2006 (4) TMI 66 - AT - Central Excise

Tribunal decision: Beads not dutiable, RTCWS under Heading 59.06. Appeals pending for Supreme Court resolution.

The Tribunal upheld the non-dutiability of Beads and Dip Solution due to lack of marketability. It maintained the classification of RTCWS under Heading ... Manufacture of tyres, tubes and flaps - Dipped/Rubberized tyre cord fabrics classifiable u/h 59.02 not u/h 59.06- Dip solution was actually being transferred between different units of the assessee were not marketable and hence not excisable, set aside a demand of BED & AED - In respect of RTCWS, matter will be considered on merits after decision of the Hon’ble Supreme Court (matter pending regarding classification of impugned product) Issues Involved:1. Dutiability of intermediate products (Beads, Dip Solution, Dipped Tyre Cord Warp Sheets (DTCWS), and Rubberised Tyre Cord Warp Sheets (RTCWS)).2. Marketability and excisability of intermediate products.3. Classification of RTCWS under the Central Excise Tariff Act.4. Applicability of additional excise duty (AED) on RTCWS.5. Maintainability of Appeal No. E/1395/98.6. Finality of the Tribunal's orders and the impact of pending appeals before the Supreme Court.Issue-wise Detailed Analysis:1. Dutiability of Intermediate Products:The Revenue appealed against the orders vacating demands of duty on intermediate products (Beads, Dip Solution, DTCWS) used in the manufacture of ADV tyres, which were exempt from duty. The lower appellate authority had set aside the demands, ruling that these items were not marketable and hence not excisable. The adjudicating authority had also set aside a demand of AED on RTCWS, classifying it under Heading 59.06, which was not subject to AED.2. Marketability and Excisability of Intermediate Products:The Revenue argued that Beads, Dip Solution, and DTCWS were marketable. It was pointed out that Dip Solution was transferred between different units of the assessee, and DTCWS was purchased from another party, indicating marketability. However, the Tribunal relied on previous judgments, including the Bombay High Court's decision in CEAT Tyres of India Ltd., which held that Dip Solution was not marketable due to lack of shelf-life. Similarly, Beads were held to be non-marketable due to their short shelf-life in MRF's own case.3. Classification of RTCWS:The Revenue challenged the classification of RTCWS under Heading 59.06, arguing that the Commissioner had traversed beyond the scope of the show-cause notices by changing the classification. The Tribunal had previously classified Dipped/Rubberised Tyre Cord Fabrics under Heading 59.06. However, the Delhi Bench in the case of Good Year (India) Ltd. held that RTCWS was classifiable under Heading 59.02, not 59.06. This created a conflict in classification decisions.4. Applicability of AED on RTCWS:The Commissioner had dropped the demand for AED on RTCWS, classifying it under Heading 59.06, which was not subject to AED. The Revenue argued that the classification should not have been changed retrospectively and that RTCWS should be classified under Heading 59.02, making it liable for AED. The Tribunal noted the conflicting decisions and the pending appeal before the Supreme Court on this issue.5. Maintainability of Appeal No. E/1395/98:The Tribunal dismissed Appeal No. E/1395/98 as not maintainable, noting that the Supreme Court had dismissed the assessee's appeals against the same order of the Commissioner. The Tribunal's order had merged with the Supreme Court's order, making the appeal non-maintainable.6. Finality of Tribunal's Orders and Impact of Pending Appeals:The Tribunal noted that the operation of its previous order was not stayed by the Supreme Court, allowing it to follow the ratio of its decision. However, given the conflicting decisions and the pending appeal before the Supreme Court, the Tribunal decided to keep the appeals pending until the Supreme Court's decision was known.Conclusion:The Tribunal upheld the non-dutiability of Beads and Dip Solution due to lack of marketability. It also maintained the classification of RTCWS under Heading 59.06, exempting it from AED, but acknowledged the conflicting decisions and the pending appeal before the Supreme Court. Consequently, the appeals were kept pending for a final decision based on the Supreme Court's judgment. Appeal No. E/1395/98 was dismissed as not maintainable due to the Supreme Court's dismissal of the related appeals.