Commissioner of Central Excise, Delhi-Iii vs M/s. Uni Products India Ltd.

HELD: 1.1 Reference has been made to “Harmonized Commodity Description and Coding System”, Explanatory Notes issued by the World Customs Organisation (2002). These Notes, termed HSN Explanatory Notes have been referred to by both the parties. Strong persuasive value of these Explanatory Notes has been recognised by this Court. General Rules for the Interpretation of the Harmonized System lay down the Principles of Interpretation for classification of Goods in the Nomenclature. Clause 3 (a) of the General Rules For the Interpretation of First Schedule to the Central Tariff Act, 1985 in cases where possibilities arise of a single item being classified under more than one head corresponds to the said Rule 3(a) of the Explanatory Notes. Section Note 2 of Section XVII of Central Excise Tariff excludes eleven sets of items from being treated as parts and accessories. There is reference to “PARTS AND ACCESSORIES” under the main heading “GENERAL”, in Section XVII of the HSN Explanatory Notes, 2002. Under the sub-heading “(iii) PARTS AND ACESSORIES”, a three-layer test has been postulated. It is on satisfying all of these conditions a particular item would come under that chapter head. The Explanatory Notes dealing with parts and accessories under chapter-head 87.08 includes floor mats (other than of textile materials or unhardened vulcanised rubber). Chapter Notes to Chapter 57 of the HSN Explanatory Notes, relating to carpets and Other Textile Floor Coverings are relevant for effective adjudication of these two appeals. The said instrument, i.e. HSN Explanatory Notes deal with four entries against tariff item no.5703. [Para 6-9, 15 and 16][304-B-C, D, F-G; 305-C, E; 310C-H] CCE v. Wood Craft Products Ltd. (1995) 3 SCC 454 : [1995] 2 SCR 797; Collector of Central Excise vs. Bakelite Hylam [1997 (91) E.L.T. 13 (S.C.); Collector of Customs v. BusinessForms Ltd. (2005) 7 SCC 143; Holostick India Ltd. v.Commissioner of Central Excise (2015) 7 SCC 401 : [2015] 4 SCR 576 – relied on.

1.2 “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, this Court has 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 in the order of the Commissioner, before whom assertion to that effect was made by the respondent. Core issue in these appeals is as to whether car mats come under chapter-heading 57.03 or not. In the second appeal, the numerical representation of the product, as claimed by the assessee, was different but that difference is not of much significance. Revenue’s case is that the goods are manufactured in such a way that these can be used as accessories of cars. 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. [Paras 23, 24][315-H; 316-A-D]

1.3. This Court does not find any error in such reasoning. Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry. The various parts and accessories listed against tariff entry 8708 have been reproduced earlier. All of them are mechanical components, and revenue want car mats to be included under the residuary sub-head “other” in the same list. 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. Revenue’s argument is that the Explanatory Notes have persuasive value only. But the level or quality of such persuasive value is very strong, as observed in the judgments of this Court. Moreover, the Commissioner himself has referred to the Explanatory Notes in the order-in- original while dealing with the respondent’s stand. Thus, there is no reason as to why a departure should be made from the general trend of taking assistance of these Explanatory Notes to resolve entry related dispute. Now, on referring to these Explanatory Notes, it is found that one category of carpets [Textile carpets (Chapter 57)] has been excluded specifically from parts and accessories. The subject-item does not satisfy the third condition specified in Section XVII of the Explanatory Notes in relation to “III-Parts and Accessories”. A plain reading of clause (C) thereof excludes “textile carpets” (Chapter 57). The main argument of the appellant is that because the car mats are made specifically for cars and are used also in cars, they should be identified as parts and accessories. But by that logic, textile carpets could not have been excluded from Parts and Accessories. Such exclusion has been referred to in the preceding paragraph. It has also been urged on behalf of the revenue that these items are not commonly identified as carpets but are different products. The Tribunal on detailed analysis on various entries, Rules and Notes have found they fit the description of goods under chapter heading 570390.90. This finding of the Tribunal is accepted. 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 Court finds 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. [Paras 25-27][316-E-H; 317-A-E] Plasmac Machine Manufacturing Co. Pvt. Ltd. v. Collector of Central Excise, Bombay 1991 Supp. (1) SCC 57 : [1990] 3 Suppl. SCR 384 ; Dabur India Ltd. v. Commissioner of Central Excise, Jamshedpur (2005)

4 SCC 9 : [2005] 3 SCR 144; A.P. State Electricity Board v. Collector of Central Excise, Hyderabad (1994)

2 SCC 428 : [1994] 1 SCR 499; Commissioner of Central Excise v. Wockhardt Life Sciences Limited (2012) 5 SCC 585 – relied on.

Collector of Central Excise, Bombay-II v. Sterling India (2000) 115 ELT 807; Collector of Central Excise v. Swaraj Mazda (1993) 68 ELT 258; Jyoti Carpet

Industries v. Commissioner of Central Excise, Jaipur-I (2001) 132 ELT 458 – referred to.