2005 (98) ECC 143 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Bangalore

Dr. S.L. Peeran, Member (J) and Shri K.C. Mamgain, Member (T)

Champion Packaging Industries Pvt. Ltd.

Versus

Commissioner of Central Excise, Bangalore

Appeal No. E/1214/02

[Arising out of Order-in-Appeal No. 508/2002, dated 23.8.2002 passed by the Commissioner of Central Excise (Appeals), Bangalore]

Final Order No. 1422/2004, dt. 27.8.2004, Certified on 13.9.2004

Classification (C. Excise)

Aluminium foil -- Board Circular No. 753/69/2003-C.Ex. dated 6.10.2003 -- Heading 76.07 and sub-heading 7616.90 -- Aluminium foil which is laminated on both sides with plastic are classifiable under heading 76.07 and pouches made therefrom under sub-heading 7616.90.

Appeal allowed

PRESENT :

Shri Rameshananthan, Adv. for the appellant.

Shri P.M. Saleem, SDR for the respondent.

Cases Cited :

1. Collector of Central Excise, Bombay v. Tender Care International, 1998 (104) ELT 424 (Tri) [Para 3]

2. Metlex (I) Pvt. Ltd. v. CCE, New Delhi, 2004 (165) ELT 129 (SC)........................ [Para 3]

3. Paharpur 3 P v. Commissioner of Central Excise, Ghaziabad, 2004 (167) ELT 515 (T) [Paras 2 & 5]

Per : K.C. Mamgain

Heard both sides.

2. Shri Ramesh Ananthan learned Advocate appearing for the appellants pleaded that the appellants are manufacturing aluminium foil laminated on both sides with plastic films. Show cause notice was issued to them asking them to show cause as to why the goods i.e. polyester laminated with aluminium and further laminated with plythene in roll form should not be classified under sub-heading 3920.30 of the Schedule to Central Excise Tariff Act and the said goods in pouch form under 3923.90 and accordingly differential duty was demanded from them. The case was adjudicated by the AC who confirmed the demand of Rs. 7,88,592 and classified the aluminium foils laminated on both sides with plastic under sub-heading 3920.39 during February 99 and under sub-heading 3923.90 from March 99 onwards. The Commissioner (Appeals) upheld the order of the Assistant Commissioner but on quantification of duty he directed the appellant to submit a detailed statement to show the duty liability to lower authority who should verify the correctness and then confirm the duty liability. In appeal it was pleaded that the appellants are manufacturing aluminium foil laminated with plastics as per requirement of the customer. They were all along classifying the goods under sub-heading 7607.90 of the Schedule to the Central Excise Tariff Act and paying duty accordingly. He pleaded that their case is fully covered by the decision of the Tribunal in case of Paharpur 3 P v. Commissioner of Central Excise, Ghaziabad, 2004 (167) ELT 515 wherein it was held that aluminium foil laminated on both sides with plastic films is classifiable under 76.07 of Central Excise Tariff Act. He also relied on Board Circular No. 753/69/2003-C.Ex dated 6.10.03 where it was held that aluminium foil laminated on both sides with plastic film, would be classifiable under sub-heading 7607 instead of sub-heading 3920. He pleaded that the lower authorities have not considered the pleadings of the appellants and have wrongly classified the goods.

3. Shri P.M. Saleem learned SDR appearing for revenue referred to Section Note 1 (C) of Section VII and Chapter Note 4 of Chapter 71 and stated that on the basis of these Sections and Chapter Notes, the goods would be classified according to the pre-dominance of the material contained in the goods and therefore, the lower authorities have correctly classified the product under chapter 39. He also relied upon the following decisions.

(1) Collector of Central Excise, Bombay v. Tender Care International, 1998 (104) ELT 424 (Tri)

--Where it was held that air bubble ratio cushion films used specifically for packing of goods classifiable under sub-heading 39.23 of Central Excise Tariff Act as packing material and not under sub-heading 3920.38 as laminated plastic films.

(2) Metlex (I) Pvt. Ltd. v. CCE, New Delhi, 2004 (165) ELT 129 (SC)

--Where it was held that laminating/metallising of duty paid film not amounts to manufacture - product is a film to start with and remains a film after lamination or metallisation and no new and distinct product comes into existence.

4. We have carefully considered the submissions made by both the sides. The only issue contested before us is the classification of aluminium foil laminated with plastic on both sides. We find that in the show cause notice dated 1.9.99 it is alleged that the appellants are manufacturing polyester films laminated with aluminium and further laminated with polythene in roll form. The process of manufacture of the product is that the polyester films of about 10 micron thickness is laminated with aluminium foil of about 9 to 12 micron thickness. It is further laminated with the poly ethylene film of about 25 to 37.50 microns. Thus it appeared that the plastic material is pre-dominant and bulk of the roll constituent material is determined by the plastic material. Therefore, these are rightly classifiable under sub-heading 39.20.39. The Assistant Commissioner has given a finding that polyester laminated with aluminium and further laminated with polythene in roll form is classifiable under Chapter 3920.39. The Section and Chapter note as well as decisions relied upon by the learned SDR in support of the case are not relevant to the issue as the main issue is already settled as indicated in the following paragraphs.

5. We find that the department's claim is that on polyester film aluminium film is put and then polythene film is put on that. This means that this is an aluminium foil laminated on both sides with plastic films as has been pleaded by the learned counsel for the appellants. We find that Board in Circular No. 753/69/2003-C Ex dated 6.10.2003 has clarified as under:

--"The department had proposed the classification of Aluminium foil laminated on both sides with plastic films under Chapter Heading 3920 on the basis of Board's Circular No. 461/27/99, dated 11.6.1999. The referred classification was set aside by CEGAT vide Order No. 59/02, dated 12.2.2002 classifying the product under Chapter Heading 7607. Department's appeal against this order was set aside by the Supreme Court in CA No. 5148/02 on 24.2.2003 [2003 (157) ELT A 35 (SC)]. On the ground that the Department did not file appeal against the CEGAT order in the case of Indian Foils Limited, Calcutta.

--The judgment of the Supreme Court has been accepted by the Board and it has been decided by the Board that classification of aluminium foil laminated on both sides with plastic film would be under Chapter Heading 7607 instead of Chapter Heading 3920."

--From the circular it is clear that CEGAT vide Order No. 5902 dated 12.2.2002 had classified aluminium foil laminated on both sides with plastic films under heading 76.07 and the appeal of the department was rejected by the Supreme Court in C.A. No 5148/02 on 24.2.2003 against this order on the ground that department did not file appeal against the CEGAT Order in case of Aluminium Foils Ltd., Calcutta. Therefore, the board has decided that classification of aluminium foil laminated on both side with plastic film shall be under heading 76.07 instead of 39.20. We also find that in para 3 of their order in case of Paharpur 3 P v. CCE, Ghaziabad (supra), the Tribunal has given the following finding.

--"It is also noticed that on the basis of the above decision, the Board has issued a Circular (753/69/2003-CX., dated 6.10.2003) as reported in 2003 (157) ELT T 63 = 2003 (59) RLT M-16, clarifying that the judgment of the Hon'ble Supreme Court in the case of M/s R.T. Packaging Ltd., has been accepted by the Board and it has been decided by the Board that the classification of aluminium foil laminated on both sides with plastic films would be under chapter Heading 76.07 instead of Chapter Heading 39.20. Inasmuch as the issue is decided in favour of the appellants, we set aside the impugned order and allow the appeal with consequential relief to the appellants. Stay Petition also gets disposed of."

6. Therefore, we find that in view of these decisions and the Circular of the Board, the product i.e. aluminium foil which is laminated on both sides with plastic are correctly classifiable under heading 76.07 and pouches made therefrom under sub-heading 7616.90. Accordingly we set aside the order of lower authority and allow the appeal.