TMI Blog2020 (5) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... clude them in sub-heading 5703. We do not find so from these decisions of the Tribunal. There are authorities in which it has been held that the popular meaning among consumers would be a major factor for interpretation of dispute relating to classification - This principle has been laid down in the cases of PLASMAC MACHINE MFG. CO. PVT. LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1990 (11) TMI 142 - SUPREME COURT] and DABUR (INDIA) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAMSHEDPUR [ 2005 (4) TMI 57 - SUPREME COURT] - In the case of Dabur India Ltd, it was held that In classifying a product the scientific and technical meaning is not to be resorted to. The product must be classifiable according to the popular meaning attached to it by those using the product. Emphasis on technical meaning has been highlighted in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S WOCKHARDT LIFE SCIENCES LTD [ 2012 (3) TMI 40 - SUPREME COURT] for resolving classification related disputes of goods. In this case, it has been held that a commodity cannot be classified in a residuary entry if there is a specific entry, even if the specific entry requires the product to be understood in a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second order of the Commissioner, there is no necessity to import the common parlance test or any other similar device of construction for identifying the position of these goods against the relevant tariff entries. Appeal dismissed. - CIVIL APPEAL NOS. 302-303 OF 2009 - - - Dated:- 1-5-2020 - Deepak Gupta And Aniruddha Bose , JJ. For the Petitioner : B. Krishna Prasad For the Respondent : Charanya Lakshmikumaran JUDGMENT ANIRUDDHA BOSE, J. These two appeals against the decision of the Customs Excise Service Tax Appellate Tribunal (CESTAT) rendered on 16th July, 2008 require adjudication on the question as to whether car matting would come within Chapter 57 of the First Schedule to the Central Excise Tariff Act, 1985 under the heading Carpets and Other Textile Floor Coverings or they would be classified under Chapter 87 thereof, which relates to Vehicles other than Railway or Tramway Rolling-Stock and Parts and Accessories Thereof . The appeals are against a common decision and we shall also deal with both these appeals together in this judgment. The respondent-assessee want their goods to be placed under Chapter heading 5703.90. We shall refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anuary, 2007. For the period involved in the third show-cause notice, clearance was made by the respondent under Chapter sub-heading no.570500.19, which carried effective rate of duty @8%. 2. By the time the third show-cause notice was issued, the adjudicating authority of first instance (Commissioner Central Excise, Delhi III) had passed the order against the respondent on 29th September, 2006, upon considering their responses to the said two show-cause notices. In this judgment, we shall mainly refer to this order, while examining the decision of the Tribunal. The authorities stand has been that the subject-items ought to be classified under sub-heading 8708.99.00. Against chapter heading 8708, the goods described are parts and accessories of motor vehicles of headings 8701 to 8705 . The sub-headings against tariff item nos.8701 to 8705 refer to five categories of vehicles. These are (i) tractors (except those falling under 8709), (ii) motor vehicles for the transport of ten or more persons, including the driver, (iii) motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702) including station wagons and racing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8708 91 00 - Radiators Kg 16% 8708 92 00 - Silencers and exhaust pipes Kg 16% 8708 93 00 - Clutches and parts thereof Kg 16% 8708 94 00 - Steering wheels, steering columns and steering boxes Kg 16% 8708 99 00 - Other Kg 16% 3. As would be evident from the above-referred table, there are total seventeen items under the said sub-heading of tariff-item specified as parts and accessories (including those referred to as other ) and the item against which the excise authorities want the car mattings to be treated is in the nature of a residuary item, referred to in that table as other . On the other hand, the relevant parts of Chapter 57 of Central Excise Tariff of India, 2004-2005 stipulates:- Notes: 1. For the purposes of this Chapter, the term carpets and other textile floor cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the moulded car carpets which was classified under sub-heading 5703.90. (quoted from the order of the Commissioner) 5. The respondent s argument that the Chapter heading 5703.90 covered carpets and other textile floor coverings and they were manufacturing those items only was rejected by the Commissioner. This plea, however, was subsequently accepted by the Tribunal. 6. Reference has been made before us to Harmonized Commodity Description and Coding System , Explanatory Notes issued by the World Customs Organisation (2002). These Notes, termed HSN Explanatory Notes have been referred to by the learned Counsel for both the parties. Strong persuasive value of these Explanatory Notes has been recognised by this Court in the cases of CCE vs. Wood Craft Products Ltd. [(1995) 3 SCC 454], Collector of Central Excise vs. Bakelite Hylam [1997 (91) E.L.T. 13 (S.C.)], Collector of Customs vs. Business Forms Ltd. [(2005) 7 SCC 143] and Holostick India Ltd. vs. Commissioner of Central Excise [(2015) 7 SCC 401]. General Rules for the Interpretation of the Harmonized System lay down the Principles of Interpretation for classification of Goods in the Nomenclature. Rule 3(a) there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions a particular item would come under that chapter head. The sub-head III reads:- (III) PARTS AND ACCESSORIES It should be noted that Chapter 89 makes no provision for parts (other than hulls) or accessories of ships, boats or floating structures. Such parts and accessories, even if identifiable as being for ships, etc., are therefore classified in other Chapters in their respective headings. The other Chapters of this Section each provide for the classification of parts and accessories of the vehicles, aircraft or equipment concerned. It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions: (a) They must not be excluded by the terms of Note 2 to this Section (see paragraph (A) below). and (b) They must be suitable for use solely or principally with the articles of Chapters 86 to 88 (see paragraph (B) below). and (c) They must not be more specifically included elsewhere in the Nomenclature (see paragraph (C) below). 9. Paragraph (B) and relevant extract from Paragraph (C) to the same document stipulates: - (B) Criterion of sole or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner found that what was excluded was textile carpets of Chapter 57 and not car mattings. 12. The Commissioner, thus, did not accept the assessee s stand and observed:- (A) what is excluded are the Textile carpets of Chapter 57 and not car mattings. One can only safely infer of exclusion of car matting in the list, provided, if it is established that car mattings are nothing but ordinary textile carpets of Chapter 57. But as has been already discussed supra car mattings are commercially known differently in the market than ordinary textile carpets of Chapter 57. From the point of view of its manufacturing process these are entirely different from ordinary carpets. My discussion and logic given in para 18.7.1 clearly indicates that, the car mattings are different products. Board s Circular No.117/28/05-CX dt. 17.4.95 clearly states car mattings different product all together. The observations advanced in the judgments of Hon ble Tribunal in the cases of Sterling India (2000(115) ELT-807-Trib., Jyoti Carpet Industries (2001 (132) ELT-458-Trib-Delhi), Swaraj Majda (1993 (68 ELT 258 Trib) clearly indicates that car mattings are entirely different than ordinary textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter 87.08 of motor vehicles of Chapter 87.05- 87.07. 13. The other order of Commissioner in connection with the third show-cause notice was passed on 5th January, 2007. The reasoning and conclusion of this order was in the same line with the order passed on 29th September, 2006. Thus, in both the orders the Commissioner sustained the directions for payment rejecting the reply of the assessee and the orders charged on the respondent duty differential and interest and also imposed penalty. 14. The two appeals of the respondent before the Tribunal were decided in their favour by a composite decision. This decision is assailed before us by the revenue authorities in these two appeals. The Tribunal observed and held:- 5.3 We find that chapter 57 covers not only carpets but also other floor coverings. What has to be considered is that between the terms carpets and other floor coverings the terms parts and accessories which can be considered more specific. Even if the claim of the Department that at no stage the carpets come into existence is accepted, it cannot be denied that the article can be considered as other floor coverings meant for other application. We also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COVERINGS, TUFTED, WHETHER OR NOT MADE UP. 5703.10- Of wool or fine animal hair 5703.20- Of nylon or other polyamides 5703.30- Of other man-made textile materials 5703.90- Of other textile materials This heading covers tufted carpets and other tufted textile floor coverings produced on tufting machines which, by means of a system of needles and hooks, insert textile yarn into a pre-existing backing (usually a woven fabric or a nonwoven) thus producing loops, or, if the needles and hooks are combined with a cutting device, tufts. The yarns forming the pile are then normally fixed by a coating of rubber or plastics. Usually before the coating is allowed to dry it is either covered by a secondary backing of loosely woven textile material, e.g., jute, or by foamed rubber. Products of this heading are distinguished from the tufted textile fabrics of heading 58.02 by, for example, their stiffness, thickness and strength, which render them suitable for use as floor coverings. 17. Learned counsel for the revenue has argued, referring to three earlier orders of the Customs Excise and Gold (Control) Appellate Tribunal (CEGAT-the predecessor of CESTAT) and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o excise duty or not. The question here is under which tariff-head the duty should be paid. The aforesaid circular does not assist the revenue in the subject appeals. 18. In the three Tribunal decisions cited on behalf of revenue authorities, such car mattings were treated as parts and accessories of motor cars. The first case cited is that of Collector of Central Excise, Bombay-II vs. Sterling India [(2000) 115 ELT 807]. This was a decision of CEGAT, New Delhi. Before the Tribunal in this case, the assessee went unrepresented. The goods involved were canvas canopy, floor mattings and seat covers. The Tribunal upheld the Collector s order that the said articles were not classifiable as floor coverings under sub-heading No.5702.90 of the Tariff and those were to be classified under Heading No. 8708.00. The order of the Tribunal does not contain any analysis or reasoning and reads: - 3. We have gone through the facts on record. We find that both the Asstt. Collector of Central Excise, Bombay, who had adjudicated the matter and the Collector of Central Excise (Appeals), Bombay, had held that the goods in dispute were not the carpets and floor mattings but were accessories of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning as to whether the revenue authorities had been treating car mats as a subject head under sub-heading 8708, on proper analysis of competing claim of the assessees to include them in sub-heading 5703. We do not find so from these decisions of the Tribunal. 20. There are authorities in which it has been held that the popular meaning among consumers would be a major factor for interpretation of dispute relating to classification. This principle has been laid down in the cases of Plasmac Machine Manufacturing Co. Pvt. Ltd. vs. Collector of Central Excise, Bombay [1991 Supp.(1) SCC 57] and Dabur India Ltd. vs. Commissioner of Central Excise, Jamshedpur [(2005) 4 SCC 9]. In the case of Dabur India Ltd (supra), it has been held: - 9. From the abovementioned authorities, it is clear that in classifying a product the scientific and technical meaning is not to be resorted to. The product must be classifiable according to the popular meaning attached to it by those using the product. As stated above, in this case the appellants have shown that all the ingredients in the product are those which are mentioned in Ayurvedic textbooks. This by itself may not be sufficient but the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adequate to demolish the case of the appellant. In our opinion, therefore, the conclusion arrived at by the Tribunal is unobjectionable. 22. Emphasis on technical meaning has been highlighted in the case of Commissioner of Central Excise vs. Wockhardt Life Sciences Limited [(2012) 5 SCC 585] for resolving classification related disputes of goods. In this case, it has been held that a commodity cannot be classified in a residuary entry if there is a specific entry, even if the specific entry requires the product to be understood in a technical sense. 23. The common parlance test , marketability test , popular meaning test are all tools for interpretation to arrive at a decision on proper classification of a tariff entry. These tests, however, would be required to be applied if a particular tariff entry is capable of being classified in more than one heads. So far as subject-dispute is concerned, we have already referred to Chapter note 1 of Chapter 57. This note stipulates that carpets and other floor coverings would mean floor coverings in which textile materials serve as the exposed surface of the Article when in use. This feature of the car mats has not really bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... car mats are made specifically for cars and are used also in cars, they should be identified as parts and accessories. But if we go by that logic, textile carpets could not have been excluded from Parts and Accessories. We have referred to such exclusion in the preceding paragraph. It has also been urged on behalf of the revenue that these items are not commonly identified as carpets but are different products. The Tribunal on detailed analysis on various entries, Rules and Notes have found they fit the description of goods under chapter heading 570390.90. We accept this finding of the Tribunal. Once the subject goods are found to come within the ambit of that sub-heading, for the sole reason that they are exclusively made for cars and not for home use (in broad terms), those goods cannot be transplanted to the residual entry against the heading 8708. As we find the subject-goods come under the chapter-heading 570390.90, and the other entry under the same Chapter forming the subject of dispute in the second order of the Commissioner, in our opinion, there is no necessity to import the common parlance test or any other similar device of construction for identifying the position ..... X X X X Extracts X X X X X X X X Extracts X X X X
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