TaxTMI 
TaxTMI 
2006 (4) TMI 66
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....uty on an intermediate product of the assessee's factory at Arakkonam for the period 5/1996 to 4/1997. While the lower appellate authority set aside demands of duty on Beads, Dip solution and Dipped Tyre Cord Warp Sheets (all intermediates emerging in the process of manufacture of "ADV tyre" i.e. tyres meant for animal-drawn vehicles) after holding that these items were not marketable and hence not excisable, the adjudicating authority below set aside a demand of additional excise duty (AED) on Rubberised Tyre Cord Warp Sheets (another intermediate as above) after holding that this item was classifiable under Heading 59.06 in the Schedule to the Central Excise Tariff Act. AED was not leviable on goods falling under this Heading. 2. The respondents are engaged in the manufacture of tyres, tubes and flaps. ADV tyres were exempt from payment of duty during the period of dispute (March, 1994 to February, 1998). Notifications 217/86-C.E. and 67/95-C.E. exempted captively consumed intermediate products from payment of duty where the final product was dutiable. In terms of these Notifications, intermediate products captively ....
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....sp; The department had issued two other show-cause notices to the respondents demanding BED and AED on Beads, Dip solution and RTCWS for the period May, 1997 to February, 1998. These notices were adjudicated upon by the original authority which passed order No. 12/98 confirming the demand of duty following its own earlier order No. 65/97 ibid. An appeal preferred by the assessee against this order No. 12/98 was disposed of by the Commissioner (Appeals) as per Order-in-Appeal No. 153/98, wherein the above demand and duty was vacated by the appellate authority following its earlier Order-in-Appeal Nos. 49-51/98. [Again the dutiability of RTCWS did not arise for consideration by the appellate authority.] The present appeal No. E/3577/98 filed by the Revenue is against this Order-in-Appeal No. 153/98. This appeal is on the same grounds as those raised in Appeal Nos. E/3170-3177/98 as regards Beads and Dip solution. In the grounds of this appeal, there is no reference to RTCWS. 4. Two other show-cause notices had also been issued by the department demanding AED from the assessee on RTCWS captively consumed in the manufacture of ADV tyres during the period....
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....d to the decision of this Bench in Madura Coats Ltd. v. CCE, Madurai [2000 (125) E.L.T. 726 (T)] wherein it was found that the department had accepted the assessee's classification of DTCWS under heading 59.02 for a certain period. On the other hand, Shri Ignatius. Counsel for the respondents, relied on the Bombay High Court's decision in the case of CEAT Tyres of India Ltd. v. UOI & Others [ 1987(30) E.L.T. 857 (Bom.)] holding that Dip solution, not being stable and marketable, was not liable to levy of duty of excise. Counsel pointed out that this decision of a learned Single Judge of the High Court was affirmed by a Division Bench of the Court in UOI v. CEAT Tyre of India Ltd. [1989 (42) E.L.T. 565 (Bom.) = 1989 (43) E.L.T. 267 (Bom.)]. Ld. Counsel also relied on Order-in-Original No. 5/97, dated 5-8-97 of the Commissioner of Central Excise, Goa, wherein it had been found that Dip solution was not marketable for want of shelf-life. As regards Beads, Id. Counsel submitted that, in MRF's own case, this Tribunal had held that the item having very short shell life and being incapable of being retained as a commodity, was not marketable and hence not liable to duty vide CCE, Panaji (....
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....s in consonance with three decisions of the tribunal as well as our own decisions contained above, there fore the prayer of the learned Senior Advocate for appellants merits consideration and the appeals are dismissed as not pressed. However, learned Sr. Advocate submitted that the said prayer is with liberty to file cross- objections in case at future date, the Revenue agitates this issue in any manner. He consider this prayer to be fair and accede to it." It appears from the records and submissions that, against the above dismissal of the assessee's appeals E/62 & 63/98. M/s. MRF Ltd. filed Civil Appeal Nos. 1494 and 1495/99 [2005 (180) E.L.T. 310 (S.C.)] before the Supreme Court and that these Civil appeals were dismissed by the Apex Court as per Order dated 27-9- 01, which reads as under: - "Pursuant to the show cause notice which was issued the Commissioner by order No. 5 of 1997 dated 25th September, 1997 dropped the proceedings against the respondent and held that the item in question was classifiable under Heading 59.06. The appeal filed against the same by the respondent was withdrawn by it. This being so,....
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....ration of our Final Order was not stayed. In the circumstances, we think we can follow the ratio of the decision contained in our Final Order dated 20-7-98. As regards classification and dutiability of Dipped Tyre Cord Warp Sheets (DTCWS). this item has been held to be classifiable under Heading 59.06 and no BED/AED is leviable on it vide Final Order dated 20-7-98 ibid. However, as regards Rubberised Tyre Cord Warp Sheets, even Final Order dated 20-7-98 cannot help the assessee inasmuch as the demand of duty on Rubberised Tyre Cord Warp Sheets confirmed in Order-in- Original No. 65/97 of the Assistant Commissioner was not challenged by the assessee. As regards this item, Order-in-Original No. 65/97 of the original authority has become final and binding and consequently, the assessee is liable to pay BED/AED on Rubberised Tyre Cord Warp Sheets cleared for captive consumption during the period November, 1996 to April, 1997. As regards Beads, the question whether this intermediate product of the respondents is excisable is no longer res Integra inasmuch as this Tribunal has held, in their own case, that this item is not marketable and hence not liable to duty of excise on account of i....
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....ection with the demand of duty on Rubberised Tyre Cord Warp Sheets. The original authority shall re-quantify the demand of BED on RTCWS after allowing to the assessee the benefit of Modvat credit of appropriate duty paid on eligible inputs used in the said intermediate product for the relevant period. (Order pronounced in open Court………………)  ....
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....nbsp; Dated 28-10-2004 10. [Per : Jeet Ram Kait, Member (T) (agreeing with Member (J)]. - While agreeing with the view taken by my learned brother Shri P.C. Chacko, Member U) that Appeal Nos. E/3170 to 3177/98 filed by the Revenue should be rejected, I would like to add that so far as the item Dip Solution is concerned, the plea of the learned Sr. Counsel for the Revenue, as recorded on page 9 of the order, is that as Dip solution used to be transferred between different units of the assessee located in different parts of the country, there could be no gainsaying that the item had no shelf-life or that it was not marketable. The plea taken by the Revenue is not supported by any material whatsoever that this product has shelf- life and if so for what period and the time taken by the assessee in transferring the product from one place to another. On t....
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....ve use as per Notification No. 67/95-CE, dated 16-3-95, but there is no specific exemption from AED. The show cause notice culminated in the order of adjudication passed by the Commissioner against which is the present appeal. By the impugned order, the Commissioner classified the product under heading 59.06, and held that no AED is leviable under 59.06 and dropped the proceedings initiated under the two show cause notices ibid. It is against this order of the Commissioner that the Revenue has filed the appeal on direction from the Board, on the following grounds (a) Initially M/s. MRF had filed classification declaration classifying coated Rubberised Tyre Cord Warp Sheet under heading 59.02 and the said classification list was approved. They had cleared the RTCWS to their sister units on payment of duty by adopting the said classification. (b) The classification of the product was not sought to be revised in the show cause notice. Further, MRF in their reply to the show cause notice dated 3-12-1996 and 23-6-97 had not disputed the classificati....
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....eets in the calendering machine with two or more rollers operated at selected surface speeds and controlled temperature for coating rubber on both sides of the dipped tyre cord warp sheets to a controlled thickness and the resultant product is called as coated or RTCWS and are used in the manufacture of tyres. (f) As per page No. 815 of the HSN Explanatory notes, the heading 59.02 covers, tyre cord fabric whether or not dipped or impregnated with rubber or plastics. (g) It is well-settled that any change in classification can only take prospective effect. 13. Smt. Bhagyadevi learned SDR appearing on behalf of the Revenue reiterated the grounds taken by the Revenue. She has also referred to the decision of the Tribunal in the case of Good Year (India) Ltd. v. CCE, New Delhi reported in 2003 (157) E.L.T. 560, wherein it was held that tyre cord fabric obtained by dipping grey tyre cord fabric in Resorcinol solution, applying rubber compound thereafter and finally calendering the fabric, was held to be specifically covered under heading No. 59.02 and not un....
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....aragraphs. 17. The classification of the product was not sought to be revised in the show cause notice. Nevertheless, the Commissioner proceeded to change the classification on his own. Further, MRF in their reply to the show cause notice dated 3-12-96 and 23-6-97 had not disputed the classification of the product RTCWS under heading 59.02. It was only in their written submission dated 22-8- 97 that they contended that the classification of RTCWS under heading 59.02 is not correct and requested for classification under heading 40.05, therefore, when the classification of RTFWS was not the subject matter of the show cause notice, the Commissioner by changing the classification has traversed beyond the scope of the show cause notice. Further as per Rule 173B, the proper officer to decide the classification was the Assistant Commissioner and for the purpose of reclassification or making any amendment to the already approved classification, the procedure for revising the classification, as per Rule 173B, have to be followed. 18. The Revenue in their present appeal viz. Appeal No. E/1395/98 has challenged the impugned order of....
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....rics would be classifiable Under heading 59.05 (now 59.06) and was not liable to AED, and the Revenue's appeal has been admitted and is pending before the Apex Court. It was for this reason, that the learned Sr. Counsel for the Revenue suggested that the present appeals be kept pending. This position is discussed by my learned brother on pages duct 11 & 12 of his order. further, I also note that as recorded by learned Member (J) on page 16 of the order, the appeal filed by the Revenue against the Tribunal order dated 20-7-98 has been admitted by the Hon'ble Apex Court, though no stay has been granted. I note that the Hon'ble Supreme Court in the case of UOI v. West Coast Paper Mills Ltd. reported in 2004 (164) E.L.T. 375 (S.C.) has held in paras 14 & 15 thereof as under: "14 Once a Special Leave is granted and the appeal is admitted the correctness or otherwise of the judgment of the Tribunal becomes wide open. In such an appeal, the Court is entitled to go into both the questions of fact as well as law. In such an event, the correctness of the judgment is in jeopardy. 15. Even in relation to a Civil dispute,....
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..... v. CCE, New Delhi is a later decision. In that decision, the Delhi Bench has referred to the decision of the South Zonal Bench in the case of MRF Ltd. v. CCE, Chennai & Goa and has held that the product RTCWS is classifiable under heading 59.02 and not under Heading No. 59.06. For convenience of reference, I reproduce be low both the headings: "59.02 : Tyre cord fabrics of high tenacity yarn of nylon or other poliyamides, polyesters or viscose rayon 59.06: Rubberized textile fabrics other than those of heading 59.02" It is not in dispute that the grey lyre cord fabrics is dipped in a Resorcinol solution and thereafter rubber compound is applied and the fabric is calendered. The assessee thus get rubberized lyre cord fabric after the processing is undertaken by them. Heading No. 59.02 specifically cèvers tyre cord fabrics of high tenacity yarn of nylon or other polyamides polyester or viscose yarn. Further, in the write up furnished by the respondents assessee vide their letter No. E/A/G/SO/231, d....
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....Zonal Bench in their decision in the case of MRF Ltd. v. CCE, Goa & Chennai [1999 (105) E.L.T. 619 = 1999 (80) ECR 3981 has not specifically held that RTCWS would be classifiable under heading 59.06 and they have merely combined the item Dipped Tyre Cord Warp Sheet (Stage-1.of rubberisation) and Rubberised/Calendered Tyre Cord Wharp Sheet (Stage 2 of the rubberisation) to hold that RTCWS would be classifiable under heading 59.06. It is this decision which has been challenged by the Revenue before the Hon'ble Apex Court and the Hon'ble Apex Court has admitted the appeal and is pending. Delhi Bench of the Tribunal in their decision in the case of Good Year India Ltd. v. CCE, New Delhi reported in 2003 (157) E.L.T. 560 (Tri.-Del.) has held that RTCWS would be classifiable under heading 59.02 and not under heading 59.06. In the said decision, the Tribunal has referred to various decisions of the Tribunal including that of the South Zonal Bench cited supra. The Delhi Bench of the Tribunal in their decision has gone into in great detail about the Explanatory notes below heading 59.06 before coming to the conclusion that the product RTCWS would be classifiable under heading 59.02. In para....
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....not maintainable as held by learned M (J). 22. Now I proceed to take up Appeal No. E/3577/1998. This has been dealt with by learned Member (J), on pages 18 & 19 of his order. In this case, the Order-in-Original No. 12/98, dated 9-6-98 dealt with two show cause notices Nos. 184/97, dated 1-12-97 and 360/98, dated 24-3-98. Both the show cause notices proposed demand of BED and AED on the following intermediate products: (1) Beads (2) Dip Solution (3) RTCWS In the Order-in-original passed by the Assistant Commissioner, he has held that all these products are marketable and confirmed BED of Rs. 1,57,71,352/- and AED of Rs. 29,19,531/- under Section 11A of the CE Act, 1944. Against the said order the assessee filed appeal before the Commissioner (Appeals)....
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....sp; Sd/- ....
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....sp; Whether appeal Nos. E/1395/98, is liable to be dismissed as not maintainable as held by Member (Judicial). OR Whether it should be kept pending to be disposed of on the basis of final outcome of the Revenue's appeal filed in the Supreme Court against the Tribunal's Final Order Nos. 1370-88/98, dated 20-7-98 in the case of MRF, Ltd. v. CCE, Goa & Chennai vide 1995 (105) E.L.T. 619 (T), as held by Member (Technical); (2) Whether appeal No. E/3577/98 is liable to be dismissed as held by Member (Judicial) &....
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....sp; Member ( Member (I) Dated 20-12-2004 &nb....
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....sp; Sd!-  ....
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....nbsp; Sd!- Sd! (P. Karthikeyan), &nbs....