2002 (5) TMI 51 - SC - Central Excise

Dyed and hydraulic-pressed rubber sheets and strips: whether 'further worked' or mere surface working for tariff classification

The dominant issue was whether the manufactured rubber plates/sheets/strips, after being dyed and pressed in a hydraulic press, were 'further worked' so ... Classification of the goods - duty demand - determination of the rate of duty payable on the goods manufactured - Whether the appellant manufacturer's process of placing the plates, sheets and strips in the dye and subjecting the same to pressing in the hydraulic press is in the nature of 'further working'? - Held that:- The majority view of the Tribunal held that the basic character of the goods changed when they were subjected to the process of dye and grooving by hydraulic press. In their opinion, 'even after the emergence of plates, sheets or strips after extrusion, the material had to undergo the hydraulic press stage to become the plates, sheets and strips meant for resoling, repairing or retreading under the sub-heading No. 4008.21.' This process fell within the meaning of 'further worked' and, therefore, the impugned products could not be classified under sub-heading No. 4008.21 as held by the Collector. The minority opinion held that the types of processes or activities, which lead to 'surface working' were illustrated and indicated in the bracket after the words 'surface worked'. This meant that further working would constitute some process or activity, which is to be undertaken after surface working. As the manufacturing process claimed by the appellants had neither been contradicted nor shown to be wrong, it was held that the impugned goods were only 'surface worked' and 'further worked' and could, therefore, be classified under sub-heading No. 4008.21. The Heading No. 40.08 provides more specific description to the impugned goods than Heading No. 40.16 and hence, the specific entry should overrule the general entry. Moreover, the manufacturing process involved 'surface working' of the types described above and does not include 'further working'. This is evident from the interpretation of Note 9 of Chapter 40, that further working would envisage an activity other than those mentioned therein. Hence, on the basis of the aforesaid discussion, the impugned goods would be classified under sub-heading 4008.21 and not under sub-heading 4016.99 as claimed by the Department. Appeal allowed. Issues:Classification of goods under Central Excise Tariff Act, 1985 and determination of duty payable.Analysis:The dispute in this case revolves around the classification of goods under the Central Excise Tariff Act, 1985 and the duty payable on goods manufactured by the appellants. The Department claimed that the goods were classifiable under sub-heading 4016.99 before the 1990 budget, while the appellants argued that they were classifiable under sub-heading 4008.21 both before and after the 1990 budget.The impugned goods were initially cleared under sub-heading 4008.21 as per the approved classification under Rule 173B of the Central Excise Rules, 1944. However, subsequent show cause notices were issued demanding duty under a different classification, leading to a series of objections and appeals.The key issue in determining the classification of the goods lies in the nature of the manufacturing process undertaken by the appellants. The process involves various stages, including mixing rubber, extrusion, cooling, and pressing in a hydraulic press to produce vulcanized grooved material. The relevant sub-headings under consideration are 4008.21 and 4016.99.The Tribunal, by majority opinion, classified the goods under sub-heading 4016.99, considering the process of pressing in the hydraulic press as 'further working'. However, the minority opinion disagreed, stating that the process undertaken by the appellants constituted 'surface working' and 'further working', making the classification under sub-heading 4008.21 appropriate.The interpretation of Note 9 of Chapter 40 before and after its amendment in 1990 played a crucial role in determining the classification. The amendment clarified the scope of 'plates, sheets, and strips', emphasizing the distinction between 'surface worked' and 'further worked'.In light of the specific description provided by Heading No. 40.08 and the absence of 'further working' in the manufacturing process, the impugned goods were correctly classified under sub-heading 4008.21. Thus, the appeals were allowed, setting aside the Tribunal's order and reinstating the Collector's classification decision.