The respondents were 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 5703.90; effective rate of excise duty on goods under that entry was 8% and education cess at the applicable rate. Three show cause notices were issued against the respondent for declaring the goods to be specified under heading no 8708.99.00 as the rate of basic excise duty would have been 16% apart from education cess. The respondent explained the manufacturing process in course of hearing on the first two cause notices before the authority of first instance (Commissioner, central excise, Delhi III, Gurgaon) which was rejected but subsequently was accepted by the tribunal. The other order of commissioner in connection with the third show cause notice was passed on 5th jJanuary, 2007 in which the directions was given for payment of duty differential and interest along with the penalty imposed. But the two appeals, which were filed by the respondent in the Customs Excise & Service Tax Appellate Tribunal (CESTAT), were decided in their favour by a composite decision. Hence, this suit has been file in the Apex Court.

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 thereof, which relates to “Vehicles other than Railway or Tramway Rolling Stock and Parts and Accessories Thereof”.

The main argument of the appellant is that because the car mats are especially for cars and are also used in cars, they should be identified as parts and accessories. But for the sole reason that they are exclusively made for the cars and not for home use, those goods cannot be transplanted to the residual entry against the heading 8708. The tribunals on detailed analysis on various entries, Rules and Notes have found that they fit the description of goods under chapter heading no. 570390.90.

Appeal has been dismissed and the impugned judgement of the Tribunal is sustained.