Custom, Excise & Service Tax Tribunal
M/S Uni Products India Limited & Others vs Cce, Delhi-Iii on 16 July, 2008
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK-II, R.K. PURAM, PRINCIPAL BENCH, NEW DELHI, COURT NO. III
Excise Appeal Nos. 94 & 3226 of 2007
[Arising out of Order-in-Original No. 10 & 11/PP/CE/2006 dated 29.9.2006 and 16/CE.JM/07-8 dated 4.10.2007 passed by the Commissioner of Central Excise, Delhi-III]
Date of hearing: 03.07.2008
Date of decision: 16.07.2008
Honble Mrs. Archana Wadhwa, Member [Judicial]
Honble Mr. M. Veeraiyan, Member [Technical]
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
M/s Uni Products India Limited & Others Appellant
[Rep. by Mr. V. Laxmikumaran, Advocate]
Vs.
CCE, Delhi-III Respondent
[Rep. by Mr. V. Chaudhry, Jt. CDR]
Coram: Honble Mrs. Archana Wadhwa, Member [Judicial]
Honble Mr. M. Veeraiyan, Member [Technical]
O R D E R
Per: M. Veeraiyan:
1.1 Excise Appeal No. 94 of 2007 is against the order of the Commissioner No. 10 & 11/PP/CE/2006 dated 29.9.2006.
1.2 Excise Appeal No. 3226 of 2007 is against the order of the Commissioner No. 16/CE.JM/07-08 dated 4.10.2007.
1.3 Both the appeals involved a common issue namely whether carpet matting manufactured by the appellant is classifiable under chapter heading 570390.90 as claimed by the assessee or falls under 870899.00 as found by the Department accordingly. Both the appeals are, therefore, being dealt with by a common order.
2. Heard both sides.
3.1. The relevant facts, in brief, in Excise Appeal No. 94 of 2007 are as under:-
(a) Appellant manufacture carpet matting and the process of manufacture as claimed by the appellant is as follows:-
Depending upon the variety of Moulded Car Carpets, the fibre i.e. polyester /polypropylene is fed in opening and blending equipments, from where it is transported to carding equipments. After carding, the same is put for Needle punching. After needle punching, the fabric is then chemically treated in order to provide strength to the carpet fabric as per customer requirement. After chemical binding, the fabric is laminated as per customer requirement. The laminated fabric /impregnated fabric is then moulded as per the requirement and trimmed to be fixed in the vehicle. After trimming the Namda felt is fixed on the back of the carpet as per requirement.
b) During the course of audit, the Central Excise officers suspected wrong classification; they called for the details of the manufacturing process and copies of invoices; the party furnished such details vide their letter dated 23.6.2005 relating to the period 9.7.2004 to 31.3.2005. Show cause notices dated 9.8.2005 and 2.5.2006 were issued proposing the classification under 8708990 and demanding differential duty and proposing penalties. Commissioner vide his order dated 29.9.2006 confirmed a demand of Rs.4,05,09,068/- plus education cess of Rs. 8,10,702/- alongwith interest; he ordered recovery of interest, he also imposed penalty of Rs. 4,05,09,068/-.
3.2 In Excise Appeal No. 3226 of 2007, the facts involved are substantially identical with the period involved being 1.2.2006 to 30.1.2007 and the duty amount confirmed being Rs.3,42,14,047/- ( along with interest) and a penalty of equal amount.
4. Learned Advocate submitted the following.
4.1 There was a dispute relating to the period 1.1.95 to 16.4.95 on the carpet matting manufactured by them. The dispute was whether the same should be treated as carpet of jute falling under 5703.30 as contended by the assessee or as 5303.90 as other carpets and the Tribunal vide order dated 25.8.2000 decided the classification in their favour.
4.2 The Boards circular No. 5/87 dated 23.6.87 clarified that car carpet made from duty paid carpet in roll form need not pay duty once again under chapter 5702.90 as it existed then. After extension of modvat facility on matting made from duty paid non-woven material in roll form, Board issued fresh circular No. 117/28/95-X dated 17.4.95 which clarified that the duty has to be charged on both stages. This circular was issued after withdrawing the Circular No. 6/87.
4.3. He drew our attention to note one to chapter 57 and submitted that 5702 and 5703 covers carpets and other textile floor coverings whether or not made up. He also drew our attention to note (1) of the said chapter according to which the term carpets means floor coverings in which textile materials serve as the exposed surface of the article when in use and includes articles having the characteristics of textile floor coverings but intended for use for other purposes.
He also drew our attention to chapter 8708 relating to parts and accessories of the motor vehicles of heading Nos. 87.01 to 87.05 which according to him describes the products by a class and not by name .
4.4 He drew our attention to interpretative notes for rule 3(a) in HSN where by way of an example it has been clarified that textile carpet identical for use in motor cars to be classified not as accessories of motor cars in heading 8708 but in heading 5703 where they are more specifically described as carpet. Referring to section notes under section XI relating to textiles and textile articles he submitted that the said section did not cover certain glass fibres or articles fibres under chapter 70, articles of chapter 94, articles of chapter 95, articles of chapter 96, but it did not refer by way exclusion articles under chapter 87. He submits that the intention is that if an article is likely to fall both under 57 and 87 preference should be given to chapter 57. However, if there is a conflict between chapter 57 and any of the chapters 70, 94, 95 and 96 then the latter chapters should be preferred to chapter 57.
4.5 He also drew our attention to HSN note applicable to chapter 8708 and submitted that the said chapter heading covers parts and accessories of motor vehicle subject to fulfillment of two conditions. One of the conditions is that they must not be excluded by the provision of notes to section XVII?. He submits that parts and accessories even if identifiable as for articles under this section (17) they are to be excluded if they are covered more specifically by any other heading elsewhere for example, as textile carpet under chapter 57. Further, he also submits that in the inclusion category for chapter 8708 mentions floor mats other than that of textile material or unhardened vulcanized rubber.
5. Learned DR submits that the non-woven fabric in roll form is a thinner variety and the same cannot be considered as carpets; the same non-woven fabric is one of the raw materials used for the manufacture of articles claimed by them as carpets; no carpets comes into existence at any stage; the impugned goods cannot be considered as textile carpets as the textile carpets are different from car carpets; the impugned goods are solely and principally used in cars and hence they cannot be considered as textile carpets. The various interpretative notes relied on behalf of the appellant are not relevant.
5.1 We have carefully considered the submissions from both sides. At this stage, it would be appropriate to reproduce chapter 5702 and 5703 along with the chapter note No. 1 to Chapter 57:-
Notes:
1. For the purposes of this Chapter, the term carpets and other floor coverings means floor coverings in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor coverings but intended for use for other purposes.
57.02 Carpets and other textile floor coverings (other than those of heading No. 57.01), knotted, woven, tufted, or flocked, whether or not made up.
-In or in relating to the manufacture of which any process is ordinarily carried on with the aid of machines:
5702.11 of coconut fibres (coir) 5702.12 of jute 5702.13 other 5702.14 other 57.03 Other carpets and other textile floor coverings, whether or not made up.
5703.10 of coconut fibres (coir) 5703.20 of jute 5703.90 other 5.2 We may also reproduce the relevant portion of the explanatory notes:-
(IV) It is not practicable to lay down hard and fast rules by which to determine whether one heading more specifically describes the goods than another, but in general it may be said that:
(a) A description by name is more specific than a description by class (e.g. shavers and hair clippers, with self-contained electric motor, are classified in heading 85.10 and not in heading 84.67 as tools for working in the hand with self-contained electric motor or in heading 85.09 as electro-mechanical domestic appliances with self-contained electric motor).
(b) If the goods answer to a description which more clearly identifies them, that description is more specific than one where identification is less complete.
Examples of the latter category of goods are:
(a) Tufted textile carpets, identifiable for use in motor cars, which are to be classified not as accessories of motor cars in heading 87.08 but in heading 57.03, where they are more specifically described as carpets.
(2) Unframed safety glass consisting of toughened or laminated glass, shaped and identifiable for use in aeroplanes, which is to be classified not in heading 88.03 as parts of goods in heading 88.01 or 88.02 but in heading 70.07, where it is more specifically described as safety glass.
SECTION XI TEXTILES AND TEXTILE ARTICLES Section Notes.
1. This Section does not cover:
(r) Glass fibres or articles of glass fibres, other than embroidery with glass thread on a visible ground of fabric (Chapter 70);
(s) Articles of Chapter 94 (for example, furniture, bedding, lamps and lighting fittings);
(t) Articles of Chapter 95 (for example, toys, games, sports requisites and nets);
(u) Articles of Chapter 96 (for example, brushes, travel sets for sewing, slide fasteners and typewriter ribbons); or 57.05 OTHER CARPETS AND OTHER TEXTILE FLOOR COVERINGS, WHETHER OR NOT MADE UP.
This heading covers carpets and textile floor coverings, other than those covered by a more specific heading of this Chapter.
The heading includes:
----- ----- ----- ------ --
(2) Nonwoven carpets, consisting of a layer of carded textile fibres crimped between grooved rollers to form loops, which may either be held in position by a thick coating or rubber, plastics, etc., which also serves as a backing, or be bonded to a backing fabric by similar adhesives.
(C) Parts and accessories covered more specifically elsewhere in the Nomenclature.
Parts and accessories, even if identifiable as for the articles of this Section are excluded if they are covered more specifically by another heading elsewhere in the Nomenclature, e.g.:
------ ----- ----- --- --
(7) Textile carpets (Chapter 57).
This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions:
(i) They must be identifiable as being suitable for use solely or principally with the above mentioned vehicles;
(ii) They must not be excluded by the provisions of the Notes to Section XVII.
Parts and accessories of this heading include:
---- ---- ---- --- --
(B) Parts of bodies and associated accessories, for example,.
.
Safety seat belts designed to be permanently fixed into motor vehicles for the protection of persons; floor mats (other than of textile material or unhardened vulcanized rubber), etc., 5.3. We find that chapter 57 covers not only carpets but also other floor coverings. What has to be considered is that between the terms carpets and other floor coverings the terms parts and accessories which can be considered more specific. Even if the claim of the Department that at no stage the carpets come into existence is accepted it can not be denied that the article can be considered as other floor coverings meant for other application. We also find that in the interpretative notes for rule 3(a) in HSN, where by way of an example, it has been clarified that textile carpet identifiable for use in motor cars to be classified not as accessories of motor cars in heading 8708 but in heading 5703 where they are more specifically described as carpets. Though, in common parlance the impugned product may not be considered as carpets, in view of the wordings of the chapter the section notes, chapter notes and the explanatory notes extracted above we are of the considered opinion that the impugned goods is correctly classifiable under chapter heading 570390.90 as claimed by the assessee.
6. The orders of commissioner are set aside and the appeals are allowed with consequential relief.
[Pronounced in the open Court on 16.07.2008] [Archana Wadhwa] Member [Judicial] [M. Veeraiyan] Member [Technical] [Pant]