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2003 (9) TMI 488 - AT - Central Excise

Issues Involved:
1. Classification of Aluminium foil/strips backed on both sides with plastics.
2. Classification of Stainless steel foils/strips backed with plastics on both sides.
3. Applicability of the extended period of limitation for demanding duty.

Detailed Analysis:

1. Classification of Aluminium foil/strips backed on both sides with plastics:
The primary issue is whether Aluminium foil/strips backed on both sides with plastics should be classified under sub-heading 7607.00 of the Central Excise Tariff Act, as claimed by the appellants, or under sub-heading 3920.30, as classified by the Commissioner. The appellants argued that the plastic backing is used only to improve the bonding of the metallic screen with the plastic jacket of JFTC cables and to seal the longitudinal edge of aluminium tapes. They emphasized that the aluminium part dominates over the plastic part in terms of thickness, bulk, weight, and value. They relied on several precedents, including the Tribunal's decision in Hindustan Packaging Co. Ltd. v. CCE, Vadodara, which classified aluminium foil backed by paper and polyethylene under sub-heading 76.06. The Tribunal noted that the essential character of the product is given by the metal portion, and the use of plastic is only for bonding purposes. The Tribunal concluded that the aluminium strip backed with plastics on both sides is appropriately covered by Heading 76.07, supported by the Supreme Court's dismissal of the appeal in the Hindustan Packaging case.

2. Classification of Stainless steel foils/strips backed with plastics on both sides:
Similar to the aluminium foil issue, the classification of stainless steel foils/strips backed with plastics on both sides was contested. The appellants contended that the copolymer-backed stainless steel tape is used in optical fibre cables to provide armour to make the cable rodent and termite-proof. They argued that the steel portion dominates the plastic portion in terms of thickness, bulk weight, and value. The Tribunal agreed with the appellants, noting that the essential character of the products is imparted by the metal part. Applying Rule 3(b) of the Rules for Interpretation of the Schedule to the Central Excise Tariff, the Tribunal held that the stainless steel strip backed with plastic is classifiable under Heading 76.02.

3. Applicability of the extended period of limitation for demanding duty:
The appellants argued that the entire demand for the period from November 1996 to February 2000 is time-barred as the show cause notice was issued on 29-11-2001, beyond the normal period of one year specified in Section 11A(1) of the Central Excise Act. They contended that they had been regularly filing RT-12 returns and had submitted details of the manufacturing process, clearly showing that aluminium foil is laminated on both sides with plastic. The Tribunal found that the appellants had declared the products manufactured and cleared by them, specifically mentioning that the products are backed with plastics. The Tribunal noted that the Revenue had not disputed the classification declaration, which contained a full description of the goods. Therefore, the Tribunal held that the extended period of limitation as provided in the proviso to Section 11A(1) of the Central Excise Act for demanding the duty is not invocable, and the entire demand is hit by the time-limit specified in Section 11A(1).

Conclusion:
The Tribunal concluded that the impugned products are not classifiable under Heading 39.20 but are classifiable under Heading 76.07 (Aluminium foil backed with plastic) and Heading 76.02 (stainless steel strip backed with plastic) of the Central Excise Tariff. The Tribunal set aside the impugned order and allowed both appeals.

 

 

 

 

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