Customs, Excise and Gold Tribunal - Delhi
New India Industries Ltd. vs Collector Of Customs on 1 August, 1994
Equivalent citations: 1994(73)ELT723(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. The brief facts leading to this appeal are that the appellants imported 9 consignments of 'Baryata Coated Base Paper' and two consignments of 'Documents Raw Base Paper' which were classified under sub-heading 4810.11 and 4805.40 respectively. They filed refund claims on the ground that Baryata Coated Base Paper and uncoated Documents Base Paper were classifiable under Heading 4810.11 and 4802.20 respectively, and that these at the same time were eligible for exemption under Notification No. 55/86. The Asstt. Collector rejected the claims on the grounds that Baryata Coated Base Paper and Uncoated Document Base Paper were not eligible for the benefit under Notification 55/86 since they were not 'Printing and Writing Paper'. The appeal filed against the order passed by the Asstt. Collector was rejected by the Collector (Appeals). The appellants herein are not contesting the Order of the Collector (Appeals) in respect of Baryata Coated Base Paper. Their appeal is directed against the finding that Uncoated Document Base Paper is not eligible for exemption under Notification No. 55/86.
2. When the matter came up for hearing before the Bench of the Tribunal and on hearing both the parties, the Bench found that the only question needs to be examined is whether Document Raw Base Paper could be deemed as Printing and Writing Paper falling under any of the sub-heading specified in the Notification. According to the Serial No. 2 of the table to the Notification, Printing and Writing Paper having a substance by weight of 25 g/m2 and above but not exceeding 180 g/m is eligible to a concessional duty of 60% ad valorem. The Bench took note of the submissions of the appellants that they were not using the imported Documents Raw Base Paper as Printing and Writing Paper. The appellants heavily relied upon the Tribunal decision in their case reported in 1990 (47) E.L.T. 83 (T) - CC v. New India Industries Ltd. wherein the Tribunal had held that Document Raw Base Paper can be used for printing and writing and hence will be eligible for exemption under Notification No. 55/86. The Bench also found that the Collector (Appeals) in rejecting the claim of the appellants has relied upon the HSN Explanatory Note sub-heading 48.02 and the Bench further found that these Explanatory Notes bring out clearly the distinction between Paper and Paper Board of a kind which are used as Base for photo-sensitive, heat sensitive on the one hand and other Paper and Paper Board of a kind used for writing and printing and other graphic purposes on the other hand. The Bench felt that Base Paper including the disputed Document Raw Base Paper which are used as a base for photo-sensitive, heat sensitive and electric sensitive and other similar purposes and Paper and Paper Boards are distinct from Paper and Paper Board of a kind used for Printing and Writing on account of different characteristics and usage. However, since in the appellants' own case cited (supra), the Tribunal had arrived at a different finding the matter was recommended for being heard by a Larger Bench. Accordingly, this Bench had been constituted by the President for considering the issue.
3. Shri A.S. Sunder Rajan, learned consultant appearing for the appellants contended that the question stands settled by the Tribunal's decision in respect of the same goods in their own case reported in 1990 (47) E.L.T. 83 (T) (supra). The learned consultant pointed out that this decision has not been challenged by the Department, He further argued that without challenging the above decision of the Tribunal it was not open to the Department to put forth arguments regarding classification of the Paper base on the first principles. The learned consultant contended that the HSN Explanatory Notes are at best only pursuasive in character and even the Notes under Heading 48.02 in the nature of an inclusive definition and do not really help in differentiating between different types of papers. In the earlier orders passed by the Tribunal, the ISI specification for Printing and Writing Paper had been considered. A sample of the paper had been perused by the Bench/The learned consultant also argued that it is not correct on the part of the Collector (Appeals) to say that it was a method of circumventing ITC restrictions that the appellants had declared the paper as Printing and Writing Paper in the Bill of Entry. The learned consultant pointed out that in fact Raw Base Paper is covered by OGL in the Import Policy. There was also another decision of the Tribunal in their own case reported in 1990 (35) E.C.R. 324 (CEGAT) wherein the Tribunal had held that Baryata Coated Raw Base Paper was eligible for exemption under Notification No. 55/86. In coming to this decision, the Tribunal in that case quoted another decision of the Tribunal in the case of same appellants in Order No. 1266/90-C. The learned consultant urged that these Orders of the Tribunal remained unchallenged and therefore, should be followed.
4. Shri Somesh Arora, learned JDR for the Department contended that the appellants significantly chose to claim the Import for ITC purposes not as Printing and Writing Paper. He referred to ITC Policy 1988-1991 that Printing and Writing Paper will be covered by serial No. 125 of Appendix 2B of the Policy. The learned DR referred to the HSN Explanatory Notes under Heading 48.02 that two distinct categories of papers are enumerated. Applying the HSN Notes the goods are identifiable as Raw Base Paper as a separate category as against Printing and Writing Paper. The DR argued that it is well settled that HSN Explanatory Notes are worthy of respect and should be followed because the Tariff is largely based on it and also for the reasons it represents an international understanding of the articles in the Import Trade. The Tribunal decision in their own case reported in 1990 (47) E.L.T. 83 was based on the visual inspection of the samples. The HSN Explanatory Notes as quoted above are clear on the subject and had not been controverted in the previous decisions of the Tribunal. It was also contended that the goods are not sold as Printing and Writing Paper.
5. The submissions made have been carefully considered. The relevant entry in the Notification No. 55/86 is reproduced below :
"The Central Government exempts goods specified in column (3) of the Table hereto annexed and falling under the heading No. or sub-heading No. specified in column (2) thereof, when imported into India, from so much of the duty of Customs as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table :
TABLE
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Sr. No. Heading No. or sub- Description of goods Rate of
heading No. of the duty
First Schedule to the
Customs Tariff Act,
1975
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(1) (2) (3) (4)
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2. 48.02, Printing and writing 60% ad 48.10, paper having a sub- valorem 4823.51 stance by weight of 25 g/m2 and above, but not exceeding 180 g/m2
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6. The headings 48.02 and 4802.20 are reproduced below :
"48.02 : Uncoated paper and paper board, of a kind used for writing, printing or other graphic purposes, and punch card stock and punch tape paper, in rolls or sheets, other than paper of heading No. 48.01 or 48.03, hand-made paper and paper board.
4802.20 Paper and paperboard of a kind used as a base for photosensitive, heat-sensitive or electro-sensitive paper or paper-board.
The question is whether the uncoated Document Base Paper will be eligible for the exemption under Notification No. 55/86. We find that there is on record a Test Report dated 25-10-1990 by the Chemical Examiner in the Custom House on 'Document base paper'. It reads as follows :
"The technical references and write-up forwarded, states that Document base papers are thin paper composed entirely of rag pulp or highly purified wood cellulose to ensure maximum permanence both in colour and physical properties. They must be free from foreign substances and impurities which would effect the emulsion and must possess sufficient strength both wet and dry to withstand any action of acid and alkaline processing solutions frequently at high temperature and physical handling.
The thinnest of the light weight grade of documentation paper is used for instrument recording work where maximum footage is small dia rolls is important and in document and engineering drawing reproduction where the photographic reproduction is to be used as a printing master.
The goods u/r is also a light weight paper of G.S.M. of 90 approx. and is made entirely of chemical pulp having a very smooth and absolutely white surface. It is not having any sort of coating on either side.
As per the process of manufacture, the document base paper is coated with a light sensitive emulsion over this a cop coat of gelation is given to protect light sensitive layer from any damage. This is then cured and cut to size for specific use.
As the goods u/r meets all the requirements of document base paper i.e. in respect of weightage, colour smoothness and furnish, in my opinion, it would thus merit to be considered as Document base paper.'
7. The Indian Standard Glossary of Terms used in Paper Trade and Industry IS 4661-1968 defines Base Paper as follows :
"Paper or board for conversion by coating or surface application or impregnation. In certain countries this term is also used for papers to which a layer of other material (aluminium, plastics, etc.) is to be added.
8. It is further observed that the Tribunal decision in their own case was not merely based on the perusal and visual inspection of the sample of the product. It was also based on the perusal of the Test report. The Tribunal observed as follows:
"It has not been disputed before us that the imported paper falls within this range of the grammage per square meter. Further, the learned advocate has filed before in the open Court a copy of the Test Report of the Indian Institute of Packaging which shows that the sample of the Document Raw Base Paper was 90 gms/m2- The analysis of the Test Report also shows that the Product passed the Test prescribed in the Indian Standard specifications for Printing and Writing paper. Copies of these papers were also submitted earlier."
9. It is further noticed that in the subsequent Order No. 1266/90-C, dated 16-11-1990, the then President in his concurring Order had observed that in the case of Document Raw Base Paper, the very name signifying that it was to be used for documentation which would have meant Printing or Writing. This decision of the Tribunal, had been further followed by a Three Member Bench in the Appellants own case reported in 1991 (35) E.C.R. 324. The Tribunal observed in that decision that the imported product has to be taken for classification in the condition in which it is imported and not in its end-use. The Tribunal observed that it is likely that the product is capable to be used for Printing and Writing purposes also as could be gathered from its classification. The Tribunal further observed so long the Trade understands it as printing and writing paper of its general uses and at the time of its import, it has been considered so, for the purposes of classification, then it follows for the purpose of notification, the eligibility for the exemption has to be solely on the basis of the conditions stipulated in the Notification. Therefore, the precedent decisions of the Tribunal on this very product in the case of appellants themselves have proceeded on the basis that the goods Document Raw Base paper in the form it is imported is capable of being used for being printing upon and that this has been found to be supported by the Test Report of the Indian Institute of Packing and also the nomenclature for the product itself. It may also be noted that the Department had not produced any evidence contrary about the trade understanding of the product in the condition in which it is imported. Therefore, considering the well settled principle that HSN Explanatory Note though admittedly having pursuasive value but at the same time do not have any statutory authority, and further considering that in more than one decision on the very same product, the Tribunal in the case of the same appellant has found that the goods uncoated Raw Base Paper could be considered for exemption under Notification 55/86 provided the grammage limits are fulfilled, it will be reasonable to conclude that these decisions of the Tribunal should stand and should be followed and there is no justification for deviating therefrom. This conclusion also arises when it is considered that the Deptt. had not shown before us that any of these precedent decisions have been challenged before the higher forum. Therefore, it is held that the goods imported, namely, uncoated Document Base Paper classified under Heading 4802.20 will be eligible for exemption under Notification No. 55/86 provided the other conditions in the notifications are fulfilled.