Full Judgment
2. The brief facts of the case are that the respondents herein had manufactured and cleared Vulcanising solution without payment of duty during the period from October, 1988 to March, 1989. They claimed classification under Central Excise Tariff sub-heading No. 3506.00 and availed the exemption up to first clearance value of Rs. 5 lakhs under Notification No. 175/86, dated 1-3-1986 as amended. Since the Department was of the view that the product falls for classification under Central Excise Tariff sub-heading No. 4005.00 attracting duty, and not eligible to exemption under Notification No. 175/86, the show cause notice was issued to the assessee as to why duty amounting to Rs. 15,916.52 should not be recovered from them under Section 11A of the Central Excises & Salt Act, 1944. The Assistant Collector of Central Excise confirmed the demand and also classified the product - Vulcanising solution under sub-heading No. 4005.00 and denied the benefit of the Notification. Accordingly, he confirmed the demand for Rs. 15,916.52. On appeal, the lower, appellate authority set aside the Assistant Collector's order following the Tribunal's decision in the case of MRF Ltd. reported in 1990 (29) ECC 315 (SB), wherein the Tribunal had held that the rubber compound cement or black vulcanising cement manufactured from vulcanised rubber is not classifiable under Heading No. 40.05 of Central Excise Tariff Act, 1985 and upheld classification under Heading No. 35.06 for the period subsequent to 10-2-1987. Hence, this appeal filed by the Revenue.
3. We heard Shri Sumit Das, JDR and Shri J.M. Sharma, Advocate and carefully considered the submissions.C.C.E. v. MRF Ltd., the Tribunal had based its decision in terms of the earlier decision of the Tribunal in the case of Elgi Polytex reported in 1988 (34) E.L.T. 404. In that case the product under consideration viz. rubber cement or black vulcanising cement had composition of rubber compound 11.00%, soluble sulphur 0.30%, Resin 1.00% and S.B.P. Spirits 87.00%. The Tribunal had held that the product which contains apart from the above contents, (rubber compound and solvent), sulphur, carbon black, stearic acid, zinc oxide, fillers and answers to the description of rubber based adhesives compound and is correctly classifiable as glue under Heading No. 35.06.
The Tribunal ruled-out classification under Heading No. 40.05 because the rubber compound from which rubber cement was produced was of vulcanised rubber and therefore, the respondents' product cannot be held to be of unvulcanised rubber. In the case of MRF reported in 1990 (50) E.L.T. 604 (Tribunal) the Tribunal was concerned with the classification of a product known as vulcanising solution containing rubber compound 12%, rubber chemicals 3% and solvent 85%. In the present case, the product contains natural rubber 8%, zinc oxide 4%, carbon black 2.4%, sulphur 0.3%, rubber chemicals 0.3%. The use of the product has been explained by the respondent before the Collector (Appeals) as in the retreading of tyres. In the appeal filed by the Revenue before the Tribunal the only ground taken by the Revenue is that the Department has filed the appeal against the Tribunal's decision reported in 1990 (50) E.L.T. 604 to the Hon'ble Supreme Court.
Further, we find that the Supreme Court has by its Order reported in 1998 (97) E.L.T. 23 (S.C.) upheld the order of the Tribunal on classification and rejected the Revenue's appeal.
5. We, therefore, hold that the ratio of the decisions in the case of Elgi Polytex and MRF (which has been upheld by the Supreme Court), are directly applicable to the present case, and therefore, uphold the order of the lower appellate authority classifying the vulcanising solution under GET sub-heading No. 3506.00 and reject the appeal.