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Collector Of Central Excise, … vs M/S Matador Foam & Ors on 5 January, 2005

Supreme Court of India
Collector Of Central Excise, … vs M/S Matador Foam & Ors on 5 January, 2005
Author: S N Variava
Bench: S.N.Variava, Dr.Ar.Lakshmanan, S.H.Kapadia
           CASE NO.:
Appeal (civil)  3832-3837 of 1999

PETITIONER:
Collector of Central Excise, Kanpur

RESPONDENT:
M/s Matador Foam & Ors.

DATE OF JUDGMENT: 05/01/2005

BENCH:
S. N. Variava, Dr. AR. Lakshmanan & S. H. Kapadia

JUDGMENT:

J U D G M E N T

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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