ORDER
P.C. Jain, Member (T)
1. The respondents herein are manufacturing inter alia back-rest, arm-rest, head-rest and seat cushions made up of polyurethane (PU) foam. In the first instance the classification of the aforesaid product had been made under Tariff Heading 94.01 which reads as follows :-
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Heading No. Sub-heading Description of Goods Rate of
No. Duty
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94.01 9401.00 Seats (other than those of 20%
Heading No. 94.02), whether or
not convertible into beds, and
parts thereof.
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Revenue however felt in view of Chapter Note 3(b) of Chapter 94 of the Central Excise Tariff that the aforesaid articles should be classified under Tariff Heading 94.04.
2.1 We may at this stage reproduce the Tariff Heading 94.04 and the said Chapter Note 3.
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Head- Sub-hea- Description of Goods Rate of
ing No. ding No. Duty
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94.04 9404.00 Mattress supports; articles of bedding and 75%
similar furnishing (for example, mattresses,
quilts, eiderdowns, cushions, pouffes and
pillows) fitted with springs or stuffed or
internally fitted with any material or of cellular
rubber or plastics, whether or not covered.
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” 3. (a) In heading Nos. 94.01 to 94.03 references to parts of goods do not include references to sheets or slabs (whether or not cut to shape but not combined with other parts) of glass (including mirrors), marble or other stone or of any other material referred to in Chapter 68 or 69.
3. (b) Goods described in heading No. 94.04, cleared separately, are not to be classified in Heading No. 94.01,94.02 or 94.03 as parts of goods.”
2.2 A show cause notice was therefore issued to the respondents herein as to why the classification under Tariff Heading 94.04 be not confirmed and further as to why a duty of Rs. 11,86,923.86 for the period 1-1-1990 to 31-7-1990 be not recovered.
3. On adjudication the Collector of Central Excise, Hyderabad dropped the show cause notice.
4. The CBEC in exercise of its powers under Section 35E of the Central Excise Act, 1944 considers the said order of the Collector as not proper and legal. CBE & C’s order raises the following points for determination by this Tribunal in the form of application now filed before us (to be treated as an appeal) :-
“3. Upon such examination, the Board is satisfied that the said order is not a legal and proper order for the following reasons :-
(a) Chapter Headings 94.01 & 94.04 reads as under :-
94.01 9401.00 Seats (other than those of heading No. 94.02),
whether or not convertible into beds, and
parts thereof ... 25%.
94.04 9404.00 Mattress supports; articles of bedding and
similar furnishing (e.g. mattresses, quilts,
elder-downs, cushions, pouffes and pillows)
fitted with springs or stuffed or internally
fitted with any material or of cellular rubber
or plastics, whether or no covered ... 75%."
Section Note 3 (b) reads as under :-
“Goods described in heading 94.04, presented separately, are no to be classified in heading No. 94.01,94.02 or 94.03 as parts of goods”
“The above would reveal that sub heading 9401.00 covers only complete seats. The parts of seats viz., back-rest, arm-rest, head-rest and seat cushions of polyurethane foam, which are manufactured as per requirements of the customer and which are presented separately in bare condition are appropriately covered under sub-heading 94.04 in view of the Section Note 3(b) supra. This allegation was brought against the assessee in the show cause notice also.
(b) Under the heading “PARTS” under chapter heading 94.01 at page 1576 of HSN, it has been given as under :-
“Separately presented cushions and mattresses, sprung, stuffed, internally fitted with any material or of cellular rubber or plastics whether or not covered are excluded (heading 94.04) even if they are clearly specialised as parts of upholstered seats (e.g., settees, couches, sofas). When these articles are combined with other parts of seats, however, they remain classified in this heading.
From the above, it would be amply clear that the separately presented articles of polyurethane foam, whether or not covered, are classified under sub-heading 9404.00. These fall under sub-heading 9401.00 only when these are combined with other parts of seats. In the instant case, since the said articles are being removed without a cover and presented separately fall under sub-heading 9404.00; chargeable to duty @ 75%.
(c) Collector should have taken all the facts mentioned above into consideration and, confirmed the demand in full and imposed penaltyr”
5. Learned SDR Shri A.K. Agarwal, reiterates the above reasons for setting aside the impugned order. He submits that it is not disputed that parts of seats namely back-rest, arm-rest, head-rest and seat cushions of PU foam are presented separately in bare condition and are therefore appropriately covered under sub-heading 94.04, in view of Chapter Note 3(b) of Chapter 74 read with Explantory notes under the heading “Parts” under Tariff Heading 94.01 at page 1576 of HSN (already abstracted above).
6. Opposing the contention learned Advocate for the respondents Shri V. Lakshmikumaran submits that the goods, in order to be classified under Tariff Heading 94.04 must be (i) mattress suport or (ii) articles of bedding 01 (iii) furnishing similar to articles of bedding. It is not disputed by the Revenue that the respondents are clearing identifiable parts of bus-seats of ISI specification 8255 of 1976. It is also referred to in the impugned order. And the purchase order etc., referred to in the impugned order testified that the products of the respondents satisfy the aforesaid specifications. He therefore submits that the products cannot be covered under any of the 3 types of articles covered by Heading 94.04 namely mattress support (2) articles of bidding (3) furnishing similar to article bedding. The mere fact that the identifiable parts are presented in bare condition does not push the goods out of the scope of Heading 94.01.
7. We have carefully considered the pleas advanced from both sides. We agree with the submissions of the learned Advocate for the respondents. Chapter Note 3(b) on which the reliance has been placed, no doubt, shows that goods cleared separately are not to be classified under Heading 94.01,94.02 or 94.03 as parts of goods but it is forgotten by Revenue that this note applies to be goods covered by the description of goods in Heading No. 94.04. This has not been proved that the products manufactured/conform to the description of the goods mentioned in 94.04. We are further impressed with the plea of the learned Advocate for the respondents that if such a wide meaning is given to Heading 94.04 to the effect that whatever P.U. foam article is presented in bare form pertaining to. a furniture, it would be covered under that Tariff Heading, then it would be rendering nugatory the Heading 94.01. Accordingly we dismiss the appeal of the revenue.
8. In view of dismissal of the appeal of the revenue, cross appeal of the respondents is not maintainable. It is also dismissed as such.