Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Hindustan Photo Films on 29 November, 1990
Equivalent citations: 1992(37)ECC104, 1991ECR107(TRI.-DELHI), 1991(52)ELT301(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. The Collector of Customs, Madras has preferred these appeals against a common order dated 13-12-1988 passed by the Collector of Customs (Appeals), Madras by which he had held that cinematograph film, (unexposed), in jumbo rolls is correctly classifiable for additional duty of customs (CVD) under Item 37-I of CET (prior to 1-3-1986) and under Heading 3704 of CET Act, 1985 after that date. He, thereby, set aside the order of the Assistant Collector of Customs, Refund Section, Custom House, Madras dated 16-9-1987 by which she had rejected the 72 refund claims of the respondents herein, M/s. Hindustan Photo Films Mfg. Co. in which they had sought re-assessment of the goods under Heading 3704 CET. The facts of the case in brief are that the respondents, herein, imported goods described as cinematograph film (unexposed) colour positive in 'Jumbo forms' with a specification of an effective width of 112 CMS. This was assessed to CVD by the Custom House under Item 68 CET as 'all other goods, not elsewhere specified', and after 1-3-1986 under Heading 3701.90 CETA as other photographic plates and films in the flat or in rolls, sensitised, unexposed, of any material other than paperboard, paper, etc. The respondents, subsequently, preferred a refund claim seeking re-assessment under Item 37-I CET as cinematograph films, unexposed, and under Heading 37.04 after 1-3-1986 under CETA as cinematograph films, unexposed. This claim was rejected by the Assistant Collector, by her order dated 16-9-1987 by holding that in the imported form, the goods are not fit for being used as cinematograph film because it has to undergo further slitting before being put to use as cinematograph film and that, therefore, the Assistant Collector, held that the goods is only the raw-material for the manufacture of cinematograph film. Further, it was found that basically, all are photographic films which are distinguished by ultimate usage as photographic, cinematographic, X-ray film, etc. The Assistant Collector's order was contested in appeal before the Collector (Appeals), who referred to a clarification by the Government of India F.No. 119/1/88-CX 3 dated 5-9-1988 in which it was clarified that the view that the process of cutting into smaller sizes and repacking of jumbo rolls of sensitised film on which duty of customs including CV duty has been paid will not amount to manufacture for the purpose of Central Excise duty. The Collector (Appeals), further, referred to another clarification by the Finance Ministry that the process of slitting into required width and cutting to required length of duty paid imported jumbo rolls of cinematograph film, graphic film, etc. cannot be treated as process of manufacture for the purposes of levy of C.E. duty and that the process of perforation will not also amount to manufacture since the cinematograph film, in question, will remain cinematograph film only both before and after perforation.
2. Relying on the above views expressed by the Government of India, Ministry of Finance, the Collector (Appeals) upheld the contention of the respondents and concluded that the cinematographic films unexposed in jumbo rolls, is correctly classified under Item 37-I CET before 1-3-1986 and under Heading 37.04 under CETA after that date. The present appeals have been preferred against this order of the Collector (Appeals). Sh. Jayararrian, Ld. SDR, appearing for the appellants, contended that in respect of the position of the classification of jumbo rolls under the erstwhile C.E. Tariff, there is a decision of the Tribunal reported in 1990 (29) ECC 116 (SB) in which the Tribunal has held, by a majority opinion, that cinematographic films unexposed in jumbo rolls is classifiable under Item 37-I of First Schedule of Central Excise Act for levy of additional duty (CVD). However, the Ld. S.D.R. pointed out that with the coming into effect of the Central Excise Tariff Act from 1-3-1986, the Central Excise Tariff underwent a radical change in the Tariff and the new CETA was aligned to HSN. In this context, he referred to the detailed grounds of appeal in which at Sl. No. 4, the relevant portion of the Explanatory Note to the HSN occuring at pages 511 and 512 thereof under Heading 37.20 in Chapter 37, have been extracted. It has been clearly stated therein that photographic film in rolls is included under the heading as also films in rolls with or without sprocket holes and that photographic films not cut to usable sizes remain classifiable under that heading. It was submitted that it is well settled that the Explanatory Notes to the HSN, which the CETA largely follows have persuasive value in determining the classification. The Ld. S.D.R., further, pointed out that in the corresponding Customs Tariff Act another sub-heading 3702.39, the classification of other films without sprocket holes of a width exceeding 105 mm is under various sub-headings with specification of width and length of the film, whereas in the CETA of these headings are compressed into the sub-heading 3702.90 as other. In this context, the Ld. SDR pointed that the CETA description underwent a change after 1-3-1987 and the department's case is that from 1-3-1986 to 28-2-1987, the classification of the goods should be 3701.90 as other photographic plates and films, etc. and after 1-3-1987 under heading 3702.90 as other photographic films in rolls sensitised, unexposed, etc. For the period prior to 1-3-1986, the Ld. S.D.R. submitted that he would adopt and reiterate department's arguments before the Tribunal in the case of HPF (supra). He, further, contended that the jumbo rolls imported cannot be used as cinematographic films and put to use in cinematographic equipment without undergoing the process of slitting, perforation, etc. Therefore, it is basically a raw-material in jumbo form and as such would be correctly assessable to duty under the residuary item on 'others' in heading 3701.90 and later under heading 3702.90. The Collector's reliance upon the clarification given by the Ministry, the Ld. S.D.R. contended is misplaced because a careful reading of the Ministry's clarification will show that it was with reference to the scope and ambit of the word 'manufacture' in relation to x-ray film, graphic films, under Chapter 37 and related to whether or not cutting, slitting of jumbo forms into smaller sizes and repacking of such product would amount to manufacture. Classification of the material was not the subject-matter of that clarification. The Ld. SDR, further, drew attention to Notification 40/88 CE in which it is indicated that jumbo rolls for cine films are goods falling under sub-heading 3702.90 which refers to 'other'. This is a clear indication, according to the department, of the scope of the heading. The Ld. S.D.R., further, urged that the fact that ultimately the jumbo rolls find use as the cinematographic films, will make no difference because the goods have to be assessed for import in the condition in which they are imported and he relied upon the case of Dunlop India v. UOI decided by the Supreme Court reported in 1983 ELT 1566 that end-use is relevant for classification.
3. It was, further, contended by the Ld. SDR that in the case of Collector of Central Excise v. Northern Plastic Ltd. reported in 1990 (45) ELT 263, the Tribunal had held that jumbo rolls are not cinematographic films which would also go to support the department's case.
4. Shri A. K. Jain, the Ld. Counsel appearing for the respondents, contended that in the decision in the case of very same respondent on classification of the jumbo rolls under the erstwhile CE tariff already referred to by the Ld. SDR reported in 1990 (29) ECC 116, the Tribunal had also referred to the very same clarification dated 5-9- 1988 of the Government of India and observed that it reflected a view that is in accordance with the conclusion of the Tribunal also in that case. The Ld. Counsel, further contended that the finding of the Tribunal in that case has relevance even under the CETA Tariff Schedule because the tariff description under Item 37-I as well as under heading 3704 and 3702 subsequently remained the same, namely, cinematographic films, unexposed. The Ld. Counsel also urged that when the tariff description itself is clear, there was no ground for seeking the aid of Explanatory Notes to the HSN which do not have any statutory authority and the explanatory notes cannot be taken as a conclusive of the issue. The Ld. Counsel also contended that the decision of the Tribunal in Northern Plastics case (supra), does not materially support the department because in that case, the question was with reference to the claim for exemption under notifications 52/86 and 266/86 and 40/88 and 50/88. There was also a question of mis-declaration as the goods were not declared as jumbo rolls by Northern Plastics and the further question of violation of ITC regulations. The notifications referred to were on the basis whether the material was jumbo rolls or non-jumbo rolls and there was a further aspect to that case of having imported the goods without having licence under the Industrial Development and Regulation Act. The present case is, therefore, distinguishable and the ratio of the Northern Plastics decision will not apply as it was given in a different context. He also contended that indication of classification in an exemption notification cannot be held to conclusive of the issue.
5. We have carefully considered the submission made by the Ld. S.D.R. and the Ld. Counsel. The question is whether the goods imported, namely, cinematographic films, unexposed, colour positive in jumbo form with a specification of an effective width of 112 CMS is classifiable under heading 3701.90 or under heading 3702.90 and Item 68 CET as contended by the department or under 3704.00 or 3702.20 or under 37-I CET as claimed by the respondents, M/s. HPF. The relevant headings are reproduced hereunder:
1. 68 CET (Old Tariff) - All other goods, not elsewhere specified.
2. 3701 CET (New Tariff Act, 1986) Photographic plates and film in the flat or in rolls, sensitised, unexposed, or any material other than paperboard, paper or textiles; instant print film in the flat or in rolls, sensitised unexposed, whether or not in packs.
3. 3704 - Cinematograph films unexposed.
4. 3702 - Photographic films in rolls, sensitised, etc.
5. 3702.20 - Cinematographic films, unexposed.
6. So far as the position under the erstwhile C.E. tariff is concerned, we find that the issue is well-settled by the decision of this Tribunal in the case of Hindustan Photo Films (supra). In that case the issue was whether the imported jumbo rolls is classifiable for CVD under Item 68 or under 37-I CET. The department claimed classification under 68 CET while the respondents therein wanted classification under Item 37-I as cinematograph film unexposed. There was a difference of opinion between the members of the Bench. While one of the members held that the jumbo rolls could not be said to be cinematographic films as they could not be used for the purpose in the imported condition and held it to be assessable under Item 68 CET. The other Member of the Bench was of the view that the imported goods in jumbo rolls correctly fall under Item 37-I CET. The matter was referred by the President to a third Member in terms of Section 135C(5) of the Customs Act, 1962 and the third Member agreed with the view that cinematographic films in jumbo rolls is correctly assessable to duty under Item 37-I as cinematographic films unexposed. The majority judgement, therefore, held that even though jumbo films may have to be further slit and perforated before use, its primary function was as cinematographic film, and the essential characteristic of the imported goods is the capability to become cinematographic film. Trade parlance on an international level was also relied upon. This was with reference to the fact that in the talks held by the Indo-GDR Group of Experts, jumbo rolls were also referred to as positive colour cine films, and that the meeting of the committee of the experts was also attended by the D.G.T.D and the experts from Government of India and GDR and that, therefore, some weight would have to be given to the views expressed in the minutes of the expert committee where the goods were considered as cinematographic films unexposed. Therefore, from the above, decision, it is very clear that the classification of the goods under the erstwhile CET prior to 1-3-1986 under Item 37-I CET as cinematographic films unexposed, is well-founded and since there is no ground to take a different view, we follow the same in the case of these appeals also where the ratio of the decision is squarely applicable and we hold accordingly.
7. As regards the controversy regarding classification under the C.E. Tariff Act, 1985 there also we find that heading 3704 reads as cinematographic films unexposed. Sub-heading 3702.20 (after 1-3-1987) also reads the same. Therefore, the tariff description subsequent to 1-3-1986 is also identical with the tariff description under Item 37-I CET. It has been argued before us that the goods will fall under 3701.90 as residuary item under heading 3701 and similarly, under heading 3702.90 with reference to the Explanatory Note to the HSN because of its persuasive value in classification matters under CETA which largely follows the HSN. However, it is well-settled that in the scheme of CETA, the classification is to be determined with reference to the tariff heading, chapter notes and section notes, as also the rules of interpretation for the tariff. It is only if it is not possible to arrive at a conclusion with reference to all these statutory parameters, it will be advisable to seek the aid of the Explanatory Notes to the HSN because of their persuasive value. We have found in this case, however, that the tariff description has not changed and it remains, 'cinematographic films unexposed'. The Tariff Entry does not also contain any size restrictions. Regard has to be had in classification matters to the nature of the goods and their essential character. In this connection, the views expressed by the Sr. Vice President (as he then was) in the HPF case which was agreed to by the third Member in para 22 and 23 of that order are relevant and reproduced below:-
"22. The nature of the subject-jumbo rolls namely, cinematograph films, is not to be doubted though it is true that they cannot be straightaway put into cinema equipment without their undergoing the process of slitting and performation. These latter physical processes actually serve to help the mechanical process of fitment into the equipment and movement of the film in the equipment. But the quality of the goods which makes it cinematograph colour positive film is essentially attributable to the process of emulsion, coating etc. which the rolls have undergone prior to their being imported for, it is nobody's case that jumbo rolls have to undergo any processing in India after their import, save that of slitting and perforation.
23. For all the aforesaid reasons, the imported cinematograph films, unexposed, in jumbo rolls are classifiable more appropriately under Item No. 37(I) of the Central Excise Tariff Schedule than under the non-descript residuary Item No. 68. Item No. 37(I), as noted earlier, reads "cinematograph films, unexposed." The entry does riot place any width restriction on the film. Standard width cinematograph films, unexposed that is to say, of width 70MM, 35mm, 16mm, etc. would undoubtedly fall within the entry. There is no dispute about this position. From the words employed in the entry it is hard to see how the concept of width can be brought into the picture. So long as a given film is a cinematograph film by nature of its quality, though it may not be ready for use in cinematography equipment before being slit into one of the standard widths and perforated at the edges, there is no reason to hold that it would not fall within the scope of the description employed in the entry. In my view the said description is far more specific to cover cinematograph films, unexposed, in jumbo rolls which are the subject of the dispute rather than the non-descript residuary Item No. 68 which has been picturesquely described by Courts of Law as an orphanage to which goods should not be consigned if there is better entry to cover them. This view would gain support from the observations contained in paragraph 7 of the Bombay High Court's judgement in Commissioner of Sales Tax v.Agarwal & Co., - 1983 ELT 116 (Bom.). In this paragraph the High Court has considered several Supreme Court judgements holding that a term in a fiscal legislation should be interpreted having regard to newly developing materials, methods, techniques and processes. Particularly apposite is the observation of the Supreme Court in Porrits & Spencers (Asia) Ltd. v. State of Haryana in 1983 ELT 1607 = 42 STC 433 quoting Homes J. with approval -
"A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used."
It may be that, till not so long ago, cinematograph films, unexposed, used to be imported into India in the standard formats, namely, width of 70 mm, 35 mm., 16 mm., etc. but, in recent years, imports of cinematograph films, unexposed are taking place in jumbo rolls that are of a considerable larger widths and these are slit and perforated in the country. This difference in the format should not make any difference to the classification of the goods as cinematograph films, unexposed, if one applies the observations of the Supreme Court referred to earlier."
8. In view of the above reasoning, which is fully applicable to interpretation of the tariff after the introduction of CETA also, and having regard to the fact that a more specific entry should prevail over a residuary entry, and since by their essential character and primary use of the jumbo rolls they remain cinematographic films, and as such, the heading 'cinematographic films unexposed' in the tariff is specific for these goods, therefore, it is held that the classification of the goods under 3704 under CETA between 1-3-1986 to 28-2-1987 and sub-heading 3702.20 under the CETA after 1-3-1987 will be the appropriate classification for the cinematographic films in jumbo rolls imported here. We also find that the decision of the Tribunal in the case of Northern Plastics (supra) is distinguishable. It has been distinguished at para 40 thereof which is re-produced below:-
"40. Shri Asthana made an important point when he referred to the Judgement of this Tribunal in Collector of Customs and Central Excise v. Northern Plastics Ltd., reported in (1989) 24 ECC 45 (SB): 1990 (45) ELT 263, Tribunal. In that judgment, it was held that the imported goods were jumbo rolls and not cinematograph colour films. In my opinion, the judgment does not influence the present matter. There the question was whether there was mis-declaration as the goods were described (in the bill of entry) as cinematograph films whereas the imported goods were found to be jumbo rolls. In the present matter, the Appellants declared the goods as jumbo rolls and the question is whether for purpose of CET 37(I), they should be considered as cinematograph films. The question being different and the facts being different, I do not consider that the earlier Judgement in Northern Plastics Ltd. (Supra) has to be followed here."
9. In the result, we see no reason to interfere with the orders passed by the Collector (Appeals). The appeals are, therefore, rejected.
S. L. Peeran, Member (J)
10. In these batch of appeals, the merits of the entire case was not argued before us, nor the parties had placed before us any material/evidence on record for complete determination of the questions arising in the appeals.
11. Shri A. K. Jain, learned Consultant, submitted that the matter had been conclusively concluded by this Bench rendering a decision in their own case as reported in 1990 (29) ECC 116 SB : 1990 16 ETR 599.
12. Shri M. Jayaraman learned SDR on the other hand submitted that this decision was in contra to the view taken by the Tribunal in the earlier case decided in respect of identical item in the case of Collector of Customs and Central Excise v. Northern Plastics Ltd. as reported in 1990 (45) ELT 263 T. and therefore the matter required to be placed before a larger bench. In this context, he pointed out the ruling given in the earlier case of the respective importer will not have a binding effect as there is no res judicata in taxation matters.
13. Shri M. Jayaraman, learned SDR submitted that in the earlier case of the same importer the Collector has decided in favour of the Department and confirmed the classification done by the lower authorities. However, in these appeals, the Collector had followed the direction given by Government of India vide their reference No. F.No. 119/1/88-C.X.3, dated 5-9-1989 wherein it had been clarified that cutting, sliting into smaller sizes and re-packing of X-ray films, graphic films did not amount to manufacture. In this connection, he submitted that the learned Collector had seriously erred in not giving any finding on the grounds on which the Assistant Collector had rejected the refund application of the importer vide orders-in-original. The learned Collector had not taken up any pleas but had gone on the basis of the enduse which was not the criteria to be applied in respect of imported items which were in the nature of 'Jumbo Forms' and imported as a basic raw material and were not meant for 'ready for sale' conditions. The imported material did not fit into TI 37 prior to 28-2-1986 as that Tariff Item 37 referred to 'cinematographic films' which were in ready to use form as the imported material did not come within Tariff Item 37. Only item available for classification was TI 68 of CET. The CECB vide tariff advice No. 8 of 1983 dated 10-5-1983 which was made public, had also clarified that a colour cinematographic jumbo unexposed was correctly classified under Item 68 and not Item 37. The Assistant Collector had examined this issue in great details and had held that the goods are not capable of being used as a cinematographic film. It was in the nature of a raw material for the manufacture of cinematographic film. The Assistant Collector had also held that the Tariff Act did not define cinematographic film or photographic film. Basically, all the photographic film, depending on the use to which it is put, the item is distinguished as photographies, cinematographic film, X-ray film etc. The Assistant Collector had negatived the claim of the importer that the jumbo film had got essential character of being sensitive to light, required for cinematographic film. Sensitiveness to light is essential character of all photographic film and it was not peculiar to cinematographic film alone. The Collector (Appeals) had not gone into these matters at all and had also not taken into consideration Trade parlance and commercial use and understanding, while examining the appeals before him. The importer had also failed to put forth any evidence in this matter. Therefore, Shri M. Jayaraman submitted that this matter required to be remanddd for fresh adjudication. However, he submitted that even the issue covered by the previous two rulings was not clear on the point raised in these appeals. He further submitted that there was no technical literature produced by the importer to Say that the imported film could be used only for cinematographic cameras and it cannot be used for any other purposes. Therefore, the bench in the earlier case of the Importer had gone on the basis of tariff entries without taking these factors into consideration and therefore, the matter required to be re-opened and re-considered either by referring these appeals to the larger Bench or for remanding it for de novo consideration. He further pointed out that the third Member in the earlier Importer's case had taken into consideration the materials which had been rejected by both the Members in the case. The Third Member, therefore, had proceeded on the assumption that the documents had been accepted by the Bench. He further submitted that the Collector (Appeals) had committed error in mis-reading the Government of India's letter. He submitted that the issue discussed in that letter was one of simplicity - whether or not cutting, slitting of jumbo films into smaller sizes and repacking of such products would amount to 'manufacture'. This was a clarificatory letter, the issue was not one of the 'classification of Cinematographic films under CET'. Therefore, the Collector had committed an error in concluding that the letter of clarification from Government of India was only discussing the classification of jumbo rolls or films under CET. He further submitted that if the imported items were treated as cinematographic film unexposed, a strange situation would arise, whereby both the imported raw materials and the product manufactured out of it will also be classifiable in the same heading, as product, which is definitely not in the scheme of classification of goods under Customs Act as well as CET. He submitted that the imported items were 'jumbo films' they were raw materials for manufacture of cinematographic films hence they were appropriately classifiable under TI 68 of CET, prior to introduction of new CET Act and in TI 3701.90 of CET (pursuant to introduction of CET 1986) and not Item 37(I) of CET Act (old tariff) - 3704 of CET (new tariff). Shri M. Jayaraman, learned SDR further submitted that a Third Member in the importer's earlier case had erred while stating in the Northern Plastics case (supra) that the matter related only to applicability of Notification and misdeclaration of the goods under Bill of Entry as 'cinematographic films' while imported goods were found to be jumbo rolls. He pointed out that the Bench in Northern Plastics Ltd. case (supra) had also held in para 47 that the imported items were jumbo rolls and not cinematographic colour films. Although the question of classification was also in dispute before the Bench in Northern Plastics case and a clear finding had not been arrived at. He further pointed out that in Customs Classification matters pertaining to raw materials essential characteristics of the imported goods cannot be the basis for classification. Therefore, in view of the anomalous situation, he sought for the matter being referred to a larger Bench.
14. Shri A. K. Jain appearing for the importer respondent reiterated that the issue had been clearly gone into by both the Benches and it did not require any further clarification in the matter.
15. We have to examine the case from this point of view only. As merits of the matter have not been argued, therefore, the Only question for our consideration is (i) as to whether the decision rendered in the earlier case of the respondent importer as reported in 1990 29 ECC 116 is in conflict with the decison rendered in Northern Plastics (Supra) (ii) Does the earlier decision in M/s. Hindustan Photofilms Ltd. (reported in 1990 (29) ECC 116) has the binding effect on these bunch of appeals to be followed as a binding precedent. (iii) Is there a conflict between the two citations under reference requiring these appeals to be placed before larger Bench.
16. In the tariff entry there are several items included therein various types of films viz. photographic plates and films sensitives whether or not exposed or developed sensitived paper board and cloth, whether or not exposed but not developed, cinematograph film, chemical products and flash light materials etc. Cinematographic films exposed or unexposed X-ray. The imported item admittedly is not in a finished form but in raw stage in huge 'Jumbo-rolls'. It has to undergo several processes to come to a complete form by which it could be put into one use. The Collector (Appeals) has placed before him the circular of Government of India virbatim reproduced and directed himself to hold that there is no 'manufacture' without any application of mind. Such a practice has been deprecated by Supreme Court, High Court and by Tribunal. Being a quasi judicial authority, he should have independently applied his mind to come to independent conclusion. Moreover, this Circular was not before the original authority who is a fact finding body. The Collector (Appeals) was sitting in appeal. This has been introduced before him as an additional evidence. There was no examination of the conclusions arrived at in the Circular. The fact that the film has to undergo several processes to make it viable for particular end-use itself suggest process incidental and ancillary and to manufacture such processes result in production of goods. Hence, this is suggestive of "manufacture". Therefore, the Collector (Appeals) should have remanded the matter to the original authorities for de novo consideration, more so, because Assistant Collector had given a finding on 'manufacture' and the Collector (Appeals) was reversing it by applying the contents of the Circular without examining the same and subjecting it to scrutiny in the eye of the law and on the basis of well settled principles of 'manufacture' laid down by the Courts. In earlier appeals before the same Collector, he had upheld the findings of Assistant Collector that the processes were manufacture and now when he was changing his view based on the Circular of Government of India, it tentamounted to extraneous forces working on his quasi-judicial powers. Such type of application of mind has been deprecated in the case of Orient Paper Mills Ltd. v. Union of India & Others - AIR 1969 SC 48, also in 1978 ELT 345 (SC) and in JK Steel Ltd. v. Union of India & Others AIR 1970 SC 1173.
17. There are several items in each of the heading. The imported item is in a raw stage in huge 'Jumbo Rolls'. It is not within our knowledge as no technical literature is produced before us, nor was such literature produced in both the earlier cases cited before us; which could suggest that the imported material cannot be converted into other forms of films noted in the tariff entries except the cinematographic film. The Assistant Collector has stated so in her Order-in-Original that the goods are not capable of use as a cinematographic film and depending on use to which it is put, the item is distinguished as photographic, cinematographic, X-ray films etc. Therefore, this aspect of the matter requires reconsideration. The third Member (Shri I. J. Rao) in M/s. Hindustan Photofilm Ltd. has relied on some materials. These materials were not considered as it had been rejected by the Bench. It is well settled that the scope of reference to a third Member is to confine himself to the points in reference, as has been held in the case of Collector of Customs, Bombay v. Indian Scientific Glass & Others in Order No. 724 to 726/1990-D, dated 7-11-1990. Moreover, these materials were in the nature of additional evidence which could not be looked into at all. Member (Judicial) in his minority order in Hindustan Photofilm Ltd. case has referred to these materials not being taken on record, as the appellants therein had not brought it by an application and the Bench had rejected it. These portions of the order is not contradicted by differing members and hence it has to be construed as the order of the Bench. It is noted so in paras 11, 12 and 13 as follows:-
"11. In this connection Shri Jain sought to rely upon several circumstances as establishing the above contention of the appellants. He referred us to the fact that in the talks held by the Indo-GDR Group of Experts (as evidenced by the minutes of the meeting on 8th & 9th April, 1975) jumbo rolls were also referred to as positive colour cine films. He further pointed out that in discussions held between the appellants and the delegations of M/s. Kamera Film Export Import, Berlin on 27th, 28th and 30th April, 1976 (as evidenced by the minutes of the discussions) jumbo films were also discussed in the discussions over import and supply of positive colour cinematographic films. He also referred to the agreement concluded between the appellants and M/s. Kamera Films, following the above discussion, in which colour jumbo were referred to with reference to the import of cine positive PC-7 films. He again referred to the purchase orders, the invoices etc. of the appellants and their suppliers wherein jumbo films have been described as colour cine films positive, the same description being carried out in the bills of entry also. Reference was also made to the contract with Agfa Gevaert on the part of the appellants wherein also mill rolls of colour cine positive films of width 140 cms. etc. have been referred to (the term mill rolls is apparently another method of describing what others mentioned in jumbo rolls).
12. I may here note that though Shri Jain had produced two other letters, both dated 15th July, 1987, one from the National Film Development Corporation Ltd. and the other from the South Indian Film Chamber of Commerce, he had conceded that they need not be looked into since they would be in the nature of additional evidence and no steps had been taken to introduce such addi tional evidence.
13. Thus, in effect, the appellants have produced, in support of their claim regarding the trade parlance, instances of discussions, agreements, follow up documents etc. of their own transactions only. The explanation is that they alone import such jumbo rolls and therefore there can be no instance of any other part in our country dealing with, and in the course thereof describing, jumbo films as cinematographic unexposed films. While it may be true that no evidence of trade parlance within the country could be produced for the reason stated above it is not known why trade parlance at least in international trade could not be produced by the appellants. As earlier mentioned, the evidence produced of trade parlance is in relation to their own transactions only, with overseas manufacturers also, evidence of said trade parlance being with reference to the transactions in issue in these appeals themselves. I am not satisfied that this would suffice as proof of the trade parlance relied on by the appellants."
(underlined by me).
18. In the main order, Member (Technical), Shri K. S. Venkataramani has referred to these materials. These materials were rejected by the Bench. Possibly he is referring to the materials, which were considered by third Member in Hindustan Photofilm Ltd. case. The documents not being subjected to scrutiny by this Bench, no reliance can be placed on it at all. These are extraneous materials so far as these appeals are concerned. There can be nores judicata in taxation matters as held by Supreme Court in C.I.T. v. Brij Lal Lohia as reported in 1972 84 ITR 273; and in the case of M.R.F. Ltd. v. Collector of Central Excise - 1986 (24) ELT 273. Therefore, if fresh materials had come on record which is likely to change the view taken by earlier Benches then the earlier views do not bind this Bench (see 1989 (43) ELT 266 Bombay). Therefore, the Bench has to independently view this point of Trade Parlance test in the light of the said materials. This is the law laid down by Supreme Court in C.I. T. v. Brij Lal Lohia in 1972 84 ITR 273 and C. W. T. v. Smt. Kusum Badar (1990) 185 ITR 70 by Rajasthan High Court. This has been consistently being followed by the High Courts and by our Tribunal also. These materials have not been scrutinised by original authorities either. In a situation like this only remand for de novo consideration is the choice left for us.
19. As regards the nature of goods, there is no doubt of it being in the form of raw material as noted in both the citations M/s. Hindustan Photo Films Manufacturing Co. Ltd. (supra) and Northern Plastics (supra). However, regarding classification, the dispute was before the Bench. In the Northern Plastics case (supra) at para 5, it is stated that:-
"In the personal hearing, the Respondents argued before the Collector that exemption Notification Nos. 52/86-Cus and 50/88-CE were available to them on the basis of the practice of the Delhi Custom House with reference to identical goods. It appears from the Collector's order that the respondents filed a copy of the L-4 licence (Licence to manufacture goods liable to Central Excise Duty) which referred inter alia, to Cinematographic Colour Films (unexposed) Positive under sub-heading 3702.20. The respondents claimed that the goods should be classified under 3702.41 and argued before the Collector that this having been the earlier practice there could not be a departure from the same."
20. The question No. 1 for consideration raised in para 46 is "(i) whether the goods imported by the respondents are Jumbo rolls/Cinematographic colour films". The answer at para 47 is "In so far as the identity of the imported goods is concerned, it is quite clear that what has been imported are Jumbo rolls and not cinematographic colour films. It was never the case of the respondents that the imported goods were not Jumbo Rolls".
21. The findings pertaining to the same imported goods in Hindustan Photofilm Manufacturing Co. Ltd. (1990 29 ECC 116) by Judicial Member are paras 14, 15 and 16 noted below:-
"I shall at this stage deal with the contention raised by Shri Sachar, as noted in para 6 supra. That was to the effect that the appellants themselves had, in the matter of basic customs duty, accepted classification under heading 37.01/08(1) CTA. It is seen that in the matter of payment of basic customs duty, the appellants had paid duty under the said heading claiming benefit of notification No. 220/76 dated 2-8-1976. That notification exempted colour jumbo films falling within Chapter 37 of the First Schedule to the CTA, when imported into India for processing into colour cine films, from so much of that portion of the duty of customs leviable thereon which is specified in the said first schedule as is in excess of 50% ad valorem, the notification does not spell out the sub-heading. But when we look into the rate of duty in heading 37.01/08 it is clear that the notification put the Jumbo films under sub-heading (1) since that sub-heading provides for a rate of duty at 100%, sub-heading (2) at Rs. 1/- per linear metre sub-heading (3) at 40% and sub-heading (4) X-ray film at 60%. It is, thus, clear that the Government also, in issuing the notification, was of the opinion that colour jumbo films would fall under heading 37.01/08(1).
Cinematographic films are either exposed films or unexposed films. Depending on whether they are exposed or unexposed they would fall under heading 37.01/08(2) or (3) respectively. 37.01/08(1) obviously does not deal with cinematographic films since, as earlier said, such films are either exposed or unexposed only. It is thus clear that in the matter of payment of basic customs duty the appellants themselves had consciously decided that the jumbo films were not cinematographic films and, therefore, chose to pay duty under sub-heading (1) claiming benefit of the notification applicable thereto also. In the circumstances, their contention that colour jumbo films in trade parlance are known as cinematographic films only is not acceptable.
I have earlier held that the jumbo rolls in question could not be said to be cinematographic films as they could not, as imported, be used for that purpose. It has also been seen that there is no acceptable evidence of the description of these jumbo films as cinematographic films in trade parlance also. In the circumstances, I hold that the classification adopted by the customs authorities for purposes of levy of additional duty of customs under Item 68 CET was correct. Accordingly, I hold that wherever duty had been paid under the said item it had been correctly paid and wherever duty was demanded thereunder it was correctly demanded. I accordingly order dismissal of all these appeals." (underlined by me).
22. The findings of Sr. Vice President given at paras 22, 23 and 24 are noted below:-
"The nature of the subject - jumbo rolls namely, cinematograph films, is not to be doubted though it is true that they cannot be straightaway put into cinema equipment without their undergoing the process of slitting and perforation. These latter physical processes actually serve to help the mechanical process of fitment into the equipment and movement of the film in the equipment. But the quality of the goods which makes it cinematograph colour positive film is essentially attributable to the process of emulsion, coating etc. which the rolls have undergone prior to their being imported for, it is no body's case that jumbo rolls have to undergo any processing in India after their import, save that of slitting and perforation.
For all the aforesaid reasons, the imported cinematograph films, unexposed, in jumbo rolls are classifiable more appropriately under Item No. 37(I) of the Central Excise Tariff Schedule than under the non-descript residuary Item No. 68. Item No. 37(I), as noted earlier, reads "Cinematograph films, unexposed." The entry does not place any width restriction on the film. Standard width cinematograph films, unexposed that is to say, of width 70 mm, 35 mm, 16 mm. etc. would undoubtedly fall within the entry. There is no dispute about this position. From the words employed in the entry it is hard to see how the concept of width can be brought into the picture. So long as a given film is a cinematograph film by nature of its quality, though it may not be ready for use in cinematography equipment before bring slit into one of the standard widths and perforated at the edges, there is no reason to hold that it would not fall within the scope of the description employed in the entry. In my view the said description is far more , specific to cover cinematograph films, unexposed, in jumbo rolls which are the subject of the dispute rather than the non-descript residuary Item No. 68 which has been picturesquely described by Courts of Law as an orphanage to which goods should not be consigned if there is better entry to cover them. This view could gain support from the observations contained in paragraph 7 of the Bombay High Court's judgement in Commissioner of Sales Tax v.Agarwal & Co., 1983 ELT 116 (Bom.). In this paragraph the High Court has considered several Supreme Court judgments holding that a term in a fiscal legislation should be interpreted having regard to newly developing materials, methods, techniques and processes. Particularly apposite is the observation of the Supreme Court in Points & Spencers (Asia) Ltd. v. State of Haryana in 1983 ELT 1607 : 42 STC 433 quoting Homes J. with approval -
"A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used."
It may be that, till not so long ago, cinematograph films, unexposed, used to be imported into India in the standard formats, namely, width of 70 mm., 35 mm., 16 mm., etc. but, in recent years, imports of cinematograph films, unexposed are taking place in jumbo rolls that are of a considerable larger widths and these are slit and perforated in the country. This difference in the format should not make any difference to the classification of the goods as cinematograph films, unexposed, if one applies the observations of the Supreme Court referred to earlier.
In the result, I would hold that the imported cinematograph films, unexposed, in jumbo rolls correctly fell under Item No. 37(I) of the Central Excise Tariff Schedule. The orders of the lower authorities deserve to be set aside and the appeals allowed with consequential relief to the appellants." (underlined by me).
23. The third Member has concluded it by noting as follows in paras 37, 38 and 39:-
"The other major point argued by both sides related to trade parlance.
After carefully considering Shri Asthana's devaluation of the minutes of the Indo-GDR meeting, I am of the opinion that even if trade parlance is a relevant point, the contents of these minutes cannot be ignored. As submitted by Shri Jain, the meeting was attended by representatives of DGTD, Ministry of Industry, Government of GDR etc. When the Department did not themselves bring any evidence about trade parlance, this evidence, in my opinion, is reliable. I refer to these only to dispose of the Learned JCDR's arguments in this regard.
The question discussed by the two learned Members and now before me is whether for the purpose of levying CVD, the goods should be classified under heading 37(1) CET 68. In my opinion, the contents of para 22 of the learned Senior V.P.'s order of great significance. Shri Jain emphatically stated before me that the goods are utilised only for the manufacture of cine films and they have no other use. This was never denied either by the learned JCDR before me or by the Department at any stage. Slitting and perforation which is necessarily done on the films do not change the classifiability as would be clear by the judgement of the Tribunal in Agarwal & Co. [1987 (29) ELT 975]. Besides, as correctly argued by Shri Jain classification of the goods is based on its primary functions. (Atul Glass Works) supra. In the present matter, the essential characteristic of the imported goods is the capability to become cinematograph films. The trade parlance on an international level having been held proved by the minutes of the Experts Committee, the goods have to be classified as cinematograph films unexposed." (Underlined by me).
As regards the application of the ruling of Northern Plastics, Member (Technical) has stated at para 40 as under:-
"Shri Asthana made an important point when he referred to the Judgement of this Tribunal in Collector of Customs and Central Excise v. Northern Plastics Ltd., reported in (1989) 24 ECC 45 (SB): 1990 (45) ELT 263 Tribunal. In that judgement, it was held that the imported goods were jumbo rolls and not cinematograph colour films. In my opinion, the judgement does not influence the present matter. There the question was whether there was mis-declaration as the goods were described (in the bill of entry) as cinematograph films whereas the imported goods were found to be jumbo rolls. In the present matter, the appellants declared the goods as jumbo rolls and the question is whether for purpose of CET 37(I), they should be considered as cinematograph films. The question being different and the facts being different, 1 do not consider that the earlier judgement in Northern Plastics Ltd. (supra) has to be followed here."
24. The above observation is not correct as in M/s. Northern Plastics case (supra) as noted above, the question of classification had been raised and gone into and findings arrived at in para 5, 46 and 47. Therefore, it cannot be said that in M/s. Northern Plastics case, the question of classification was not gone into but only the question of eligibility of notification and mis-declaration alone was before the Bench. It could not be so also due to the fact that the classification has to be decided first before the eligibility of exemption notification could be considered. As exemption under the notification could be availed of only after deciding the classification. The film being in raw stage and awaiting several processes to undergo before reaching the enduse it could not be said at this stage, in absence of technical literature that it would suit only for cinematographic film and not for other items. There is such advance in technology and the importer being manufacturer of various types of films, they could utilise it for converting it into any other type of film. The fact that it is being used for cinematographic film requires to be established, if the principle of enduse is being applied for classification purpose at this stage (which appears to me to have been done by the Bench (majority)) in Hindustan Photofilm Manufacturing Co. Ltd. (supra). In this connection, it may be pointed out that the enduse cannot be determinative factor for the purpose of classification as held by Supreme Court in the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and Others, 1983 (13) ELT 1566.
25. It has to be observed that it is the trade parlance test and the manner in which the goods are understood in the trade and commerce which has to be the determination factor for classification of goods in C.T. as well as under CET as held by Supreme Court in the case of Union of India v. Gujarat Woollen Mills 1977 (1) ELT 3.24; Dunlop India Ltd. v. Union of India, AIR 1977 SC 597. The Judicial Member in minority view has made observation at para 13 of the report in Hindustan Photofilms Manufac turing Co. Ltd. 's case (supra) regarding the trade parlance noted above, which cannot be lost sight of, while considering these appeals also. Even if this case does not deserve remand for de novo consideration, yet it requires to be referred to larger bench to settle the issues, in the meanwhile directing the parties to produce the evidence, placed by them in earlier case of Hindustan Photofilms Mfg. Co. (supra) and Northern Plastics Ltd.'s case for the scrutiny of the Bench.
26. I, therefore, answer the questions before me accordingly.
FINAL ORDER In accordance with the majority opinion these appeals are dismissed.