1997(11)LCX0178
IN THE CEGAT, COURT NO. III, NEW DELHI
Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)
COLLR. OF C. EX., BOMBAY
Versus
IMPERIAL WATER PROOFING INDS. (INDIA)
Final Order No. 610/97-C, dated 25-11-1997 in Appeal No. E/5712/89-C and E/Misc. 618/97-C
CASES QUOTED
Deccan Rubber Solution Mfg. Co. v. Collector — Tribunal Order Nos. 828 to 830/90-C, dated 26-7-1990 — Followed [Para 2]
Elgi Polytex Ltd. v. Collector — 1988(02)LCX0035 Eq 1988 (034) ELT 0404 (Tribunal) — Relied on [Paras 2, 7]
DEPARTMENTAL CLARIFICATION CITED
C.B.E. & C. Circular No. 99/24/87-CX. 3, dated 8-2-1988 [Para 7]
REPRESENTED BY : Shri A.K. Mohan, SDR, for the Appellant.
None, for the Respondent.
[Order per : Jyoti Balasundaram, Member (J)]. - In the above appeal which arises against the order dated 30-8-1991 of the Collector of Central Excise (Appeals), Bombay, the following issues arise for determination :
(1) Classification of rubber solution (solvent based) manufactured by the respondents and its eligibility to the benefit of Notification No. 175/86-C.E., dated 1-3-1986;
(2) Availability of the benefit of Notification No. 250/86-C.E., dated 11-4-1986 to Rubber Solution (Water based) manufactured by the respondents herein - the classification of this product is not in dispute as the assessees have accepted the department's stand that this product falls for classification under sub-heading 4001.00 of the Schedule to the Central Excise Tariff Act, 1985.
The lower Appellate authority has upheld classification of Product No. 1 under sub-heading 3506.00 and has extended the benefit of Notification No. 175/86 and in respect of the second item, he has remanded the matter for verification of the claim of the assessees that no power is used in the manufacture of this item and has held that subject to verification by the Assistant Collector, the benefit of exemption as claimed by the assessees, is allowed.
2. We have heard Shri A.K. Madan, learned DR and perused the records as the respondents have asked for a decision on merits. The respondents' submission that classification of Rubber Solution (solvent based) has been confirmed under sub-heading 3506 by the Tribunal's order in the case of Deccan Rubber Solution Manufacturing Co. v. Collector of Central Excise, Bombay (Final Order Nos. 828 to 830/90-C, dated 26-7-1990), is correct. In that order, the Tribunal was concerned with the classification of rubber solution which was a mixture of solvent and raw rubber manufactured by dissolving raw rubber in solvent like white petrol. In para 4 of its order, the Tribunal relied upon its earlier order in the case of Elgi Polytex reported in 1988 (034) ELT 404 in which it was held that rubber cement or black cement used as adhesive in retreading the tyres is classifiable under Chapter Heading 3506. Following the ratio of the above order which is squarely applicable to the first product in dispute, we hold that the Collector (Appeals) was correct in classifying this product under Chapter sub-heading 3506.00. The benefit of Notification No. 175/86 is also available to this product as that notification covers goods falling under this heading. The Revenue seeks to deny the benefit of this Notification on the ground that the product falls for classification under Chapter 40 which is not a chapter covered by the notification in question. However, in view of our finding that the product falls for classification under Heading 3506, automatically the benefit of Notification No. 175/86 is available thereto.
3. As far as product No. 2 is concerned, the contention of the Revenue is that the assessees have not established that no power was used in the manufacture of this product and since the notification is available if no power has been used in its manufacture, the benefit has been wrongly extended. We find from the order of the Collector of Central Excise (Appeals) that he has not straightaway allowed the exemption but has held that the fact whether the product is manufactured without aid of power, is open to verification and thus the Assistant Collector is at liberty to verify with a view to check the veracity of the appellants contention and subject to that verification, he has extended the benefit of the notification. In other words, he has only remanded the matter for verification and we see no reason to interfere with this finding with which we are in accord.
In the result, we uphold the impugned order and reject the appeal of the Revenue.
4. [Assent per : S.K. Bhatnagar, Vice President]. - While agreeing with the above findings, I would, however, like to add that the product described as Rubber solution (Water-based) was admittedly prepared by mixing latex rubber with water along with a small percentage of viscosity control agent (an emulsifier). The appellants have claimed it to be merely a solution of natural rubber. The McGraw Hill Encyclopaedia of Science & Technology Volume II, however, mentions that "natural rubber and most synthetic rubbers are also commercially available in the form of latex, a colloidal suspension of polymers in an aqueous medium." A mere addition of water and a bit of emulsifier could only result in a colloidal suspension and there is a lot of force in the submission that it does not result into change of characteristics since the natural latex by itself is a white, tacky aqueous suspension of a hydro-carbon polymer (vide "The Condensed Chemical Dictionary by Gessner G. Hawley). According to HSN also, the natural rubber latex (whether or not pre-vulcanised) is a liquid which consists of an aqueous solution of organic and mineral substances classifiable under Heading 40.01 which includes stabilised or concentrated natural rubber latex also. However, merely adding water or emulsifier does not make any substantial difference and therefore, there is a lot of force in the arguments taken before the lower authorities initially that there was no process of manufacture involved. However, as it happened, this point was not pressed before us and not debated and no orders were passed in this respect, I am inclined to mention it as an abundant precaution before parting so that our order is not treated as an endorsement of the order of the lower authorities in this regard.
5. I may also further mention that the synthetic latexes are also made by emulsified polymerisation techniques and are in the nature of colloidal suspensions. Furthermore, the natural rubber latex in the form of liquid, paste or dispersions falling under sub-heading 4001.00 were exempt from duty provided that no process in or in relation to the manufacture of the said goods is ordinarily carried on with the aid of power vide Notification No. 258/86.
6. The second item has been described as `Rubber Solution Solvent Based'. According to the appellants, it is used as an adhesive and rubber based adhesive have been described as follows in `The Condensed Chemical Dictionary Volume II' by Gessner G. Hawley :-
“Adhesive, rubber-based (cement, rubber), (1) A solution of natural or synthetic rubber in a suitable organic solvent, without sulphur or other curing agent; (2) a mixture of rubber (often reclaimed), filler, and tackifier (pine tar, liquid asphalt) applied to fabric backing (pressure-sensitive friction tape); (3) a room-temperature curing rubber-solvent-curative mixture, often made up in two parts, which are blended just before use; (4) rubber latex, especially for on-the-job repairing, such as conveyor belts; (5) silicone rubber cement.”
7. It is further noticed that rubber solutions manufactured by dissolving duty paid natural rubber in an organic solvent like Toluene is classifiable under sub-heading No. 4005.00 according to Board's Circular No. 99/24/87-CX. 3, dated 8-2-1988. However, for the reasons mentioned in the Tribunal's order relied upon by the Collector, the Tribunal's view has differed from the Board's view and rubber cement or black vulcanising cement used as adhesive for retreading of tyres was hold as not classifiable under Heading 40.05 in terms of the Tribunal's decision in the case of Elgi Polytex Ltd., Coimbatore v. Collector of Central Excise, Coimbatore reported in 1988(02)LCX0035 Eq 1988 (034) ELT 0404 (Tribunal) . The A.C. and the departmental authorities have referred to HSN Heading 40.05 but appear to have over-looked the exclusion clauses therein. The Explanatory Note under Heading 40.05 HSN states that this heading also excludes :-
“(c) Prepared glues and other prepared adhesives consisting of rubber solutions or dispersions with added fillers, vulcanising agents and resins, and rubber solutions and dispersions put up for retail sale as glues or adhesives, not exceeding a net weight of 1 Kg.”
Furthermore, Heading 35.06 of HSN covers "Prepared glues and other prepared adhesives, not elsewhere specified or included; Products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight of 1 Kg."
8. Since our tariff does not incorporate the conditions of the weight of the packing meant for retail sale or otherwise and the entry takes use into consideration and the product is apparently used as adhesives for retreading purposes, therefore, the order of the Collector (Appeals) which relies upon the aforesaid order of the Tribunal for reasons mentioned therein is required to be upheld.
9. Insofar as the question of exemption notification is concerned, since the matter has only been remanded for verification of facts, there was no reason to interfere. The appeal is, therefore, rejected as already announced in the open Court.
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Equivalent 2000 (119) ELT 476 (Tribunal)