Car Mats subject to Excise Duty under Residuary Entry: SC [Read Judgment]

The Supreme Court held that Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry, so car mats to be included under the residuary sub-head “other”.

The respondent-assessee contended that their goods are covered under Chapter heading 5703.90. The respondent, at the material point of time, was engaged in the business of manufacture of textile floor coverings and car matting and were clearing the goods declaring them to be goods against Heading No.570390.90. The effective rate of excise duty on goods under that entry was 8% and education cess at the applicable rate for the subject period.

CESTAT rendered 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, which relates to “Vehicles other than Railway or Tramway Rolling-Stock and Parts and Accessories”.

The show-cause-notices were issued against the respondent over the clearance of goods. These notices required them to answer as to why they should not be charged the differential rate of duty and interest.

The respondent-assessee contended that the Chapter heading 5703.90 covered carpets and other textile floor coverings and they were manufacturing those items only and were rejected by the Commissioner. This plea, however, was subsequently accepted by the Tribunal.

The division bench comprising Justice Deepak Gupta and Aniruddha Bose held, “one category of carpets has been excluded specifically from parts and accessories. In our opinion, 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  Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry, so car mats to be included under the residuary sub-head ‘other’,” the division bench observed.