Customs, Excise and Gold Tribunal - Delhi
Cce vs Sheela Foams (P) Ltd. on 6 January, 2000
Equivalent citations: 2000(68)ECC479, 2000ECR433(TRI.-DELHI), 2001(138)ELT1387(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by the Revenue, the issue for our consideration is whether the goods in question were covered by the Central Excise Tariff sub-heading No. 3921.11 or were classifiable under Heading No. 94.04 of the said tariff. The respondents, M/s. Sheela Foams (Pvt.) Ltd. were engaged in the manufacture of plastic and articles thereof covered under Chapter 39 as well as articles classifiable under Chapter 94 of the Central Excise Tariff which among other articles covered mattresses. In the show cause notice dated 3.8.93, it was proposed that the Polyurethane (PU) foam sheets pasted with the industrial tape on the edges should be classified under Chapter 94 instead of Chapter 39. It was mentioned that PU foam sheets of thickness 75 mm or more after being cut to size were further worked upon and a self-adhesive industrial tape was used on their edges. It was alleged that as a result of such processing the goods went beyond the purview of Subheading No. 3921.11 as the same did not conform to Chapter Note 10 of Chapter 39 any more, and that their correct classification was under sub-heading No. 9404.00. The Commissioner of Central Excise (Appeals), Ghaziabad held as under:
In view of the arguments advanced by the respondents, I hold the classification of PU foam sheets under Chapter 39 instead of Chapter 94. This is also the present classification of the goods.
In the grounds of appeal, the Revenue had pleaded that the mattresses of PU foams were clearly classifiable under sub-heading No. 9404.00; mattresses were known only by their name and not as PU foam sheets, and that the mattresses of PU foams could only be made by cutting into sheets of PU foam block which is made with the help of moulding. It was mentioned that while foam sheets cut to size of mattresses were classifiable under Chapter 39, when the 'industrial tape' was affixed on the edges of the sheet cut to size, the goods attained the shape of mattresses classifiable under Chapter 94.04. Heading No. 94.04 covered mattresses of rubber as well as plastic irrespective of the fact whether such mattresses were covered with cloth etc. or not. It was argued that since the sheets of foam cut to size were not cleared as such but were affixed with the industrial tape the goods in question could not be considered as a sheet falling under Chapter 39. It was also added that the classification opinion of Customs Cooperation Council had no applicability in the present case where the sheets of Chapter 39 were not cleared as such. It had also been mentioned that to ascertain the classification of any product it was essential to see its marketability/trade parlance and that in trade parlance the goods were known as mattresses and not as sheets of PU foam.
2. The matter was heard on 4.11.99 when Shri Praveen Sharma, Advocate referred to the Board's Circular under F.No. 93/24/91 CX3 dated 17.12.91 wherein, it had been clarified that PU foam sheets obtained by cutting of PU foam blocks for use as mattresses would merit classification under Heading No. 39.21 of the Central Excise Tariff.
Shri V.M. Udhoji, DR, submitted that the goods presented for assessment were mattresses, which were specifically described under Heading No. 94.04. The goods as finally marketed and cleared by the assessee had gone beyond the stage of sheets. They were known in the market as mattresses and not as sheets.
3. We have carefully considered the matter. It is seen from the facts on record that the goods whose classification is under consideration were marketed as mattresses. The mattresses were made from the sheets but were distict and different from the sheets. Both the mattresses and the sheets were separately classifiable under the Tariff. It is also seen that for their use as mattresses, the sheets have to be further worked even when the sheets had already been cut to the mattress size.
4. It is not disputed that the goods in question were used as mattresses. Sheets as such were not useable as mattresses as they were pliable to be dispersed, dishevelled or bulged out or wither out. Sheets were not usable as mattresses unless they were further worked, reinforced or supported on the edges. The goods were admittedly mattresses. By the process of re-inforcing and support of the edges, the sheets had assumed the shape of mattresses. While in Heading No. 39.21 only sheets were covered, mattresses were specifically covered in Heading No. 94.04. Under Heading No. 39.21 other plates, sheets, foam, foil, and strip of plastics were covered. Subheading No. 3921.11 covered among others the sheets of Polyurethane. Only those sheets whether or not printed or otherwise surface worked uncut or cut into rectangles but which are not further worked were classifiable in Heading No. 39.21. Chapter Note 10 under Chapter 39 is extracted below:-
10. In Heading Nos. 39.20 and 39.21, the expression "plates, sheets film, foil and strip" applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut, they become articles ready for use).
It is also seen from the Chapter Notes that the Chapter 39 does not cover articles of Chapter 94. Thus, Chapter 94 had a precedence over Chapter 39 (refer Clause (s) of Chapter Note 2 under Chapter 39).
5. The expression "further worked" has come up for consideration before the Tribunal in the case of Kerala Books & Publication Society v. Collector of Customs . The imported rubber blankets had end fittings, metal strips, (bars) at the two edges of the rubber sheets and were ready for fitment conditions. They were found to be further worked for the purposes of Note 9 to Chapter 40 of the Customs Tariff which was similarly worded as Note 10 of Chapter 39 of Central Excise Tariff. Para 10 from that decision is extracted below:-
10. Shri Kunhi Krishnan had attempted to draw an analogy from the wood working and had quoted from World Book Encyclopaedia which is extracted above. The classification of the items has to be done as per the chapter note and section note and hence, this analogy would not be appropriate. The aluminium metal strips which have been fixed as end fittings, has been done with a particular purpose. The contention that the bars are provided merely to protect the ends of the rubber sheets to ensure proper fitment while use in the machine, would also indicate that these end fittings have been done to a specification, and without it the rubber blankets cannot be fixed to the machine properly for precision printing; as admitted by the importer themselves. Therefore, such fittings have to be considered "further worked.' and the items excluded from Heading 4008 as per Note 9 of Chapter 40. As such, to consider the item as a mere rectangular sheet to fall under Heading 40.08 is not proper. There is no merit in these appeals and the same are dismissed.
In the case of Collector of Central Excise v. Kasturi & Sons , the imported goods rubber blankets were found to be attached with metal brackets on both the sides. This fixation of metal bars/brackets to the edges on both sides of rubber blanket sheets was found to be 'further worked'.
6. Under Heading No. 94.04, mattress supports, articles of bedding and similar furnishing (for example mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered, were included.
7. When sheets and mattresses are separately described in the Tariff it is the form in which the goods are cleared which is relevant for classification. The argument whether when sheets are transformed into mattresses, there is a process of manufacture is not relevant in such a situation (refer Hindu un-divided Family Business known as Ramlal Mansukhrai Reivari, and British India Corporation Ltd., Dhariival v. CCE, Chandigarh 1986 (6) ECR 712 (Tribunal) (Para-8).
8. The reference to the Trade Notice 4/1993 dated 18.1.93 does not appear to be appropriate. According to the trade notice Polyurethane foam sheets obtained by cutting of PU foam blocks for use as mattresses will merit classification under Heading No. 39.21. The goods presented for assessment should be sheets and not mattresses even when the sheets have been obtained by cutting of the PU foam for use in mattresses. The trade notice does not provide that mattresses as such will be classifiable differently when they are specifically covered by Heading No. 94.04.
9. As regards the clarification from the Customs Cooperation Council, it is seen that the issue was of flexible PU foam slabs or sheets for use as mattresses but not of mattresses as such. The Committee had opined that the expanded PU sheets merely cut into rectangles even if intended for use as mattresses were classifiable under Heading No. 39.01. It was further opined that the mattresses of expanded foam or sponge rubber made by moulding were classifiable under Heading No. 94.04. In the grounds of appeal, the Revenue had stated as under:-
Mattresses of P.U. foam can only be by cutting into sheets of P.U. foam block which is made with the help of moulding.
HSN Explanatory Notes relating to Heading No. 94.04 at page 1579 is extracted below:-
94.04--Mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered).
It is thus seen that the clarification by the Customs Cooperation Council relates to the different product.
10. There thus appears to be considerable force in the pleadings of the Revenue. The Ld. Advocate had submitted that against the same impugned order-in-appeal dated 30.10.96, the assessee M/s. Sheela Foams had also filed appeal which was registered as an appeal No. 1745/96 NB and the same was disposed of by the Tribunal under final order No. A/789/97 NB (SM) dated 27.6.94 holding that the Modvat credit was admissible on industrial tapes. In these proceedings, we are not concerned with the issue of Modvat credit. The appeal has been filed by the Revenue with regard to the issue of classification for which we find that the matter had not been fully analysed by the adjudicating authority as well as the appellate authority.
At the same time, we consider that both the adjudicating authority and the appellate authority had not described as in what form the goods were presented for assessment and under what name goods were marketed. The Revenue had in the grounds of appeal stated as under:-
To ascertain classifiability of any product it is essential to see its marketability/ trade parlance. In trade parlance, it is known as mattresses and not as plate, sheet or strip of PU foam.
11. In the interest of justice, we consider that this matter should go back to the jurisdictional Asstt. Commissioner, Central Excise for full examination of the matter in the light of our above observations. After affording an opportunity to the manufacturers, the matter should be re-decided in accordance with law.
12. The appeal filed by the Revenue is thus allowed by way of remand. Ordered accordingly.