Commissioner Of Central Excise vs. Uni Products India Ltd. - (Supreme Court) (01 May 2020)

As the subject-goods comes under a particular chapter-heading, there is no necessity to import “common parlance” test

MANU/SC/0427/2020

Excise

Present two appeals against the decision of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) rendered on 16th July, 2008 require adjudication on the question as to whether “car matting” would come within Chapter 57 of the First Schedule to the Central Excise Tariff Act, 1985 under the heading “Carpets and Other Textile Floor Coverings” or they would be classified under Chapter 87 thereof, which relates to “Vehicles other than Railway or Tramway Rolling-Stock and Parts and Accessories Thereof”.

The Respondent-assessee want their goods to be placed under Chapter heading 5703.90. The Respondent, at the material time, were clearing the goods declaring them to be goods against Heading No.570390.90. Effective rate of excise duty on goods under that entry was 8% and education cess at the applicable rate for the subject period. The Tribunal found that though in common parlance the products involved may not be considered as carpets, in view of the wordings of the chapter, section notes, chapter notes and explanatory notes, the goods were classifiable under chapter heading 570390.90.

“The common parlance test”, “marketability test”, “popular meaning test” are all tools for interpretation to arrive at a decision on proper classification of a tariff entry. These tests, however, would be required to be applied, if a particular tariff entry is capable of being classified in more than one heads. So far as subject-dispute is concerned, present Court have already referred to Chapter note 1 of Chapter 57. This note stipulates that carpets and other floor coverings would mean floor coverings in which textile materials serve as the exposed surface of the Article, when in use. This feature of the car mats has not really been rejected by the revenue authorities as untrue.

Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry. The HSN Explanatory Notes dealing with interpretation of the rules specifically exclude “tufted textile carpets, identifiable for use in motor cars” from 87.08 and place them under heading 57.03. The Commissioner himself has referred to the Explanatory Notes in the order-in- original while dealing with the Respondent’s stand.

The Tribunal on detailed analysis on various entries, Rules and Notes have found them fit the description of goods under chapter heading 570390.90. Present Court accept this finding of the Tribunal. Once the subject goods are found to come within the ambit of that sub-heading, for the sole reason that they are exclusively made for cars and not for “home use” (in broad terms), those goods cannot be transplanted to the residual entry against the heading 8708. As the subject-goods come under the chapter-heading 570390.90, and the other entry under the same Chapter forming the subject of dispute in the second order of the Commissioner, there is no necessity to import the “common parlance” test or any other similar device of construction for identifying the position of these goods against the relevant tariff entries. The impugned decision of the Tribunal is sustained. Appeal dismissed.

Tags : DUTY LEVY GOODS CLASSIFICATION