CEAT LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are two appeals filed by M/s. CEAT Ltd. and Collector of Central Excise, Aurangabad involving the issues as mentioned below.

(2.) BRIEFLY stated the facts are that M/s. CEAT Ltd. manufacture Tyres, Tubes, flaps and other rubber products. One of the raw materials purchased by them is Tyre bead wire' which is copper coated high stainless steel wire. These wires are coated with rubber compound. During the course of manufacture of tyres, the waste arises in the form of strip of rubberised bead wires. The Collector, in the impugned order, classified the scrap under subheading 7204.90 (7217.90 for pre 1988) as the percentage of beadwire was 75% as against 25% of compound by weight and the scrap was sold on weight basis. Hence, the appeal E/2288/93 -B by the Assessee. Similarly the Assessees purchase/import steel belt fabrics falling under sub -heading 7217.90 of CETA which is also coated with rubber compound on both side and gets converted into rubberised steel cord fabric. The Assistant Collector classified the scrap of rubberised steel cord fabric under sub -heading 7204.90 as after rubberization, the weight content of steel dominated over the rubber content. On appeal, the Collector (Appeals) set aside the adjudication order and classified the said scrap under Heading 40.04 holding that as per HSN Explanatory Notes, Heading 72.04 refers to waste and scrap which is used for the recovery of metal by remelting or in the manufacture of chemicals: that the scrap in question is not used for recovery of metal but is taken by dealers of rubber products and that rubberised steel fabrics is not considered as an article of iron and steel and it is an article of rubber. Hence, appeal No. E/2689/93 -B by the Revenue.

(3.) SHRI Sajan Narayan, learned Advocate, submitted that the classification lists filed by them classifying scrap rubberised bead wire under heading 40.04 were approved by the Department from 1 -3 -1986 onward and the clearances were effected by the Assessee accordingly; that Assistant Collector in his order dated 20 -11 -1988 held that there was no contravention of provisions of Rule 9(1) of the Central Excise Rules inasmuch as they had cleared the scrap under approved classification list; that again, the Assistant Collector, under order dated 8 -8 -1989, held that there was no question of issuing any order as the assessee had been paying duty correctly from 12 -7 -1988 onwards under sub -heading 7219.90 of CETA; that it is thus apparent that Department was throughout aware of the factual position and there was no question of misdeclaration or suppression by them. He mentioned that Note 6 to Section XVI of CETA defines scrap as "metal waste and scrap from the manufacture or mechanical working of metal, and metal goods.."; that as per Note 6 to Chapter 40 "the expression waste, pairings and scrap means rubber waste, pairings and scrap from the manufacture of working of rubber and rubber goods definitely not usuable as such because of cutting up, wear or other reasons."