COMMISSIONER OF CENTRAL EXCISE, GOA AND CHENNAI versus M.R.F. LTD., CHENNAI

Citation: [2005] 1 S.C.R. 814 · Decided: 25-01-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Disposed off

Judgment (excerpt)

A 
""' 
COMMISSIONER OF CENTRAL EXCISE, GOA AND CHENNAI 
v. 
M.R.F. LTD., CHENNAI 
JANUARY 25, 2005 
B 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
Central Excise Act, 1944; Section 35/UCentral Excise Tariff Act, 1985; 
c 
Tariff headings 59.02 and 59.06, Chapter Note-4 to Chapter 59 and Note-4 
to Section XI of the Act: 
Classification-Dipped Tyre Cord Fabric-Levy of excise duty under 
Tariff Headings 59.02 or 59.06-Held: Neither did the Tribunal examine the 
scope of Tariff Heading 59.02 nor did the assessing/adjudicating authority 
D 
examine the matter in the light of Note-4 to Chapter 59 to ascertain rubber 
content in the product to determine the classifiability of the product-Since 
Supreme Court in a similar matter held that the product in question is 
classifiable under Tariff Heading 59.02, it is no more res-integra-Tribuna/ 
was wrong in equating the product as Rubberised Tyre Cord Fabric-The 
product is classifiable under Tariff Heading 59. 06-Matters remitted to 
E Department to determine excisability and classification of the product afresh 
in accordance with law. 
The question which arose for determination in these appeals was as 
to whether Dipped Nylon Tyre Cord Warp Sheet was a High Tenacity 
Yarn in terms of Tariff Heading 59.02 of the Excise Tariff Act. 
F 
It was contended by the Revenue that Grey Tyre Cord Fabric after 
dipping was classifiable under Tariff Heading 59.02 as Processed Tyre 
Fabric; that in terms of Tariff Heading 59.06, Rubberised Textile Fabric 
other than those falling under Tariff Heading 59.02 alone would fall under 
G 
Tariff Heading 59.05; thus, Dipped Tyre Cord Fabric would fall under 
Tariff Heading 59.02; that as per rule (I) of the Interpretation Rules 
appended to the Schedule to the Central Excise Tariff Act, classification 
of the product has to be decided according to the terms of the Heading; 
Since Heading 59.02 covered Tyre Cord Fabric of High Tenacity Yarn, 
.. 
the product was rightly classified by the Department under Tariff Heading 
H 
814 
C.C.E. v. M.R.f. LTD. 
815 
59.02; and that the Tribunal has not examined the "process of dipping" A 
and it has merely followed the previous judgments which do not have any 
application to the product in question. 
Assessee submitted that Dipped Tyre Cord Fabric was not an 
independent product in terms of manufacture and marketability; that the 
assessee did not manufacture the product; that there is no evidence of the B 
product being marketable; that the base fabric after going through the 
process of dipping loses its identity and becomes a different product 
commercially; that the product under Chapter Heading 59.02 is the basic 
product and when dipped it gets shifted from textile to rubber; that in 
the show-cause notices, there was no allegation to the effect that the C 
product was marketable; and that the product in question was classifiable 
under Chapter Heading 59.05 of Central Excise Tariff Act, 1985, as held 
by this Court in the cases of Falcon Tyres and Vikran Tyres. 
Disposing of the appeals, the Court 
HELD: 1.1. It is the rubber content of the product, which is the main 
determinative test to decide whether Dipped Tyre Cord Fabric is 
classifiable under Chapter Heading 59.02 or 59.05 (now 59.06) of the 
Excise Tariff Acts. To be categorized as Rubberised Tyre Cord Fabric, 
the product must have pre-dominance of rubber in proportion to fabric. 
D 
It is for this reason that Note-4 of Chapter 59 of the Act indicates the E 
requisite parameters. If the parameters mentioned in the Note are satisfied 
then the product in question would fall under Chapter Heading 59.06 
which uses the expression "Rubberised Textile Fabrics", failing which the 
product would fall under Chapter Heading 59.02. Since classification of 
the product was not in issue in any of the earlier judgments, the Tribunal F 
was wrong in equating Dipped Tyre Cord Fabric with Rubberised Tyre 
Cord Fabric. (822-B-C-D) 
1.2. The judgments in the cases of Falcon Tyres and Vikrant Tyres 
dealt with classification of Rubberised Tyre Cord Fabric with reference 
to Chapter Heading 40.05 vis-a-vis Chapter Heading 59.05 (now 59.06). G 
Therefore, the prior judgments have no application to the controversy in 
hand. Lastly, the Tribunal has not examined the scope of HSN Heading 
59.02. Moreover, the Adjudicating Authority has not examined the matter 
in the light of Note-4 to Chapter 59. rt has also not examined the problem 
in the context

Excerpt shown. Read the full judgment & AI analysis in Lexace.