9911796707
TMI Blog1992 (9) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... re specified under the said Item 31 and the rest of the battery parts were falling under TI 68. Prior to 1986 and as well as after 1986 in all the classification lists the appellants have been claiming exemption for the specified parts under Notification No. 5/64 for captive use in the factory of production. However, for the parts falling under TI 68, they were claiming exemption in terms of Notification No. 118/75 for captive consumption. All these parts became exempted after 1986, vide Notification No. 68/86. All these classification lists have been approved by the jurisdictional Assistant Collector of Central Excise. Among other things, the appellants are manufacturing micro-porous rubber separators from the date of inception. Earlier to 1986 these were classified under TI 68 and exemption in terms of Notification No. 118/75 was sought for captive consumption. However, when the Central Excise Tariff Act, 1985 was introduced. Chapter Heading 85.07 specifically included these separators. Therefore, after the introduction of Central Excise Tariff Act, 1985 the appellants have been claiming these M.R. Separators under Chapter sub-heading 8507.00 with exemption under Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.R. separators and the Department has been approving them under TI 68 earlier to 1986 and under Heading 8507.00 after 1986. They also specified in their reply that the Assistant Collector classified these products under Heading 8507.00 in spite of chemical examiner's opinion that it can be classified as sheet of rubber. 4. The Collector of Central Excise, Bangalore passed the Order-in-Original No. 52/91, dated 9-9-1991 confirming a portion of the demand amounting to Rs. 9,96,237 /- pertaining to the period from 1-3-1986 to 26-10-1987 under Rule 9(2) read with Section 11 A of the Central Excises and Salt Act, 1944. He also imposed a penalty of Rs. l lakh on the appellants under Rule 173Q(1) of the Central Excise Rules, 1944, According to the Collector, since Section Note 1(a) of Section XVI does not cover any unhardened vulcanised rubber articles falling under Heading 40.16 these separators are excluded from Chapter 85 and so much so Chapter sub-heading 8507, and Chapter sub-heading 4016.11 is more specific as compared to Chapter sub-heading 8707.00 and M.R. Separators are articles cut to required size of materials falling under Heading 40.08 and being cellular in character, come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(a) for classification of the item under Heading 40.16 which is not legally permissible. He submits that in terms of Note 9 to Chapter 40, plates, sheets and strips apply to plates, sheets and strips 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. There is no dispute that M.R. separators are only cut to rectangular (including square) shape when sheets are formed in the calendar machine and these cannot be considered as "otherwise cut to shape or further worked" in order to exclude them from the scope of Heading 40.08 and for slotting them into Heading 40.16 as articles of materials of Heading 40.08. Once it is accepted that the articles fall under 40.08, they are not excluded from Section XVI by Note 1(a) and, therefore, they would fall under Heading 85.07 which is specifically provided for separators. 6. Lastly he contends that the demand is barred by limitation as the extended period is not applicable inasmuch as the appellants had been filing classification lists for M.R. s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to and indeed, a duty was cast upon the Excise authorities in terms of Rule 173B to call for material and satisfy themselves after further enquiry, about the correct classification. It has been held by the Tribunal, in the case of Collector of Central Excise v. Muzzaffarnagar Steels - 1989 (44) E.L.T. 552 (Tri.) = 1989 (25) ECR 47 that "Rule 173 providing for the filing of classification list clearly shows that what is required of the Assistant Collector is the approval "after such enquiry as he deems fit." The approval of classification list is an important part of the process of assessment and, therefore, the Assistant Collector is required to be very careful and is expected to apply his mind before according approval. He is entitled to and indeed required to make such inquiries and summon such information as may be called for in order to arrive at the correct decision. In other words the act of approval was not merely a passive act of concurrence but involves an active decision making and the Assistant Collector was required to fully satisfy himself about the particulars of goods being manufactured and the process of manufacture wherever necessary and the relevant facts and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and removed. (vii) COLD WASH The above bobbins are removed and dipped in cold water and removed. (viii) CUTTING The above bobbins are fed to the cutting machine and the Rubber Separator sheet is unwound and cut according to the required size and thus collected separators are ready for drying. (ix) DRYING CHAMBER The above separators are stocked in racks and these stocks are kept in the drying zone of the chamber for about 4 hours (100 lbs /sq. m. steam is used for indirect heating of chamber) and then the racks are removed and separators are collected for further cutting and inspection. 11. Prior to the introduction of the new CETA 1985, electric batteries and parts thereof were falling under TI 31 of the erstwhile Schedule to the CETA, T.I. 31(2) covered storage batteries and TI 31(3) covered parts thereof, namely containers, covers and plates and exempted by virtue of Notification 5/64, dated 25-1-1964 if used in the factory of production in the manufacture of electric storage batteries. Parts other than the 3 above mentioned ones were classified under TI 68. Micro porous rubber separators were classified by the appellants under this heading and the classification lists ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hape, 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. 4008.12 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 retreading of rubber tyres." From this, it is clear that the product even after cutting of sheets to required size, will still remain under Heading 40.08, which covers "plates, blocks, sheets, strips, rods and profile shapes of vulcanised rubber other than hard rubber" as admittedly they are only cut to rectangular shape and are not "otherwise cut to shape or further worked" so as to go out of 40.08. The argument of the learned DR that cutting of sheets to size so as to make them ready for use would come within the meaning of the expression "otherwise cut to shape" is not well founded in view of the fact that further cutting of rectangular (including square) sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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