1998(02)LCX0190

IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS

S/Shri T.P. Nambiar, Member (J) and V.K. Ashtana, Member (T)

MRF LTD.

Versus

COMMISSIONER OF CENTRAL EXCISE, CHENNAI

Stay Order Nos. 149 to 151/98, dated 19-2-1998 in E/Stay/178, 179 & 180/98 in Appeal Nos. E/241 to 243/98

Cases Quoted

MRF Ltd. — 1997(09)LCX0065 Eq 1997 (096) ELT 0723 (Commr. Appl) — Referred                                              [Para 2]

Falcon Tyres v. Collector — 1996(09)LCX0013 Eq 1996 (088) ELT 0450 (Tribunal) — Referred                               [Para 2]

Vikrant Tyres v. Collector — 1996(10)LCX0114 Eq 1997 (090) ELT 0178 (Tribunal) — Referred                             [Para 2]

Collector v. Indian Aluminium Co. Ltd. — 1988(08)LCX0048 Eq 1988 (038) ELT 0369 (Tribunal) — Referred      [Para 2]

Collector v. Wood Craft Products Ltd. — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Relid on                [Para 5]

Advocated By : Shri S. Ignatius, General Manager, for the Appellant.

Shri R. Victor Thyagaraj, SDR, for the Respondents.

[Order per : T.P. Nambiar, Member (J)]. - The present application is filed for waiver of duty of Rs. 5,13,78,080/-.

2.  The learned representative Shri Ignatius, appearing for the appellants, contended before us that additional excise duty is demanded from the appellant. He pointed out that in the impugned order the goods are classified under 59.02. It was pointed out that the appellants have claimed the classification under 40.05. In this connection, it was pointed out that the product in question which is rubber coated tyre warp sheets arises as an intermediate product during the course of manufacture of tyres. It was his contention that the classification in the impugned order is not sustainable. He drew our attention to the order passed by another Commissioner in their own case with respect to the very same product which is reported in 1997 (096) ELT 723. Referring to the above said decision, he pointed out that the very same product was classified under Heading 59.06. In this connection, he also pointed out that the Commissioner (Appeals), while so classifying the goods has followed the decision of the Tribunal in the case of Falcon Tyres v. C.C.E. reported in 1996 (088) ELT 450 and also in the case of Vikrant Tyres v. C.C.E. reported in 1997 (090) ELT 178. It was, therefore, pointed out that the decision of the Commissioner in that case was pointed out before the Commissioner in this case and no reference is made with respect to this decision. It was further pointed out that in any event the appellants are entitled to take Modvat credit on the above said input under Rule 57B(1)(i). He pointed out that even earlier to 1-3-1997, the appellants are entitled to take Modvat credit in view of Explanation to Rule 57A inserted by a notification dated 14-3-1986. He also drew our attention to the decision of the Tribunal in the case of Indian Aluminium Co. reported in 1988 (038) ELT 369, wherein, it was held that inputs which are manufactured and used within the factory of production in the manufacture of final product would also be inputs for the purpose of the above. Therefore, he pointed out that in any case the applicants are entitled to take Modvat credit with respect to this product which was captively consumed by them in the manufacture of dutiable tyres.

3.  Heard the learned SDR. He drew our attention to a Circular of the Board in F. No. 59/6/96-CX, dated 23-1-1998 wherein, it was held that these goods are classifiable under Chapter Heading 59.02. It was further pointed out that the department had gone up in appeal against the decision of the Commissioner which was relied on by the learned Representative. He also pointed out that this plea of Modvat was not raised before the Commissioner. He also drew our attention to the Tariff Entry and stated that under 59.02 Tyre Cord Warp Sheets whether dipped or not are specifically covered. He, therefore, pointed out that the Tariff Entry is very clear when it is read with HSN Explanatory Notes.

4.  The learned Representative stated that dipped will not include coated fabrics.

5.  We have considered the submissions of both the sides. At this juncture, we find that the matter is highly contentious. It is no doubt true that while the Tariff Entries, the Tribunal has to look into the HSN also, as held by the Supreme Court in the case of Wood Crafts reported in 1995 (077) ELT 23. It is also seen that there is an order passed by another Commissioner which is in favour of the appellants. However, it is for the Tribunal to look into these two orders and find out as to what is the correct position.

6.  The learned SDR stated that the previous decision of the Commissioner is appealed by the department before the Tribunal. However, it is seen that the matter is highly contentious, the appellant, no doubt, has an arguable case.

7.  We have also perused the Tariff Entry in this regard as pointed out by the learned SDR.

8.  In the facts and circumstances of the case, we are of the view that interest of justice will be met if the appellant is directed to deposit a sum of Rs. 1,50,00,000/- (One Crore and Fifty Lakhs) on or before 30-3-1998 and report compliance on 31-3-1998.

9.  We make it clear that since the issue is a recurring one, both the sides are at liberty to file early hearing petition, since the revenue involved is large.

10.  If this order is complied with, the pre-deposit of the balance amount of duty and penalty is dispensed with and the recovery thereon stayed, pending appeal.

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Equivalent 1999 (106) ELT 541 (Tribunal)