[wheelguy]

The Supreme Court on Friday gave a major relief to car matting manufacturers by ruling that vehicle mattings would fall under the category of carpets to attract 8% levy and not 16% applicable to vehicle accessories.

Dismissing an appeal by Commissioner of Central Excise, Delhi, which had challenged the relief given to Uni Products India Ltd by Customs Excise & Service Tax Appellate Tribunal (CESTAT), a bench of Justices Deepak Gupta and Aniruddha Bose said, the Tribunal rightly 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 the category 'carpets and other textile flooring'.

The bench said though the vehicle accessories head under Central Excise law did not include car mattings for attracting a higher slab of levy, the revenue department intended to put the car mattings on the 'other' sub-head included in vehicle accessories.

Writing the judgment for the bench, Justice Bose said, "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 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 if we go by that logic, textile carpets could not have been excluded from (motor vehicle) Parts and Accessories. 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 'carpet and other textile flooring'," the bench said.

It said, "We accept this finding of the Tribunal. 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 'other' under the 'motor vehicle accessory'."

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