Customs, Excise and Gold Tribunal - Calcutta
M/S. Birla Tyres vs Cce & C., Bhubaneswar-I on 6 July, 2001
ORDER Smt. Archana Wadhwa, Member (J)
1. Briefly stated the facts of the case are as under-
1.2 The appellants M/s. Birla Tyres are engaged in the manufacture of tyres, tubes and flabs classifiable under chapter 40 of the Central Excise Tariff Act, 1985. For the manufacture of the above items, appellants obtains tyre cord fabric of high tenacity yarn of nylon falling under sub-heading no.5902.10 on payment of basic excise duty as well as additional duty of excise.
1.3 The said tyre cord fabric is processed in their factory for further captive consumption in the manufacture of the excisable products. The process undertaken in their factory are that grey/unprocessed nylon tyre cord fabric is first dipped in a solution consisting of Resorcinol Fornaldehide and Vinyl Pyridine Latex to impart the character of adhering to rubber components. Inasmuch as the nylon tyre cord fabric has the characteristic to shrink at high temperature, the same is subjected to a treatment of heat stretching and relaxing also called normalisation. After the above processes of dipping and passing through one overs, the emerging product, which is called 'dipped nylon tyre cord fabric' is subjected to rubberisation/clandering. The final product thus called rubberised nylon tyre cord fabric and is consumed captively by the appellants in their factory.
1.4 The Revenue entertained a view that the dipped nylon tyre cord fabric or the rubberised nylon tyre cord fabric are independent excisable goods having a distinct name, character and use and as such are excisable. It was also held that the same are properly classifiable under heading 59.02 attracting additional excise duty. Accordingly a show cause notice was issued to the appellants raising demand of duty on the said processed fabric for the period 1.5.95 to 28.2.97. The said show cause notice was defended by the appellants before the Commissioner of Central Excise, BBSR. by raising a number of pleas on merits as also on the point of limitation. The said pleas were however not found favour with by the adjudicating authority who,vide his impugned order, confirmed demand of duty of Rs.7,83,97,896.00 and also imposed persona penalty of the equivalent amount on the appellants. The said order of the Commissioner is impugned before us.
2. Shri R.Nambirajan, adv. appearing for the appellants restricted his arguments on the point of classification of the dipped and rubberised nylon tyre cord fabrics. It was submitted that the issue is no more res integra and has been decided by the various Tribunal's decisions that the said fabric could be properly classifiable under heading 59.06 of the Central Excise Tariff in which case no additional duty of excise is payable. It was submitted that the said decisions are not applicable to the facts and circumstances of their case and has illegally dismissed the precedent decisions by observing that the contending entry 59.02 was not before the Tribunal. As such submits the ld.counsel that the goods are properly classifiable under heading 59.06 and as such there was no occasion for the adjudicating authority to reject their claim on classification.
3. Shri V.K. Chaturvedi, ld.SDR has appeared on behalf of the Revenue and reiterated the department's stand.
4. We find that the appellants have strongly relied upon the earlier decisions of the Tribunal holding dipped/rubberised nylon tyre cord fabric as classifiable under heading 59.05 (now heading 59.06). In the case of Falcon Tyre Ltd. -1996(88) ELT 450 holding 59.05, the adjudicating authority has distinguished the same by observing that the contending entry 59.02 was not before the Tribunal. However, on reading of the said decision we find that it was the department's own stand that the goods are classifiable under heading 59.05 as against the appellants' claim of classification under chapter 40. Similar was the case in Vikrant Tyres Ltd. -1997(90) ELT 178.
5. Similarly we find that in the case of Apollo Tyres Ltd. v. CCE, Vadodara-1998 (79) ECR 678, it was held that the rubberised tyre cord fabrics fall under heading 59.05 (now 59.06) of the Central Excise Tariff Act. Para 5 of the said order is reproduced below:-
5. We have considered the rival submissions. We find that the classification of the calendered/rubberised tyre cord fabrics captively consumed in the manufacture of tyres which also undergoes prior process of dipping, as being assessable to duty under heading 59.05 (now 59.06) of CETA has been settled by the Tribunal decisions in the case of Falcon tyres and Vikrant Tyres (supra). The Board has also clarified that the product falls for classification under that heading. The Supreme Court decisions cited above make it clear that the departmental authorities are bound by such clarification and area to follow the decisions on classification by the higher forum. Though the Commissioner in the impugned order has not dealt with the implications of the precedent decisions and clarification of the Board, we find that the matter is settled clearly enough about the classification of the goods in dispute which have to be followed by the departmental authorities. We are also of the view that the classification claimed by the assessee will not be determinative of the issue and cannot be made the basis of determining correct classification, especially when there are binding judicial pronouncements and clarification by the Board thereon. Therefore, we allow the appeals by holding that the product is correctly classified under heading 59.05 (now 59.06) of CETA and the duty demand, if any, on applying such classification for the product may be redetermined by the Commissioner, according to law. We also set aside the order imposing penalty on the appellants.
6. The adjudicating authority has observed that since in the said decision of Apollo Tyre case, the Tribunal took note of the earlier decisions in the cases of Falcon Tyres Ltd. and Vikrant Tyres, which according to him were not applicable, the decision of the Tribunal in the case of Apollo Tyres cannot be made applicable to the present case. He has also observed that as the Tribunal in the case of Apollo Tyres has placed reliance on the Board's circular No.10/87-CX.1 dt.29.7.87, which circular according to him was not applicable to the facts, he has refused to follow the Apollo Tyres decision. However, we observe that such a distinction made by the adjudicating authority is not in accordance with the principle of judicial discipline. The Commissioner was not sitting in appeal over the decision of the Tribunal in the case of Apollo Tyres and could not be judgemental about the same. Para 5 of the decision reproduced above clearly show that what was before the Tribunal in that case was the classification of calendered/rubberised tyre cord fabric captively consumed in the manufacture of tyres, which also undergoes prior process of dipping and the same is the case in the present matter.
7. We also find that the South Zonal Bench of the Tribunal in the case of MRF Ltd. v. CCE-1999 (105) ELT 619(T) has again held that the dipping/rubberised tyre cord fabrics are properly classifiable under heading 59.06 of CETA, 1985. Para 8 of the decision is reproduced below:-
8. We have carefully considered the arguments on both sides. We note that this tribunal is a precedential court. We also note that any clarification or circular issued by the department is not legally binding on us. These are well settled laws and do not need any further reiteration. We find that in the 3 decisions of the CEGAT cited by ld.sr.counsel supra, the product classified is same. One of these decisions (the latest) is by the West Regional Bench whereas the earlier are emanating from the IVth Court at Delhi. In view of these, we are bound to follow the precedence established by these decisions as we are sitting in a Co-ordinate Bench. The department has not led any ground to show that these decisions could be distinguished on facts with the present appeals under consideration. Therefore, we respectfully apply the ratio of the said three decisions and hold that Dipped Tyre Cord Fabrics/Rubberised/Calendered Tyre Cord Fabrics would be classifiable under Heading 59.05 (now 59.06). We further order that the duty demand, if any, on applying such classification may be redetermined by the jurisdictional Commissioner according to law. Accordingly we set aside the impugned order-in-original dt.20.2.98 and the appeal succeeds accordingly.
8. The said decision has not been followed by the adjudicating authority by observing that the same was given by the Tribunal by following the earlier three decisions of GECAT i.e. Falcon Tyres, Vikrant Tyres and Apollo Tyres> and he has already discussed as to how these three decisions were not applicable. Accordingly he has observed that the CEGAT's decision in the case of MRF Tyres as a precedential court holding that the impugned goods would be classifiable under heading 59.06 is not applicable to the present case under adjudication. We find that the differentiation drawn by the adjudicating authority is on filmsy grounds and reflects upon the anxiety of the adjudicator to confirm the demand of duty against the appellants. In all the above referred decisions, it has been repeatedly held by the Tribunal that the dipped/rubberised tyre cord fabric is properly classifiable under heading 59.05 (now 59.06). No reasons have been shown by the Revenue as to why we should not follow the said decisions of the coordinate Benches. All the decisions have been given in the cases of tyre manufacturers and in respect of the identical product consumed by the assessees captively in the manufacture of the tyres. As such following the ratio of the said decisions we hold that the goods in question are properly classifiable under heading 59.06 and not under heading 59.02 as held by the Revenue. Both the sides have agreed that if the dipped/rubberised nylon tyre cord fabrics are classifiable under 59.06, no additional excise duty would be leviable. As such the confirmation of demand of duty against the appellants by the impugned order is set aside on this ground alone. The appeal is thus allowed with consequential relief to the appellants.
(Pronounced in the Court)