Document Fragment View

Matching Fragments

1. In this case the question that arose for consideration was whether 'Aluminium Foil backed by paper and polyethylene' was classifiable under Sub-heading 7606.00 of the Central Excise Tariff Act, 1985 or as "Laminated paper" falling under Sub-heading 4811.29 of the Central Excise Tariff. The matter was originally heard by a two Member Bench. The learned Member who recorded the order held that the matter was covered by the Tribunal's order in the case of National Dairy Development Board (hereinafter referred to as NDDB) reported in 1992 (59) E.L.T. 65 in which 'Tetra pack Asceptic-Packaging material' made of paper laminated with aluminium foil and polyethylene was held as classifiable under sub-heading 4811.90. However, the second Member expressed the view that the matter needed to be referred to a larger Bench since in the case of NDDB the Tribunal had not considered the effect of definition of Toil' given in Note 1(viii) to Chapter 76 of the Central Excise Tariff Act, 1985. The point of difference between the two Members was referred by the Hon'ble President to a third Member. Thereafter, having regard to the majority opinion this Larger Bench was constituted by the Hon'ble President.

2. On behalf of the appellants Shri D.A. Dave, ld. advocate with Shri V.H. Shah, Consultant appeared before us. Shri Dave stated that in the case of NDDB the Tribunal had noted that the corstituents of the product being Base paper 265 gms. per sq. mtrs, Aluminium Foil 18 gms. per sq. mtr. and Polyethylene (LD) 103 gms per sq. mtr., its classification under Chapter 48 was not ruled out by notes I(f) and I(m) of Chapter 48 since Note (f) deals with composition of paper and plastic with predominance of plastic and Note (m) applies only when metal foil is backed with-paper or paper-board. He added that in that case the Tribunal had observed that in order to decide the question whether the goods were covered by Chapter 48 or Chapter 76 was more appropriate, it was essential to have recourse to Rule 3(a) of the Rules of interpretation of the Schedule to the Central Excise Tariff Act, 1985. He contended that the Tribunal had correctly applied Rules 3(a) in determining the correct classification of the goods since in the case of Khandelwal Metal and Engineering Works v. Union of India, reported in 1985 (20) E.L.T. 222 (S.C.) the Supreme Court had held that as per Rule 1 of the relevant Rules of Interpretation in the Import Tariff classification has to be determined according to the description of the article in the heading and if the heading or a note does not otherwise require, according to the provisions of the other rules and notes. He stated that having regard to the fact that the product in question had different materials as its constituents and the taking unto account the wordings of the relevant headings of Chapters 48 and 76 and the notes to these chapters in para 12 of the decision in the case of NDDB Tribunal had correctly concluded that the most appropriate heading for the goods in question had to be determined only by applying Rule 3 of the Interpretative Rules of the Customs Tariff Act. He submitted that paper content being 265 gms. per Sq. Mtr. as against aluminuim foil of 18 gms per Sq. mtr. and polyethylene of 103 gms. per Sq. mtr., the essential character was not on account of Aluminium and hence, the Tribunal had correctly held classification of the product under Chapter 76 was ruled out. He added that the product consisting of paper coated on one side with polyethylene and by aluminium foil sandwiched between two layers of polyethylene film on the other side could not be deemed as laminated aluminium film. He argued that under these circumstances having regard to the fact that paper was the major constituent and it provided essential character to the product, in the case of NDDB the Tribunal had correctly held that it was classifiable under sub-heading 4811.29.

3. On behalf of the respondent Shri B.K. Singh, ld. SDR stated that the appellants were mainly relying upon the order recorded by the ld. Member (Judicial) who on the basis of the Tribunal's decision in the case of NDDB in respect of a similar product had held that it was classifiable under sub-heading 4811.90. He added that the ratio of the decision in the case of NDDB was not applicable in the present case since in the order recorded by Member (Judicial) he had not taken into account the effect of Note 1(viii) to Chapter 76 of the relevant Central Excise Tariff. He submitted that in manufacturing the product in question the first step involves the printing of paper roll and lamination of the printed side with polymer. Thereafter the other side of the paper is laminated with an aluminium foil coated with polyethylene. He contended that in the manufacture of the product aluminium foil backed with polyethylene comes separately into existence. In this regard he referred to the report of the Chemical Examiner at page 181 of the paper book according to which the tested product was found to be aluminium foil backed on one side with paper and on the other side with polyethylene film. He contended that the product thus clearly fits into the definition of aluminium foil as occurring in the relevant Note to Chapter 76 of the Tariff. He stated that classification of the product in question under Chapter 39 was ruled out in terms of Note 1(f) to Chapter 48. He added that in terms of Note 1(f) to Chapter 48 of the Central Excise Tariff which corresponds Note 1(m) of Chapter 48 of the Customs Tariff discussed in the case of NDDB classification of the product under Chapter 48 has also to be ruled out. He submitted that in the case of NDDB the Tribunal had erred in interpreting Chapter Note 1(m) of Chapter 48 the Customs Tariff which did not have any provision for excluding a product by virtue of predominance of weight. He added that in para 11 of the Order in that case the Tribunal while dealing with sub-heading 76.07 of the Customs Tariff had failed to examine the implications of the definition of aluminium foil incorporated in the heading. He contended that the Tribunal had also erred in applying Rule 3(a) of the Rules for the Interpretation of the Tariff to arrive at the conclusion on the basis of predominance of paper by weight that aluminium did not impart the essential character to the product. He submitted that in that case the Tribunal had failed to consider the applicability of Rule 1 according to which classification of a product has to be determined according to the terms of the headings and any relative Section or Chapter Notes. He contended that the possibility of determining the classification of the product in terms of Rule 1 of the Interpretative Rules ought to have been explored since 'Aluminium Foil' was defined in Sub-heading 76.07 of the Customs Tariff and only if the goods were not found to be classifiable in terms of Rule 1, recourse to other Rules could be taken. In support of his contentions he cited that following case law :-

8. It is seen that the case of the respondent is that in the case of NDDB the Tribunal had erred in resorting to Rule 3 of the Rules of Interpretation of the Customs Tariff since classification of the disputed product was determinable in terms of Rule 1 for the Rules for the Interpretation of the Excise Tariff in accordance with the terms of the relevant headings and relative Section and Chapter and Notes. It has been contended that having regard to Note 1(1) of Chapter 48 of the Central Excise Tariff (corresponding to Note 1(m) of Chapter 48 of Customs Tariff discussed in the case of NDDB) and the terms of Heading 76.06 and the relative Note 1(viii) of Chapter 76 of the Central Excise Tariff, the goods are correctly classifiable under Heading 76.06. In order to appreciate the point made on behalf of the Department we refer to Note 1(f) of the Chapter 48, Note 1(viii) of Chapter 76 and Heading 76.06 of the Central Excise Tariff which are reproduced below:-