re-classification insofar as the appellant-assessees are concerned. While the presence of polyethylene does fulfill the requirements of note 1 in chapter 39 of Schedule to Central Excise Tariff Act, 1985 and has not been controverted, there is abundantly less certainty on the conclusion in the test report of no rubber especially when concatenated with the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fastening of duty liability of ₹ 4,57,09,954, comprised - as ₹ 2,64,32,615 of M/s Sewa Polymers for October 2007 to September 2012, as ₹ 74,22,287 of M/s Rubber Udyog India Pvt Ltd for October 2007 to March 2011, as ₹ 1,16,44,354 of M/s Sewa Elastomers for October 2007 to September 2012 and as ₹ 2,10,638 of M/s Soham Rubber Products for October 2007 to March 2011, from the initial notice [26th October 2012 and corrigendum of 5th August 2024] for recovery of ₹8,40,89,128 from them and from M/s Konark Rubbers, as well as of ₹ 87,14,955, ₹ 1,00,11,524, ₹ 69,17,361, ₹ 54,45,519 and ₹75,81,569 from out of proposal in subsequent notices/statement of demand for recovery of ₹ 97,92,125 for October 2012 to September 2013, ₹ 1,12,48,949 for October 2013 to September 2014, ₹ 77,76,887 for October 2014 to July 2015, ₹ 61,26,208 for August 2015 to September 2016 and ₹ 85,29,265 for April 2016 to June 2017 from M/s Sewa Polymers, along with interest under section 11AA of Central Excise Act, 1944, and penalties imposed on the assessees and individual appellant under rule 25 of Central Excise Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Insofar as the classification dispute is concerned, the impugned order has relied upon composition of goods, inferred from deployment of inputs conducive not as much to elasticity, a characteristic of rubber, as to form moulding which is an attribute of plastics, and reports of tests conducted on representative samples by Deputy Chief Chemist, Vadodara which, apparently, that were accepted by responsible officials of the appellant-assessee. Learned Counsel for appellant contended that the test carried out on samples was inappropriate and their acquiescence with the 'morphology' tests had been misconstrued as concurrence with the whole even as samples tested at their initiative at private laboratories were in their favour. The adjudicating authority was disinclined to accept the authenticity of samples for acceding to claim of the appellant-assessee. 5. According to Learned Counsel, the substitution of classification was erroneous inasmuch as the test required by note 4 in chapter 40 of Schedule to Central Excise Tariff Act, 1985 had not been undertaken. It was further alleged that the test report lacked validity owing to admission, in cross-examination of the chemical examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the said burden has not been discharged at all by the Revenue……' in HPL Chemicals v. Commissioner of Central Excise, Chandigarh [2006 (197) ELT 324 (SC)]. 8. The impugned order is claimed to be sustainable on the finding that '27.16 Regarding the manufacture and clearances of goods by other entities, i.e. M/s Sewa Polymer, M/s Rubber Udyog, M/s Sewa Elastomers and M/s Soham Rubber Products which they have classified as Microcellular rubber sheets under C.S.H. 4008.11.10 claiming exemption under notification No. 3/2005 CE and under 4008.21.10 tariff rate for which is Nil, I find that noticees' contention is that samples were drawn in wrong manner and not according to the note 4(a) to chapter 40 and that samples were drawn of finished products and as such, test -reports on samples drawn from other factories/entities did not reflect the true picture of the product/sample to be rubber. In test report for sample No. 11 to 15 drawn from the factory premises of M/s Sewa Polymer, sample No. 21 to 23 drawn from the factory premises of M/s Rubber Udyog and sample No. 24 to 26 drawn from the factory premises of M/s Sewa Elastomers, except sampled no. 11, ail other sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rison between adopted and proposed classification is warranted only upon discharge of onus as laid down in judgement of the Hon'ble Supreme Court. In the absence of any exposition of description corresponding to the proposed classification, it is well nigh impossible to approve the manner in which the adjudicating authority has proceeded. 9. We are particularly concerned that the original authority appeared to be impressed, in the main, by the alleged conformity of the product with attributes that do not attach to 'rubber' to conclude that those are plastic. Such simplistic perception is contrary to the first rule of interpretation. The proposed heading comprises plates, sheets, film, foil and strip of 'cellular' and 'non-cellular' plastic within the former of which lies those made of 'polymers', whether of styrene or vinyl chloride, of polyurethanes, which could be flexible or otherwise, of re-generated and of other plastics that was found to be most apt. The expression 'plastic' has been defined thus '1. Throughout this Schedule, the expression "plastics" means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purported evidence, such as formulation found in private records, admission in statements that these reflected reality and samples sent for testing, the key to the findings are the reports of tests from Deputy Chief Chemist, Vadodara on the composition of the 'end product' as being polyethylene. This, along with the conclusion that the product is 'not rubber', led to the re-classification insofar as the appellant-assessees are concerned. While the presence of 'polyethylene' does fulfill the requirements of note 1 in chapter 39 of Schedule to Central Excise Tariff Act, 1985 and has not been controverted, there is abundantly less certainty on the conclusion in the test report of 'no rubber' especially when concatenated with the findings in the impugned order that 'rubber' was consumed in the production process. Surely, Law of Conservation Mass cannot be so wrong as to destroy the 'rubber' or to convert it to 'plastic' at the end of manufacturing process. It is also clear that the report has not asserted the test of 'rubber' - restoration to original form after induced elongation - having been undertaken on the sample. In the face of test reports from private laboratories, which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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