1995(12)LCX0014
IN THE CEGAT, PRINCIPAL BENCH `C’, NEW DELHI
S/Shri G.P. Agarwal, Member (J) and P.K. Kapoor, Member (T)
COLLECTOR OF CENTRAL EXCISE, CHANDIGARH
Versus
METRO TYRES LTD.
Order No. 443-445/95-C, dated 12-12-1995 in Appeal No. E/4915-4917/91-C
Cases Quoted
Collector v. Metro Tyres Ltd. — 1995 (080) ELT 410 [Paras 5, 9, 11]
Collector v. Bombay Tyres International Ltd. — 1994 (073) ELT 577 [Para 7]
Advocated By : Shri Mewa Singh, SDR, for the Appellants.
Shri Harbans Singh, Advocate, for the Respondents.
[Order per : G.P. Agarwal, Member (J)]. - These appeals are directed against the impugned order-in-appeal passed by the Collector of Central Excise (Appeals), Chandigarh.
2. Brief facts of the case are that the respondents are engaged in the manufacture of A.D.V. Hand Cart Tyres. They filed their refund claims for different period in respect of Central Excise Duty paid by them on A.D.V. Hand Cart Tyres on the ground that since there was no specific heading/sub-heading for A.D.V. Tyres in the Central Excise Tariff Act, 1985, except sub-heading No. 4011.99 covering `other tyres’, the same are classifiable under Heading 4011.99. But they paid Central Excise Duty @ Rs. 84 as B.E.D. (affective rate) plus 5% of B.E.D. as S.E.D. in terms of Notification No. 58/88-C.E., dated 1-3-1988 as amended by Notification No. 45/89-C.E., dated 1-3-1989. These refund claims were rejected by the Assistant Collector of Central Excise holding that the subject Tyres are classifiable under sub-heading 4011.91 and not under 4011.99 as claimed by the appellants. That it was not proved that the appellants did not pass the incidence of duty to the customers and that the refund claims were time barred partly vide his four different orders. Against the said four orders of the Assistant Collector the appellants filed the appeals before the Collector (Appeals), who vide his common order-in-appeal allowed the refund claims of the appellants holding that the subject Tyres are classifiable under Heading 4011.99 as claimed by the appellants and that it is not proved that the incidence of excise duty was passed on to the customers. However, she on the point of limitation restricted the refund claim for the period of 6 months. Hence the present three appeals by the Revenue.
3.Arguing on behalf of the Respondent should by Appellent - Ed. Shri Mewa Singh, Ld. SDR, submitted that the Collector (Appeals) erred in holding that the subject Tyres are classifiable under Heading 4011.99 by relying on the wordings of Notification No. 58/88-C.E. which only states that A.D.V. Tyres falls under Heading 40.11. It, according to him, does not indicate that A.D.V. Tyres are different from those Tyres used in the “off the road” vehicles. Continuing further he submitted that the Collector (Appeals) erred in concluding that since the specific entry 4011.10 for A.D.V. Tyres was omitted, the goods get consigned to the residuary entry without appreciating that as per the rules for the interpretation of the Schedule to the Central Excise Tariff, the sub-heading which provides the most specific description shall be preferred to the sub-heading providing the more general description. Hand Cart and Animal driven vehicles are primarily used off the road and, therefore, it would fall under sub-heading 4011.91 since it covers tyres “of a kind used on vehicles or equipments designed for use off the road”. He submitted that the reliance placed by the Collector (Appeals) on the Explanatory Notes to the HCDCS is misplaced because Heading 4011 in the Central Excise Tariff Act is not completely aligned to Heading 4011 of the Explanatory Notes. He also submitted that the respondents did not discharge the burden which lay on him to prove that the incidence of excise duty was not passed on to the customers. Elaborating he submitted that in normal practice of sale through wholesale dealers or sale through sale depots, the manufacturers offer their goods at a price which is the cum duty price and includes all the levies upto the point of sale. Since the respondents send printed price list to sale depots indicating that the prices are F.O.R. destination and local taxes are to be shown extra, it was normal to construe that this was the cum duty price. Thus, the findings of the Collector (Appeals) that it is not proved that incidence of duty has been passed on is incorrect.
4. In reply the Ld. counsel for the respondents submitted that Tariff Item 40.11 deals with the classification of various types of pneumatic tyres of rubber of a kind used on bicycles and cycle rickshaws, two wheeled motor vehicles, namely, scooters, motor-cycles, Mopeds and auto cycles, powered cycle-rickshaws, saloon cars, tractors, trailers, vehicles or equipments designed for use off the road and other. He submitted that in the instant case ADV Hand Cart Tyres does not fall under sub-headings 4011.91 as claimed by the Department but under 4011.99 as claimed by the respondents and upheld by the Collector (Appeals). Continuing further he submitted that tyres used for animal driven vehicles and hand cart vehicles are different from those tyres used in off the road vehicles. He took us through the impugned order-in-appeal to point out that Heading 4011 covers new pneumatic tyres of rubber. Sub-heading 4011.91 covers these tyres having a “herring-bone” or similar tyres as could be seen from the Explanatory Notes to HSN. He highlighted that a specific entry that is to sub-heading 4011.10 initially covering such tyres as are in question, was omitted with effect from 1-3-1989 and, therefore, when a specific entry gets omitted, the goods get consigned to the residuary entry. To strengthen his arguments he also submitted that Notification No. 58/88-C.E., dated 1-3-1988 also supports his contention inasmuch as it indicates that the tyres used for animal driven vehicles and hand cart vehicles are different from those tyres used in off the road vehicles.
5. As regards the contention of the Ld. SDR that incidence of duty in the instant case was not passed on to the customers, he submitted that this issue was also the subject matter of A. No. E/5088/91 and 5094/92-C between the same parties and the same contentions which have been advanced in the present appeal were advanced by the Revenue in that case also as appellants and the Tribunal after considering the facts and circumstances of the case which are similar to the facts and circumstances of the present case held that the Collector (Appeals) was right in holding that incidence of duty was not passed on to the customers vide Final Order No. E/119-120/93-C of April, 1993 [Since reported in 1995 (080) ELT 410].
6. We have considered the submissions.
7. Tariff Heading 40.11 deals with the [pneumatic] tyres of rubber. In the instant case we are concerned with the sub-heading 4011.91 which deals with the tyres used on vehicles or equipments designed for use off the road (for short OTR) and Heading No. 4011.91 which deals with `other’ tyres. The Government of India while clarifying the rationale behind re-casting the Tariff Item 16 in 1981 and its ambit in General Circular 24/81 dated 1-3-1981 along with the Budget in Finance Ministry F. No. IV/16/68/81 CX I, dated 1-3-1981 observed as follows :-
“4.3 The classification of tyres commonly known as OTR tyres (off-the-road tyres) has also been clearly set out in the new description of Tariff Item 16. Off-the-road tyres are generally designed for fitment in motor vehicles like off-the-high-way dumpers, and earth moving equipments like graders, bulldozers, scrapers, front-end loaders, draglines, excavators etc. They are normally of the sizes 12.00-24 and above. Some of these tyres are also of the tubeless tyres. These OTR tyres are essentially equipped with extra heavy tread with rugged bar and block tyre patterns for high traction designed to operate on broken surface strewn with sharp, fresh blasted rocks and boulders as at mining, earth moving and construction sites. Special cut resistant and high abrasion resistant rubber compounds are used in their manufacture to resist damages by cuts and bruises. The revised Tariff Item 16 is worded in such a manner as to group these OTR tyres alongwith the tyres for motor vehicles, attracting a common effective rate of 55% ad valorem (vide S. No. 5 of the Table annexed to the Notification No. 27/81-C.E., dated 1-3-1981). However, aero tyres, tyres for fork lift trucks, power tillers etc., would be covered under the residuary category ”all other tyres" under sub-item III of Item 16 attracting tariff and effective rates of 25% ad valorem.“
This clarification can be taken note of as a useful guide in classification as held in the case of Collector of C. Excise, Bombay v. Bombay Tyres International Ltd., 1994 (073) ELT 577. Even going by the wordings of the tariff item, animal drawn vehicles (ADV) for which tyres were manufactured is not a vehicle or equipment designed for use off the road. Both sub-heading 4011.91 and 4011.99 are preceded with double dash (- -) and falls under other tyres preceded with single dash (-). Notes to Heading 4011 of HSN reads as follows :-
Page 592
“40.11. - NEW PNEUMATIC TYRES, OF RUBBER (+).
4011.10 - Of a kind used on motor cars (including station wagons and racing cars)
4011.20 - Of a kind used on buses or lorries
4011.30 - Of a kind used on aircraft
4011.40 - Of a kind used on motorcycles
4011.50 - Of a kind used on bicycles
- Other :
4011.91 — Having a “herring-bone” or similar tread
4011.99 —Other
These tyres may be for use on any type of vehicle or aircraft, on wheeled toys, machinery, artillery weapons, etc.. They may or may not require inner tubes."
593 Section VII
40.112
Sub-heading Explanatory Note
Sub-heading 4011.91
Pictures of some of the types of tyres which are covered by this sub-heading are reproduced below :
8. From the aforesaid notes and pictures it is evident that the sub-heading 4011.91 covers the tyres which are having a “herring-bone” or similar tread. In the instant case A.D.V. Hand Cart tyres are not of the size of 4 X 8 inches that is to say they are not of the size of 12.00-24 and above - a circumstances pointed out in the clarification issued by the Government of India in its General Circular 24/81, dated 1-3-1981, as extracted above. Besides, the use of these vehicles, on the road is a common sight and with the advancement in the science and improvements in the conditions of the road it is well-known fact that hand cart and animal driven vehicles are vehicles and are designed for use on the road. From the said clarification of the Government dated 1-3-1981 it is also clear that off the road tyres are generally designed for fitment in motor vehicles like off-the-highway dumpers, and earth moving equipments like graders, bulldozers, scrapers, front-end loaders, draglines, excavators, etc. and they are normally of the sizes 12.00 - 24 and above. These OTR tyres are essentially equipped with extra heavy tread with tugged bar and block tyre patterns for high traction designed to operate on broken surface strewn with sharp, fresh blasted rocks and boulders as at mining, earth moving and construction sites. Special cut resistant and high abrasion resistant rubber compounds are used in their manufacture to resist damages by cuts and bruises. It is true that the Heading 4011 is not completely designed to the Explanatory Notes 4011 of HSN. But in the light of the clarifications issued by the Government of India as aforesaid and the wordings as is existing in the present tariff we have no doubt that the ADV Hand Cart tyres falls under sub-heading 4011.99 that is to say under `other’. Therefore, we uphold the findings of the Collector (Appeals) that the subject tyres are to be classified under sub-heading 4011.99 covering “other tyres”.
9. As regards the contention of the Ld. SDR, Shri Mewa Singh, that the appellants have not proved that the incidence of duty was not passed on to the customers it may be stated that the same issue was also the subject matter in the other appeal filed by the Revenue against the present appellants (Appeal No. E/5088/91-C and Appeal No. E/5094/92-C) and same contentions were raised by both sides therein which have now been again repeated before us for the prior period. And the Tribunal after considering the rival contentions and relying upon the case of Doller Co. v. Government of India, 1985(08)LCX0005 Eq 1986 (024) ELT 0245 (Madras) held that the respondents had proved that incidence of duty was not passed on to the customers vide its Final Order No. 119-120/93-C, dated April, 1993 [since reported in 1995 (080) ELT 410]. For ready reference the relevant paras 4 to 10 may be reproduced as under :-
* * * * * *
10. In the said case A. No. E/5088/91-C the period involved was 8-1-1988 to 31-8-1989. In the instant case the period involved is from 10-5-1989 to October, 1990. Thus, a part of the period is overlapping. It was the contention of the Ld. counsel for the respondents that against the said Final Order No. E/119-120/93-C of April, 1993 Government has not filed any appeal and that has become final between the present parties and, therefore, the Final Order passed by this Tribunal for a part of the disputed period which overlaps with the period involved in the present appeal is binding between the parties and the same may be followed for the remaining period also.
11. After going through the said case of the said parties as reported in 1995 (080) ELT 410 we find that the Tribunal held in favour of the respondents for the earlier period - a part of which overlape in the present case that the respondents has proved that the incidence of duty was not passed on to the customers. For the same reasons, we do not find any substance in the contention of the Ld. SDR that in the instant case it is not proved that the burden of duty was not passed on to the customers.
12. In the result, we reject the appeal.
Equivalent 1996 (82) ELT 95 (Tribunal)