Indian Kanoon - Search engine for Indian Law

4.2. The learned counsel has also submitted classification opinions given by HM Revenue and Custom, UK wherein it has been opined that the product merits classification under CETH 4811. A classification ruling given by the US Customs authorities are also submitted wherein identical product manufactured by the US entity of the appellant is classified under CETH 4811.

4.3. The learned counsel further relies on the decision of honble apex Court in the case of Collector of Customs vs. Business Forms Ltd. 2002 (142) ELT 18 (SC) and in the case of Collector of Central Excise vs. Wood Craft Products Ltd. 1995 (77) ELT 23 (SC) wherein it has been held that Explanatory Notes to HSN not only has a persuasive value but is entitled to the greater consideration in classifying the goods under Central Excise and Customs Tariff. Reliance is also placed on the decision of the honble apex Court in the case of Sharp Industries Ltd. vs. Commissioner of Central Excise, Mumbai 2005 (188) ELT 146 wherein the classification of the aluminium foil covered on one side with a polyester film and on the other side with a polyethylene was the issue for consideration. In the said case, it was held that since plastic predominates in the product as 70-80% of the product consists of plastic and aluminium foil being covered on both sides by different materials cannot be said to be backed so as to merit classification under Chapter 76 and, therefore, the product was held to be falling under articles of plastic under CETH 3920/3923. Similarly, in the case of Commissioner of Central Excise vs. Indus Coating Pvt. Ltd. 2010 (259) ELT 321, a question arose whether plastic laminated aluminium foil would fall under CETH 7606.60 or under CETH 3920 and the honble apex Court confirmed the classification under CETH 3920. A similar issue also came up for consideration in the case of Flex Industries Ltd. vs. Commissioner of Central Excise 2010-TIOL-1878-CESTAT-DEL wherein a question of aluminium foil laminated on both sides with plastic came up for consideration and this Tribunal held that the product would merit classification under Chapter 39 and not under Chapter 76. Accordingly, he submits that the impugned order is sustainable in law and needs to be upheld and the appeal of the Revenue dismissed.

5. We have carefully considered the submissions made by both the sides.

5.1. From the manufacturing process given, it can be seen that the aluminium foil is not backed with any material. On the other hand, it is covered on both sides by plastic material and is laminated on one side of the paperboard. Thus, it is the aluminium foil which forms the backing and not the other way. Further, as per the test report, paper accounts for 80% of the material and aluminium, barely 5%. After the introduction of a specific entry for asceptic packaging paper, the scope of CETH 4811 has undergone a change and paper or paperboard backed by a metallic foil merits classification under Chapter 48 which was not the position earlier. The HSN explanatory notes also underwent a change to incorporate within the scope of CETH 4811 such paper. A reading of the revised HSN Explanatory Notes clearly shows that paper and paperboards covered on both faces with thin transparent sheets of plastics with or without a lining of metal foil (on the face which will form the inside of packaging) are also classified under CETH 4811. Thus the change in the scope of tariff entry needs to be given effect to. The honble apex Court in the case of Business Forms Ltd. and Wood Craft Products Ltd. (supra) has highlighted the relevance of HSN Explanatory Notes in classification under the Customs and Central Excise Tariff as they are fully aligned to the Harmonized System of Nomenclature for commodity classification. In Sharp Industries Ltd it was held by the honble Apex Court that  an aluminium foil which is covered on both sides, by different materials cannot be said to be backed. The aluminium foil in such cases is sandwiched between other materials. It is clear that there can never any backing on both sides. Chapter note (d) of Chapter 76 also makes it clear that Tariff Heading 76.07 will not apply to products which assume the character of articles or products of other headings. In this case, since plastic predominates, the product assumes the character of plastic and for this reason, it could not be classified under Chapter 76. The said ratio was re-iterated in the Indus Coating Pvt. Ltd.(supra). The ratio of these decisions applies squarely to the facts of the case before us. Therefore, we are of the considered view that the product manufactured by the appellant is more appropriately classifiable under CETH 4811 as asceptic packaging paper. The rulings given by the UK and US authorities classifying identical products under CETH 4811, though not binding on us, also support this view. The reliance placed by the Revenue on the Hindustan Packaging case does not help as it pertained to the period prior to the changes made in the tariff creating a specific entry for asceptic packaging paper. Therefore, we do not find any infirmity in the impugned order passed by the adjudicating authority.