Circular No. 561/57/2000-CX., dated 7-12-2000

F. No. 99/3/98-CX.3

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject :- Classification of Rubber Cement or Black Vulcanizing Cement rubber solution etc. whether under 35.06 or 40.05 of the Schedule to CET.

1. I am directed to invite your attention to Board’s Circular No. 30/88-CX. 3, dated 7-12-1988 and 32/90-CX. 3, dated 28th June, 1990, wherein it was clarified that vulcanization solution or rubber solution was classifiable under Heading No. 40.05 of the Central Excise Tariff.

2. The review of the above mentioned circulars has been necessitated in view of the number of CEGAT and Court judgments classifying the goods in question under Heading No. 35.06 of the Central Excise Tariff, as well as the decision taken in the tariff-cum-general conference of the Chief Commissioners held at Mumbai on 29-8-2000.

3. The Tribunal has held that rubber cement or black vulcanizing cement used as adhesive in retreading of tyres was classifiable under heading No. 35.06 of the CET in the case of Elgi Polytex Ltd., Coimbatore v. CCE, Coimbatore [1988 (34) ELT 404 (Tribunal)]. The appeal filed by the department against this judgment in Supreme Court was dismissed by the Apex Court on 6-4-1998. In this judgment the CEGAT had held that as the subject product contains, apart from rubber compound and solvent, sulphur, carbon black, stearic acid, zinc oxide, fillers and accessories, the product answers to the description of rubber based adhesives. The correct classification of the product, therefore, would be as a prepared adhesive in Chapter 35 of the Central Excise Tariff Schedule.”

4. On a similar issue of classification of universal spray compound, relying on its earlier decision in the case of Elgi Polytex Ltd., CEGAT had held it to be classifiable under Chapter Heading 35.06 in the case of M/s. Indag Rubber Ltd. v. CCE, Jaipur - 1997 (96) ELT 559. The Supreme Court upheld this judgment and dismissed Department’s appeal in April, 1998.

5. In fact in a reasoned order, Hon’ble Apex Court in the case of CCE, Madras v. MRF Ltd. upheld the CEGAT order that rubber cement or black vulcanizing cement manufactured from vulcanized rubber was classifiable under Heading 35.06 after 10-2-1987 and not under 40.05 as claimed by Revenue [1998 (97) ELT 23 (S.C.)].

6. The matter was also discussed in the tariff-cum-general conference of the Chief Commissioners held at Mumbai on 29-8-2000, where it was decided that taking into account various CEGAT judgments, which were appealed against but were all dismissed by the Supreme Court, it would be appropriate to revise the classification of the goods in question from Chapter Heading 40.05 to 35.06.

7. The Board is in agreement with the above reasoning. Accordingly, it is ordered that the Board’s earlier Circular Nos. 30/88-CX-3, dated 7-12-1988 and 32/90-CX-3, dated 28th June, 1990, are modified to the extent that products marketed under separate nomenclatures like vulcanizing solution/rubber solution/universal spray cement/rubber cement/black vulcanizing cement essentially comprising rubber compound, certain vulcanizing agents and certain other adhesives and solvents, which are used for these adhesive properties in retreading of tyres etc. are classifiable under Heading 35.06 of the Central Excise Tariff, instead of Heading 40.05.

8. The above clarification may be brought to the notice of the lower field formations and the Trade interests may also be suitably advised.

9. All pending assessment/disputes may be finalised accordingly.

10. Hindi Version will follow.

11. Receipt of the letter may please be acknowledged.