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Collector of Central Excise, Madras Vs. M/S Mrf Limited [1997] INSC 895 (3 December 1997)

S.P. BHARUCHA, S.C. SEN

ACT:

HEADNOTE:

THE 3RD DAY OF DECEMBER, 1997 Present:

Hon'ble Mr.Justice S.P. Bharucha Hon'ble Mr.Justice S.C. Sen Joseph Vellapalli, Sr.Adv., Anoop G. Choudhary, Rajiv Nanda, V.K. Verma, S.D.Sharma, S.Ganesh K.R. Nambiar, V.Sridharan, T.Viswanathan, V.Balachandran, and Rajesh Kumar, Advs. with him for the appearing parties.

The following Judgment of the Court was delivered:

WITH

CIVIL APPEAL NOS. 2112 OF 1988 AND 8341-42 OF 1995 Bharucha, J.

We are concerned in these appeals with product "rubber cement" or "black vulcanising cement" manufactured by the assessees. The case before the Tribunal was that the said product fell under Tariff Entry 40.17 according to the assessees and under Tariff Entry 40.05 according to the Revenue, the appellant before us. The Tribunal came to the conclusion that the said product was correctly classifiable under Tariff Item 35.012 prior to 10th February, 1987, and under Tariff Item 35.06 thereafter. The assessees have accepted the classification made by the Tribunal Only the Revenue is in appeal Tariff Entry 40.05 reads thus:

------------------------------------------------------------ Heading Sub-Heading Description of goods Rate of duty No. No.------------------------------------------------------------ 40.05 4005.00 Compounded rubber, 40% unvulcanised, in primary forms or in plates, sheets or strip.------------------------------------------------------------ - Tariff Entries 35.01 and 35.06 read thus:------------------------------------------------------------ Heading Sub-Heading Description of goods Rate of duty No. No. ------------------------------------------------------------ "35.01 Albuminoidal substances;

modified straches; glues;

enzymes 3501.10 -Esterified starches 40% 3501.20 -Dextrins and other 15% modified starches 3501.90 -Other 15% 35.06 3506.00 Prepared glues and other 15% prepared adhesives, not elsewhere specified or included." ------------------------------------------------------------ The Tribunal noted the process by which the said product was manufactured. If found that the raw material that was used to manufacture the said product was classified by the Revenue under Tariff Entry 40.08, which reads thus:

"Plates, blocks, sheets, strip, rods, and profile shapes, of vulcanised rubber other than hardened rubber." The Tribunal said that this would point to the position that the raw material was vulcanised rubber and that, therefore, the said product could not possibly fall within Tariff Entry 40.05 which spoke of "Compounded rubber, un- vulcanised, in primary forms.....".

Learned counsel for the Revenue drew our attention to Chapter Note 3 of Chapter 40 of the Central Excise Tariff which reads thus:

"3 In heading Nos. 40.02, 40.03 and 40,05, the expression 'primary forms' applied only to liquids and pastes (including latex, whether or not prevulcanised, and other dispersions and solutions), and blocks of irregular shape, lumps, bales, powders, granules, crumbs and similar bulk forms".

It seems to us that no argument based on Chapter Note 3 or otherwise can be of any avail to the Revenue, having regard to the undisputed position that what is used as a raw material to produce the said product is classified by the Revenue itself as vulcanised rubber. If the raw material is vulcanised rubber, the said product made from it cannot possibly be unvulcanised rubber the said product made from it cannot possibly be unvulcanised compounded rubber.

The Revenue is, therefore, unable to satisfy us that the said product falls under Tariff 40.05 as it claims. it cannot argue that, in any event, the Tribunal was in error in classifying the said product under Chapter 35.

The appeals are dismissed with no order as to costs.

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