TMI Blog2004 (9) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN - Misc. Items) Total Rs. 5,01,600 He contests the demands amounting to Rs. 12,68,162 (Annexure I to SCN) and Rs. 24,38,045 (Annexure IV to SCN) totalling Rs. 37,06,207 relating to classification of transmission belts. He states that such belts are classifiable under sub-heading 3926.90 and eligible for full exemption under Notification No. 14/92 till 23/07/1996 and under Sl. No. 39.6 of Notification No. 8/96 thereafter. The impugned transmission belts are composite goods made up of nylon and leather, nylon and rubber and nylon and textiles. The adjudicating Commissioner has classified these goods under sub-headings 4201.90, 4010.00 and 5908.00 respectively applying General Interpretative Rule (GIR) 3(a). According to him these sub-headings provide most specific description of the impugned goods. He has also taken into consideration the fact that M/s. NTB International themselves had sought assessment under Chapters 40, 42 and 59 earlier. He has also relied on the statements recorded from persons associated with the production of the impugned goods in the appellants premises and chemical examination report from the Deputy Chief Chemist. 2. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site transmission belts that the appellants manufacture. Such composite transmission belts have not been specified under any particular heading of tariff, nor do the section and chapter notes provide any guidance, hence classification of the same applying GIR 1 and 2(a) is not possible. 5. GIR 2(b) deals with mixtures and combinations of substances, and goods consisting of two or more materials and substances. The effect of this rule is to extend any heading referring to a material or substance to include mixtures or combinations of that material or substance with other materials or substances. GIR 2(b) reads as follows:- Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3 According to HS Explanatory Note, As a consequence of this Rule, mixtures and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adings which respectively cover belts of plastic, rubber, leather, and textiles only. When none of the headings describe the composite belts, there is no question of determining which is the more specific heading under GIR 3(a). In fact, the 2nd Part of GIR 3(a) makes it clear that in such a case where two or more headings each refer to part only of the materials or substances contained in composite goods, these headings are to be regarded as equally specific. In such a case, one has to proceed to the next rule. 8. The learned advocate has argued very strongly that the essential characteristic of the belts is provided by nylon due to its strength and other properties and hence applying GIR 3(b), all the belts should be classified under Heading 39.26. The revenue has argued with equal force that nylon belts cannot be used for transmission purposes without being combined with either leather, rubber or textiles which provide the necessary friction to enable the belts to function. Both sides agree that without any of these materials, the nylon belt alone will not work as it would slip on the drive. Both sides also agree that nylon provides strength to the belt. We now proceed to dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (composed of one layer, or of a number of superimposed layers glued together) of plastics, covered on one or both faces with a band of chrome leather serving solely to increase the adhesion. 3921.90 2. Sheets, consisting of paper heavily impregnated with melamine resin, which fracture on folding due to their brittle nature and which have lost the essential character of paper, used in the manufacture of laminates. The decision is in respect of goods which is covered with a band of chrome leather serving solely to increase adhesion. The classification for such a product has been indicated under 3921.90 or 3926.90. The text is scanty, does not refer to the rules applied, and the use of leather seems only to increase adhesion. As such, we are unable to take any guidance from the said decision for deciding the case at hand where the leather component at times predominates in weight and quantity and provides the friction so essential to functioning of the belts. 12. As regards the Apex Court decision in the case of Fenner (supra), we find that the same relates to classification of PVC impregnated conveyor belting. Apart from the nature of goods being differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty demand confirmed by the Assistant Commissioner. We are of the view that these two appeals need to be remanded for fresh decision by the jurisdictional Commissioner in the light of our above decision on the issue of classification in Appeal Nos. E/1325-1330/2002 and concessions made by the learned advocate in regard to clubbing etc. for the earlier period. In addition, the following points urged by the appellants need to be considered at the time of fresh adjudication:- (i) No show cause notice has been issued for the impugned periods to M/s. NTB International though small-scale exemption is sought to be denied to M/s. Polybelt Technology by clubbing their clearances. (ii) Clubbing cannot be done for a subsequent period on the basis of relevant factors existing for such clubbing for an earlier period. At the time of fresh adjudication, the appellants shall be at liberty to produce all relevant documents and case laws and the department shall also be at liberty to determine whether the financial and other arrangements existing between the concerned units have undergone any change in the subsequent period. The impugned orders are set aside and both the matters ..... X X X X Extracts X X X X X X X X Extracts X X X X
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