Collector
of Central Excise, Kanpur Vs. M/S Matador Foam & Ors
[2005] Insc 16 (5
January 2005)
S.
N. Variava, Dr. Ar. Lakshmanan & S. H. Kapadia S. N. Variava, J.
These
Appeals are against the Judgment dated 22nd of January 1999 of the Customs,
Excise and Gold (Control) Appellate Tribunal [CEGAT].
Briefly
stated the facts are as follows.
The
question involved is whether the goods manufactured by the Respondents fall
under Tariff Item 94.01 or Tariff Item 40.08. It is an admitted position that
the Respondents manufactured goods made out of vulcanised rubber, other than
hardened rubber, and their goods are cut to the shape of seats of motor
vehicles or two wheelers. The Respondents had filed a classification list
showing the products under Tariff Heading 40.08. This had been approved.
However, a show- cause notice dated 17th May 1990 was issued by the Assistant
Commissioner raising a demand for the differential duty on the ground that the
products should correctly be classified under Tariff Item 94.01. After giving a
personal hearing, the Assistant Commissioner confirmed the demand. Thereafter,
three further show-cause notices dated 31st May 1990, 1st May 1990 and 31st
May 1990 respectively
were issued to the Respondents calling upon them to show-cause as to why the
benefit wrongly availed of them under Notification No. 175 of 1986 dated 1st March 1986 be not cancelled. The Respondents
were called upon to pay duty. After hearing the Respondents, by Orders dated 13th March 1991, it was held that the Respondents
were not entitled to exemption. They were called upon to pay duty.
It
must be mentioned that the Board issued a clarification that the goods of the
kind manufactured by the Respondents were classifiable under Tariff Heading
94.01 if they were meant for seats of motor vehicles and Tariff Heading 87.14
if they were meant for seats of two wheelers.
The
Respondents filed the Appeals, which were dismissed by the Commissioner
(Appeals). The Respondents then filed further Appeals to CEGAT. Earlier
decisions of CEGAT, holding that such goods fell under Tariff Heading 94.01
were cited. In spite of that CEGAT concluded, in the impugned Judgment, that
such goods should fall under Tariff Heading 40.08. In so doing, CEGAT relied
upon another Judgment of the Tribunal which had dealt with earlier Tariff
Headings 16A and 34A. It must be mentioned that those Tariff Headings were
completely different from the Tariff Headings now under consideration.
Tariff
Headings 94.01 and 40.08 read as follows:
"94.01:
Seats (other than those of heading No.40.01), whether or not convertible into
beds, and parts thereof.
40.08:
Plates, blocks, sheets, strikes, rods and profile shapes of vulcanized rubber
other than hardened rubber of cellular rubber." It is also necessary to
consider certain Chapter Notes which have been relied upon by the parties. In
Chapter 94, Notes 1 (a) and 2 read as follows:
"1.
This Chapter does not cover:
(a)
Pneumatic or water mattresses, pillows or cushions, of Chapter 39,40 or 63;
.................................................................
.................................................................
2. The
articles (other than parts) referred to in heading Nos.94.01 to 94.03 are to be
classified in those headings only if they are designed for placing on the floor
or ground.
The
following are, however, to be classified in the above-mentioned headings even
if they are designed to be hung, to be fixed to the wall or to stand one on the
other:
(a)
Cupboards, bookcases, other shelved furniture and unit furniture;
(b)
Seats and beds." In Chapter 40, Notes 2 (e) and 9 read as follows:
"2.
This Chapter does not cover:
(a)
..................................................
(b)
..................................................
(c)
..................................................
(d)
..................................................
(e)
Articles of Chapter 90, 92, 94 or 96;
(f)
.................................................."
...................................................................
9. In
heading Nos.40.01, 40.02, 40.03, 40.05 and 40.08, except as otherwise provided,
the expressions 'plates', `sheets' and `strips' apply only to plates, sheets
and strip and to blocks of regular geometric shape, uncut or simply cut to
rectangular (including square) shape, whether or not having the character of
articles and whether or not printed or otherwise surface-worked, but not
otherwise cut to shape or further worked.
In
heading No.40.08, the expressions `rods' and `profile shapes' apply only to
such products, whether or not cut to length or surface-worked but not otherwise
worked.
Sub-heading
No.4008.21 shall also apply to "plates", "sheets" and
"strips", whether or not cut to shape and surface-worked or further
worked so as to render them fit for resoling or repairing or re-treading of
rubber-tyres." Mr. Jain, learned counsel for the Respondents, has strongly
relied upon Chapter Note 1 (a) of Chapter 94 and submitted that pneumatic or
water mattresses, pillows or cushions of Chapter 39, 40 and 63 are excluded
from Chapter 94. He submitted that Respondents' goods are cushions falling
under Chapter 40 and are thus covered by Tariff Item 40.08. They submitted that
they are thus excluded from the purview of Chapter 94. He submitted that,
therefore, Tariff Heading 94.01 cannot cover goods of the Respondents.
On the
other hand, Mr. Venkataramani submitted that Tariff Item 94.01 is a specific
Item, which deals with seats and parts thereof.
He
pointed out that it is an admitted position that the Respondents goods are cut
to the shape of seats and are only used in seats of buses, motor vehicles
and/or two wheelers. He submitted that there being a specific Entry covering
seats and parts thereof, these goods cannot fall into general entry covered by
Tariff Heading 40.08. In support of his submissions, Mr. Venkataramani relied
upon Chapter Note 2(e) of Chapter 40 and submitted that any goods which falls
within any of the Tariff Items in Chapter 90 gets excluded from Chapter 40.
We
find substance in the submission of Mr. Venkataramani.
Chapter
Note 1(a) of Chapter 94 excludes cushions falling in Chapter
40. At
the same time, Chapter Note 2(e) of Chapter 40 excludes articles which would
fall in Chapter 90. Thus, one would have to see which of the Tariff Headings,
in these two Chapters, specifically deals with goods of the type manufactured
by Respondents. If the goods were mere cushions they may get covered by Chapter
40 and would then be excluded from Chapter 90. However, if the goods are a seat
or a part thereof they get specifically covered by Tariff Heading 94.01.
In
such cases, by virtue of Chapter Note 2(e) to Chapter 40, these goods get
excluded from Chapter 40. Between Tariff Headings 94.01 and 40.08, Tariff Item
94.01 is a more specific heading dealing with seats and parts thereof. It is an
admitted position that the goods manufactured by the Respondents are cut in the
shape of seats and are used only in seats. They are thus cushions of seats and
are parts of seats. They then fall under Tariff Heading 94.01 and Tariff
Heading 40.08 thus get excluded. This view is also supported by H.S.N.
Explanatory
Note, which states that Tariff Entry 94.01 would cover all seats including
seats of vehicles.
It
must, however, be stated that seats of two wheelers get excluded from Chapter
94 by virtue of Chapter Note 1(h), which reads as follows:
"1.
This Chapter does not cover:
..............................................
..............................................
(h)
Articles of heading No.87.14." Chapter Note 87.04 specifically deals with
parts of two wheelers.
Therefore,
seats of two wheelers would fall under Tariff Heading 87.14.
Mr.
Jain next relied upon Chapter Note 2 to Chapter 94 (which has been set out
hereinabove). He submitted that Tariff Heading 94.01 would only cover seats
which have been designed for placing on the floor or on the ground or which
could be hung or fixed on the wall or designed to stand one on the other. He
submitted that seats of cars are not designed to be placed on the floor or
ground and therefore they would not be covered under Tariff Heading 94.01. We
are unable to accept this submission. The term `floor or ground' would also
include floor of the car or vehicle. Seats made for vehicles are placed on the
floor of the car or vehicle. Therefore, Chapter Note 2 would not exclude seats
of vehicles. This also finds support from H.S.N.
Explanatory
Notes.
Reliance
was also sought to be placed, by Mr. Jain, on Chapter Note 9 of Chapter 40
which has been reproduced hereinabove. In our view, this Chapter Note does not
in any way assist the Respondents.
In the
above view, it will have to be held that the impugned Judgment cannot be
sustained.
Before
we part one other aspect must be mentioned. As stated above, earlier Judgments
of the Tribunal in the case of J. K. Foam Products vs. C.C.E, Kanpur, reported
in 1997 (94) ELT 497 and C.C.E, Coimbatore vs. Ajay Rubber, reported in 1998
(100) ELT 478, were cited. These Judgments are directly on the point. It has
been held that such goods are classifiable under Tariff Heading 94.01.
These
being Judgments of coordinate Benches were binding on the Tribunal. Judicial
discipline required that the Tribunal follow those Judgments. If the Tribunal
felt that those Judgments were not correct, it should have referred the case to
a larger Bench. The Judgment in the case of C.C.E., Madras vs. M. M. Rubber Co. Ltd., Madras, reported in 1984 (15) ELT 198, was
based on the then Tariff Items 16A and 34A. Those Tariff Items were completely
different. That Judgment has no relevance to the question under consideration.
In the
above view, the impugned Judgment is set aside. It is held that the goods of
the Respondents would fall under Tariff Heading 94.01.
The
Appeals are accordingly allowed. There will, however, be no order as to costs.
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