Full Judgment
Bharat Rubber Regenerating Co. Ltd., without giving an opportunity to the party to distinguish their case from that of Bharat Rubber Regenerating Ltd. .
2. Shri V. Laxmikumaran learned advocate arguing on behalf of the party submitted that the process of manufacture of the product in question as stated in the statements of facts given by the department is not in dispute. Accordingly the raw materials for the manufacture of reclaimed rubber is rubber scrap that is condemned and used automobile and cycle tyres, and tubes, air bags, waste moulded goods etc. These scraps are powdered and cooked in autoclaves with chemicals and oils. The material thus obtained is mixed in mixing mills and finally refined in refinery.
The product thus obtained in the form of sheets is 'reclaimed rubber'.
2A. The note given by the examiner in his report dated 2.3.1982, relied upon by the Tribunal was neither supplied to the party nor considered by the authorities below. He said that he is not pressing that issue since he is not interested in remanding the matter, however, without going into that issue he would like to emphasise his arguments, on second ground that findings given by the Tribunal in the case of Bharat Rubber Regenerating Co. is distinguishable with reference to the process of manufacture of the item in question and accordingly the ratio of the aforesaid case is not applicable to the facts of this case. He said that chemical examiner's report supplied to the party and which was considered by the Collector (Appeals) also confirmed that sample is in the form of black, thick flexible piece of size 20 c.m. X 34 c.m. It is composed of rubber, carbon black and sulpher. Chemical Examiner's report with reference to the item in question is based upon book called Rubber Technology by Morton and in the said book it was explained that the goods cleared as slabs are sheets as a product. He said that the goods in conformity with the ISI specification that the sheets of the reclaimed rubber shall be smoothly refined without grains seen on the leaves. The sheets shall be dusted so as to avoid sticking with each other. He explained the process of manufacture of the product in detail and submitted that this is not raw material but a composite product and referred to the technical literature i.e. the story of an American raw material by J.M. Ball, polymere technology by Miles and Briston in support of his contention. He said that the Assistant Collector of Coimbatore in the case of M/s. Super Rubber Works, Coimbatore, in his Order No. 80 of 1986 dated 16.12.1986 with reference to the Central Excise Tariff Act 1986, in respect of the very product accepted that reclaimed rubber in the form of plates, sheets and strips unhardened are exempted under Notification No. 71 of 1968 based upon the clarification issued by the Board as per CB and CF No. 27/8/C/2 dated 12.7.1978. The findings given by the Tribunal with reference to the product in para 6 of the order in the case of M/s. Bharat Rubber Regenerating Co. is not similar to the manufacturing process of the product in this case since it is not a raw material but a rubber product as mentioned in chemical examiner's report dated 15.6.1982 in view of its composition. He said that the Tribunal has distinguished the case of Bharat Rubber Regenerating Co. in the case of Rubber Reclaimed Co. of India Pvt. Ltd. v. Collector of Central Excise and specifically covered by Item 16A(2) of the erstwhile Central Excise Tariff and so not classifiable under Item 68. Since process of the product is identical as in the case of Rubber Reclaimed Co., same is to be classified under 16A as it was held in that case.
3. Smt. J.M.S. Sundaram learned SDR for the revenue while countering the arguments submitted, it was clearly held in the case of M/s. Bharat Rubber Regenerating Co. Ltd., that reclaimed rubber manufactured by the assessee either in the form of scrap plates or sheets is only a rubber raw material and not a product made out of rubber. She said that Tribunal arrived at the conclusion based upon the process of manufacture and also taking into consideration of the Rubber Technology by Morton referred by the respondents in this case. ISI specification is not helpful to decide the issue whether it is raw material or the product of rubber since it describes the nature of the sheets of reclaimed rubber. The technical literature referred to by the respondents, also shows that present product is only raw material.
Product is in the form of raw material of rubber and that itself is not a product made out of rubber to constitute rubber product to be classified under 16A of the erstwhile Tariff. The point at issue was properly analyzed in the case of Bharat Rubber Regenerating Co. by the Tribunal and the process of manufacture in this case is also similar as in that case and accordingly the item is correctly classifiable under residuary Item 68 of the Tariff. She said that later decision Rubber Reclaim Co. of India erroneously decided the issue without going into reasoning given by the Tribunal in the findings of Bharat Rubber Regenerating Co. She said Board issued clarification as per its letter F.No. B 35/2/75 dated 17.3.1976 that reclaimed rubber is to be classified under Tariff Item 68.
4. In reply Shri Laxmikumaran stated that taking into consideration of the manufacturing process of the item is nothing but a rubber product and since Tribunal has rightly distinguished Bharat Regenerating Co. in the case of Rubber Reclaim Co. the issue is to be decided by following the later decision.
5. We have carefully considered the matter. We concur with the arguments advanced by the Departmental Representative that the point at issue was well considered in the case of M/s. Bharat Rubber Regenerating Co. Ltd. Like in that case in the present case also the appellants purchased used and condemned tyres and tubes from the market which they melted to make unhardened plates and sheets of Rubber. Both the sides referred to the book 'Rubber Technology', Second Edition, by Maurice Morton. The definition therein is reproduced as under: The original definition for reclaimed rubber as written by J.M. Ball in the first edition of this book will be quoted: "It is the product resulting from the treatment of vulcanised scrap rubber tires, tubes and miscellaneous waste rubber articles by the application of heat and chemical agents, whereby a substantial 'devulcanisation' or regeneration of the rubber compound to its original plastic state is effected, thus permitting the product to be processed, compounded and vulcanised. Reclaiming is essentially depolymerization; the combined sulfur is not removed. The product is sold for use as a raw material in the manufacture of rubber goods, with or without admixture with crude rubber or synthetic rubber.
(2) Plates, sheets and strips un-hardened, whether vulcanised or not, and whether combined with any textile material or otherwise.
(4) Transmission, conveyor or elevator belts or belting, or vulcanised rubber.
On going through the relevant tariff entry 16A, we find that reclaimed rubber as such is not specified in the entry 16A of the Tariff but it refers to Rubber products. Hence the point revolves whether it is a raw material or a rubber product to decide the issue of classification. On going through the detailed process of manufacture of the product in question with reference to the technical literature it was held in the case of Bharat Regenerating Co., that reclaimed rubber in the form of sheets is not a product made out of rubber but it is only a rubber raw material.
The finding portion in that judgment is relevant and the same is reproduced as under: The Department's Representative is right in saying that for the purpose of Item 16A(2) of the Tariff, it is not enough if the goods are in the form of plates, sheets and strips, un-hardened. They have first to be a rubber product as per the governing words of Item 16A. It is, no doubt, true that reclaimed rubber sheets of the appellants have come out of a definite process of manufacture or production and they are, therefore, a product in their own right. But when the tariff item talks of "Rubber Products", the expression acquired a definite connotation. Milk is a product but when we talk of 'milk products', we do not include therein milk itself but only the products made out of milk. Similarly, 'wheat products' include bread, biscuits, etc. made out of wheat but not wheat itself although wheat is also a product. 'Steel' is a generic word but when we talk of steel products, we think of articles made out of steel and not steel as such. The same is the case with rubber. Though rubber is also a product, the expression "Rubber Products" would include products made out of rubber and not rubber as such. For rubber as such, the tariff has a separate entry--16AA, which relates to synthetic rubber. In contradistinction to that, the entry 16A covers "Rubber products". According to the appellants' own statements, backed by the technical literature produced by them and the trade opinion elicited by themselves, their reclaimed rubber sheets are purely a rubber raw material and not a product made out of rubber. The reclaimed rubber sheets cannot, therefore, fall under Item 16A. Since there is no separate tariff entry for reclaimed rubber (though there is entry 16AA for synthetic rubber), we hold that reclaimed rubber sheets are correctly classifiable under the residuary Item 68 of the Tariff.
It was argued on behalf of the respondents that Bharat Rubber case was distinguished in the later case Rubber Reclaim Company holding that it was classifiable under 16A of the Central Excise Tariff. It was not rightly distinguished and the conclusion arrived at by the Tribunal in the later case is without going into the reasoning given by the Tribunal with reference to the findings in the case of Bharat Rubber, as it was rightly pointed out by the D.R. Without going into the issue of possession of calendaring machine or otherwise, it was held in the case of Bharat Rubber that reclaimed rubber in the form of sheets is not a product made out of rubber but only a rubber raw-material. But in the later case this was misconceived and arrived at the conclusion based upon the observation that manufacture of rubber sheets required a calendaring machine which Bharat Regenerating Company did not possess but in the later case that the manufacturing process involved, inter alia passing the material through roller sheeting mills to obtain reclaimed rubber sheets. Concurring with the view taken in the case of Bharat Regenerating Company, we hold that reclaimed rubber in any form is not classifiable under 16 A but classifiable under 68 of the erstwhile tariff.Dt. 27.8.1993.
Sd/- (G.A. BrahmaDeva) 6. In the view we have taken, the appeal filed by the Department is hereby allowed.
7. While respectfully agreeing with the order proposed by Hon'ble Member (Judicial), it may also be mentioned that the Tribunal decision in the case of Rubber Reclaim (supra) was passed sub silentio of the point dealt with in the Bharat Regenerating case (supra), namely, that for the purpose of item 16A(2) of the Tariff, it is not enough if the goods are in the form of plates, sheets and strips, unhardened, but that they have first to be a rubber product as per the governing words of item 16A CET, and the Tribunal also found that the goods, therein, were reclaimed rubber sheets, which, the Tribunal found, were purely a rubber rawmaterial and not a product made out of rubber and, therefore, would not fall under item 16A CET. The following exposition of the concept of sub-silentio in Salmond on Jurisprudence at pages 153 to 156 is relevant: A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court.
In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio.
The appeal filed by the Department is, accordingly, allowed.Dt. 6.9.1993 Sd/- (K.S. Venkatarmani)