2014 (8) TMI 288 - AT - Central Excise

Classification of goods - metal foil / aluminium foil - Classification under under CETH 4811 9092 or under CETH 7607 2090 - Exemption under Notification 4/2006-CE dated 01/03/2006 - Held that - 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 CEETH 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 fact 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. - Product manufactured by the appellant is more appropriately classifiable under CETH 4811 as asceptic packaging paper. - Decided against Revenue.

Summary

Issues:
Classification of asceptic packaging paper under CETH 4811 or CETH 7606, applicability of Note 2(n) to Chapter 48, relevance of manufacturing process in classification, interpretation of HSN Explanatory Notes, impact of previous judicial decisions on classification.

Analysis:

1. Classification under CETH 4811 or CETH 7606:
The Revenue contended that the asceptic packaging paper should be classified under CETH 7606 instead of CETH 4811 based on Note 2(n) to Chapter 48. They argued that the product contains aluminium foil backed with paper and polyethylene, aligning with previous judicial decisions. However, the respondent argued that the manufacturing process and HSN Explanatory Notes support classification under CETH 4811, emphasizing the position of the aluminium foil within the product.

2. Applicability of Note 2(n) to Chapter 48:
The Revenue relied on Note 2(n) to Chapter 48 to support their classification argument under CETH 7606. This note excludes "metal foil backed with paper or paperboard" from Chapter 48. However, the Tribunal emphasized the specific characteristics of the product in question, highlighting the role of the aluminium foil within the packaging material.

3. Relevance of manufacturing process in classification:
The respondent provided a detailed description of the manufacturing process, emphasizing the arrangement of materials and layers within the product. They argued that the positioning of the aluminium foil within the paperboard supported classification under CETH 4811, as per the HSN Explanatory Notes.

4. Interpretation of HSN Explanatory Notes:
The Tribunal considered the HSN Explanatory Notes in determining the classification of the product. They noted that the revised notes expanded the scope of CETH 4811 to include paper or paperboard covered with plastics and metal foil. This interpretation aligned with the manufacturing process and the specific characteristics of the product.

5. Impact of previous judicial decisions on classification:
The Tribunal analyzed previous judicial decisions related to similar products and classification issues. They distinguished the present case from past rulings, highlighting the changes in tariff entries and the specific nature of the product in question. The Tribunal emphasized the relevance of the HSN Explanatory Notes and the manufacturing process in determining the appropriate classification.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the classification of the asceptic packaging paper under CETH 4811 based on the manufacturing process, HSN Explanatory Notes, and the specific characteristics of the product. The decision was supported by the interpretation of relevant legal principles and the distinction from previous judicial decisions.