Custom, Excise & Service Tax Tribunal
Sh. Sudhir Kumar Aggarwal, Partner vs C.C.E. Kanpur on 26 February, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI COURT NO. I Date of hearing/Decision:26.02.14 Appeal No. E/2601-2602/2008 -EX[DB] M/s. J.S.Fabrics Sh. Sudhir Kumar Aggarwal, Partner Appellant Vs. C.C.E. Kanpur Respondent
[Arising out of Order-In-Appeal No.357-358/CE/APPL/KNP/2008, dt.16.09.2008, passed by Commissioner (Appeals) Central Excise, Kanpur] For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Rakesh Kumar, 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?
Present:
Sh. B.K.Singh, Advocate- for the appellant Sh. Pramod Kumar, Jt. CDR - for the Respondent CORAM :
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO.51700-51701/2014 Per Rakesh Kumar:-
1.1 The appellant in their unit at Unnao, are engaged in the manufacture and clearance of Canvas Canopy for motor vehicles and tool bags and web equipment of textile material. They were classifying the canvas canopy (which is canvas tarpaulin) under sub heading 6306 of the Central Excise Act and the webing equipment and tool hugs under sub heading 6307 of the Central Excise Tariff. The Canvas canopy/Tarpaulin pieces were specially designed for vehicles of various models. The appellant were not paying any duty in respect of these items by availing the full duty exemption under Notification No.30/2004-CE dt 09.07.2004. The Department was of the view that canvas canopy, tool bags and web equipment being manufactured by the Appellant, are parts or accessories of motor vehicle classifiable under heading 8708 and would not be eligible for exemption under Notification No. 30/2004-CE. It is on this basis that a Show Cause Notice dt. 05.12.07 was issued to the appellant as well as to their partner Sh. Sudhir Kumar Aggarwal for :-
(a) demand of Central Excise duty of Rs. 33,41,168/- for the period from Dec,06 to Oct.07 along with interest thereon and under section 11AB of the Central Excise Act, 1944 ;
(b) imposition of penalty on the appellant firm under section 11AC of the Central Excise Act, 1944; and
(c) imposition of penalty under Rule 26 of Central Excise Rules, 2002 on Sh. Sudhir Kumar Aggarwal.
The Show Cause Notice also sought confiscation of 131 Pcs. of Tarpaulin canopy and 1350 Pcs. of tool bags which had been seized.
1.2 The Show Cause Notice was adjudicated by Additional Commissioner vide order-in-original dt. 24.06.08 by which the above mentioned duty demand along with interest was confirmed a against the Appellant firm along with interest on it under Section 11AB and besides this, penalty of equal amount was imposed on appellant firm under section 11AC. Penalty of Rs.5 Lakh was also imposed on Sh. Sudhir Kumar Aggarwal under Rule 26 of Central Excise Rules, 2002. The seized goods were confiscated with an option to the Appellant to redeem the same on payment of a Redemption Fine of Rs.5 Lakh.
1.3 The appellant firm as well as its partner Sh. Sudhir Kumar Aggarwal filed appeals before the Commissioner (Appeals) against the Additional Commissioners Order. The Commissioner (Appeals) vide order-in-appeal dt.30.09.08 dismissed their appeals against this order of the Additional Commissioner. Against this order of CCE(Appeals) these two appeals have been filed.
2. Heard both the sides.
3. Sh. B.K.Singh, Advocate, the learned counsel for the appellant, pleaded that the appellant manufacture specially shaped canvas tarpaulin canopies for different models of lorries, tool bags and Web equipment of textile material, that canvas canopies are made out of canvas tarpaulin, that the canvas canopies, though specially cut into shapes to cover goods loaded in open lorries of different models, flat not three dimensional, that while such Tarpaulins meant for vehicles are covered under heading 6306, that the other items, tool bags and web equipments of textile material are covered under heading 6307, that all these items are fully exempted from duty under Notification No. 30/2004-CE dt 09.07.2004, as the same are textile items of Chapter 63 and the appellant during the period of dispute were not availing input duty Cenvat Credit, that the main item canvas canopy/Canvas Tarpaulin specially designed for various types of vehicles are specifically covered under heading 6306 and the same cannot be treated as part/accessories of motor vehicle under heading 8708, that according to the HSN Explanatory Notes to Chapter heading 6306, this heading covers tarpaulins which are used to protect goods stored in the open or loaded on ships, wagons, lorries etc. against bad weather, that they are generally made of coated or uncoated man-made fibre fabrics, or heavy to fairly heavy canvas and are waterproof, that specially shaped tarpaulin are also covered by this heading provided they are flat, that the tarpaulin canopies in this case are flat and hence the same are covered by 6306, that it is a general principle of classification that the specific heading should be preferred over general heading, and tarpaulins are specifically covered by heading 6306, that the Apex Court in the case of CCE, Chennai Vs. Tarpaulin International, reported in 2010(256) ELT-481(S.C.) has held that making tarpaulin made-ups out of tarpaulin fabrics by cutting the same to required size, stitching, margins and punching eyelets, would not amount to manufacture, as just because the tarpaulin fabric has been cut into particular rectangular sheets, hemmed along sides, fitted with eyelets, cords, straps etc., it still remains tarpaulin, that the ratio of this judgment is squarely applicable to this case are in this case the canvas tarpaulin sheets have just been cut into the required shape to cover the goods loaded in open lorries of certain models, that since tarpaulin canopies are correctly classifiable under heading 6306, the same would be fully exempt from duty under Notification No. 30/04-CE as there is no dispute that the same are of textile material and no input duty credit has been taken, that the reason adopted by the Department for classifying this items as motor vehicles accessory under heading 8708 is without any basis, as the tarpaulin canopies are not three dimensional but are flat, that tool bags and webbing equipment are made of textile material and hence are classifiable under heading 6307 and would be fully exempt from duty under Notification No. 30/04-CE and that in view of the above, the impugned order is not sustainable.
4. Sh. Pramod Kumar, the learned Jt.CDR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and emphasized that the canvas canopies which are specially designed for different model of lorries are not flat and hence the same have to be treated as accessories of motor vehicles and accordingly would be classifiable under heading 8708 and hence the same would not be eligible for exemption under Notification No. 30/2004-CE.
5. We have considered the submissions from both the sides and perused the records. The only point of dispute in this case is as to whether the canvas canopies specially designed for lorries, tool bags and web equipment of textile material are classifiable under sub heading 6306/6307 and hence fully exempt from duty under Notification No. 30/2004-CE or the same are classifiable as accessories of motor vehicle under heading 8708.
6. As regards the tool bag and web equipment, the same are made of textile material. Web equipment is canvas strap made of textile material and the same in view of HSN Explanatory notes under heading 6307 would be covered by heading 6307 of the Central Excise Tariff, as heading 6307 of Central Excise Tariff is patterned on HSN heading 6307. As regards tool bags, the same, in our view, would be covered by heading 63.05 as this heading is also patterned on HSN heading 63.05 and accordingly to HSN explanatory notes to this heading, the same covers textile bags and sacks of all kind for packing of goods for transport, storage, sale etc. Since both of these items are covered by chapter 63, the same would be exempt from duty under notification no. 30/04-CE, as no input duty Cenvat Credit has been availed.
7. As regards the canvas canopies specially designed for lorries, we find that these canopies made from canvas tarpaulin, are basically the tarpaulins cut into special shapes for covering goods loaded into open lorries of different models. All tarpaulins are covered by heading 6306 of the Central Excise Tariff. This heading of Central Excise Tariff is identical to heading 6306 of the HSN. In terms of HSN explanatory notes to HSN heading 6306, tarpaulins are used to protect goods stored in the open or loaded in ships, wagons, lorries, etc. against bad weather, that they are generally made of coated or uncoated man-made fiber fabrics, or heavy to fairly heavy canvas (of hemp, jute, flex or cotton) and are waterproof, that tarpaulins are generally in the form of rectangular sheets, hemmed along sides and may be fitted with eyelets and that the Tarpaulin which are specially shaped (e.g. for covering hayricks, decks of small vessels, lorries etc.) also fall in this heading provided they are flat. The canvas Tarpaulins, in question, are specially shaped for different model of lorries and though the Departments contention is that the same are not flat, no evidence in this regard has been produced. In our view, therefore, these Tarpaulin would be correctly classifiable under heading 6306 and not as parts or accessories of motor vehicles under heading 8708. Apex Court in the case of CCE, Shilling Vs. Woodcraft Ltd., reported in 1995(77) ELT-23 (S.C.) has held that when a heading in Central Excise Tariff is patterned on HSN, the HSN explanatory note would have persuasive value for ascertaining the scope of the corresponding heading in the Excise Tariff heading and accordingly in this case, the canvas canopies specially shaped for lorries of different models would be classifiable under sub heading 6306 and accordingly the same would be eligible for exemption under Notification No. 30/2004-CE.
8. In view of the above discussions the impugned order is not sustainable. The same is set aside. The appeals are allowed.
[Operative portion of the order pronounced in the open court]
(Archana Wadhwa) Member (Judicial)
(Rakesh Kumar) Member(Technical)
S.Kaur
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