1995 (4) TMI 135 - AT - Central Excise

Issues Involved:
1. Classification of "Tensile Steel Strappings"
2. Excisability of the product
3. Application of interpretative rules
4. Examination of manufacturing processes and their impact on product characteristics
5. Reliance on ISI specifications and HSN notes
6. Trade parlance and commercial understanding
7. Validity of the Collector's order

Detailed Analysis:

1. Classification of "Tensile Steel Strappings":
The primary issue revolves around whether "Tensile Steel Strappings" should be classified under Chapter sub-heading 7308.90 of the Central Excise Tariff Act, 1985, as articles of iron and steel or remain classified under sub-heading 7211.31 as cold-rolled steel strips. The assessee argued that the processes applied to the steel strips did not alter their essential characteristics and thus should remain classified as cold-rolled steel strips. However, the Revenue contended that the processes imparted new characteristics, making them articles of iron and steel under sub-heading 7308.90.

2. Excisability of the Product:
The assessee maintained that the processes carried out on the cold-rolled steel strips did not constitute manufacturing as per Section 2(f) of the Central Excise Act, 1944, and thus the final product should not attract additional excise duty. The Revenue argued that the processes like heating, deburring, painting, and waxing transformed the steel strips into a new product with distinct characteristics, making them excisable.

3. Application of Interpretative Rules:
The Collector initially applied Interpretative Rule 3(a) to decide the classification issue before addressing excisability. The Revenue criticized this approach, arguing that the question of excisability should precede classification. The Tribunal noted that the Collector's reliance on interpretative rules without first exhausting Section and Chapter notes was improper.

4. Examination of Manufacturing Processes and Their Impact on Product Characteristics:
The detailed manufacturing process involved decoiling, pinhole detecting, shearing, TIG welding, slitting, deburring, heat treatment, painting, waxing, and packing. The assessee argued that these processes did not alter the basic characteristics of the cold-rolled steel strips. The Revenue, however, highlighted that these processes imparted tensile strength and durability, transforming the product into "Tensile Steel Strappings" with different characteristics and uses.

5. Reliance on ISI Specifications and HSN Notes:
The assessee relied on ISI specifications to argue that the final product complied with the standards for cold-rolled steel strips. The Revenue countered that ISI specifications were not aligned with the Central Excise Tariff, which is based on HSN. The Tribunal noted that while ISI specifications and HSN notes can guide classification, they cannot be the sole determinants.

6. Trade Parlance and Commercial Understanding:
The Revenue emphasized the importance of trade parlance and commercial understanding in determining classification. The Tribunal agreed that the product's market understanding and usage should guide its classification. The assessee admitted that "Tensile Steel Strappings" were used in various industries and had different commercial identities, supporting the Revenue's argument for classification under 7308.90.

7. Validity of the Collector's Order:
The Tribunal found that the Collector's order lacked detailed examination of the literature, allegations, and submissions. The Tribunal noted that the Collector had not adequately addressed the trade and commercial understanding of the product. Consequently, the Tribunal set aside the Collector's order and remanded the case for de novo consideration, allowing both sides to present technical and market evidence.

Separate Judgments:
- Majority Opinion: The majority of the Tribunal (Vice President and Member (T)) held that the goods were excisable and classifiable under Heading 7308.90, setting aside the Collector's order and accepting the Revenue's appeal.
- Dissenting Opinion: Member (J) argued for remanding the case for further examination, emphasizing the need for detailed analysis with expert assistance.

Final Order:
In view of the majority opinion, the goods are excisable and classifiable under Heading 7308.90. The impugned order is set aside, and the department's appeal is accepted.

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