 |
OFFICE OF THE
COMMISSIONER OF CUSTOMS, |
PUBLIC
NOTICE NO. 80 /2001
Sub: Imposition of Additional Excise Duty (under
goods of Special Importance Act, 1957) on tyre cord fabrics falling under
Chapter 59.02 - Clarification- Regarding.
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Govt. of India, Min. of
Finance, Dept. of Revenue, New Delhi,
Circular No.566/3/2001-CX, vide F.No.59/4/2000-CX.I dated 22.01.2001, is reproduced
below for the guidance of the.
C11/25/2001-AP(PORT)
(T.S. JAYACHANDAR)
CUSTOM HOUSE, CHENNAI-1. ASSTT. COMMR. OF CUSTOMS (APPG.)
DATE :23.04.2001
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CIRCULAR NO.566/3/2001-CX
F.NO.59/4/2000-CX.I DATED
22.01.2001
Some doubts have been raised as regard to the
classification of processed tyre cord fabrics of high tenacity yarn under
heading 59.02 or 59.05 (now 59.06) and levy of additional excise duty in lieu
of sales tax (AED) on these fabrics during the period from 16.3.95 to 1.6.98.
2.
The matter has been examined by the Board. It is
observed that the unprocessed tyre cord fabrics falling under 59.02 are dipped
in latex solution and passed through heating chambers; these dipped fabrics are
further coated and calendered with unvulcanised rubber compound. These
processed tyre cord fabrics (dipped/calendered) are used in the manufacture of
tyres falling under Chapter 40. Such processed tyre cord fabrics were for years
being classified under Heading 59.02 and by
virtue of notification existing from 1983 onwards. AED leviable on
processed tyre cord fabrics falling under Heading 59.02 was fully exempt
provided that appropriate AED has been paid on unprocessed tyre cord fabrics.
The industry had never questioned the classification, but doubts were raised
after the above said notification got rescinded w.e.f. 16.3.95. AED became
leviable on processed tyre cord fabrics, which were being classified under
59.02 obtained after dipping and rubberizing of unprocessed tyre cord fabrics
from 16.3.95 even if the latter have discharged AED. A telex was issued on
30.4.96 from F.No.345/11/96-TRU to Commissioners clarifying the position after
1995 budget specifying the leviability of AED on processed tyre cord fabrics.
It was only during the Budget 1998, considering various representations from
industry that notification No.11/98 dated 2.6.98 was issued exempting processed
tyre cord fabrics classifiable under Heading 59.02 from payment of AED if
manufactured out of unprocessed tyre cord fabrics on which appropriate duty has
been paid. Thus, AED was attracted on processed tyre cord fabrics for the
period 16.3.95 to 1.6.98, in the absence of any exemption.
3.
4.
To escape duty liability doubts have been created
by certain units claiming that these merit classification under Heading 59.05
(later 59.06) on the ground that it was only rubberised fabrics, and cited
Board’s circular No.10/87 dated 29.7.87 to support this viewpoint. It is pertinent
to note that Board’s circular No.10/87 dated 29.7.87 has been issued in an
entirely different context. The product under consideration in the circular was
not a grey tyre cord fabrics of high tenacity yarn, which was dipped and
rubberised, but it was man-made woven fabrics other than tyre cord fabrics.
Various alternative classifications of such rubberized man-made fabrics were
considered (59.02 was not one of them - because it was not grey tyre cord
fabric which was being rubberised and whose classification was in dispute) and
classification under 59.05 considered most appropriate.
5.
The instruction issued under circular No.320/36/97
dated 30.6.97 was also examined. This instruction is with reference to the
rubberised tyre cord warpsheets for cycle tyres. Unlike auto tyres, cycle tyres
do not use high tenacity tyre cord fabrics. The warpsheets are generally of
cotton and weftless. Therefore, cycle tyres cord fabrics are classifiable under
Heading 59.02 cycle tyre warpsheets are classifiable under Heading 59.05.
6.
The judgement of Tribunal in case of Vikrant Tyres
Ltd., and Falcon Tyres Ltd., were also examined by the Board. In both the cases
the issue before the Tribunal was whether the rubberised textile fabrics would
be classifiable under Heading 40.05/06 or 59.05 (now 59.06). The assessees were
claiming the classification under Chapter 40 whereas the Tribunal decided that
these are rubberised textile fabrics falling under Heading 59.05. As the
question was never put before Tribunal to examine the classification under
Heading 59.02, the Board’s view to classify the processed tyre cord fabrics
under Heading 59.02 remain unaltered.
7.
Though, the Tribunal in some judgements in case of
MRF Ltd. and CEAT Ltd., has recently classified processed tyre cord fabrics under
Heading 59.05, these have not been accepted and civil appeals filed in these
cases have been admitted by the Supreme Court.
8.
As mentioned above, Board has been consistently
holding that the classification of dipped and rubberised tyre cord fabrics of high
tenacity yarn falls under 59.02 on which AED is leviable from 16.3.95 to
1.6.98. The exemption from AED which was available to such processed tyre cord
fabrics under Heading 59.02 was withdrawn w.e.f. 16.3.95 but later restored
w.e.f. 2.6.98 - specifically again taking these goods as falling under
59.02.only.
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