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2016 (7) TMI 152 - CESTAT MUMBAI

2016 (7) TMI 152 - CESTAT MUMBAI - 2016 (343) E.L.T. 1064 (Tri. - Mumbai) - Classification of FOIL - PVC foils versus PVC films - heading 3920.11 and 3920.12 read with chapter notes - rate of duty / benefit of exemption - respondent / assessee argued that the films is generic and foils is species thereof, he argued that all foils would be covered in the description of films - Revenue asserted that the impugned product which was classified and sold by the assessee as foils is totally different fr .....

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e same invoice also describes the product as PVC Films. If revenue wanted to distinguish Film from Foil they have to first describe the attributes of both Film and Foils. It is undisputed that the product in question answers to the definition of Films given in the Chapter Notes. In absence of any definition of Foil, it is not reasonable to assert that the product, which does answers to the description of Film, is a Foil. - Revenue has not given any definition of the term Foil. The invoices .....

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Appellant Shri Gajendra Jain, Advocate with Shri Rajesh Ostwal, Advocate, for Respondent ORDER Per: Raju M/s Amartara Ltd. are manufacturers of plastic products. They were engaged in clearance of what they described in their invoices as Rigid PVC Foils, Rigid PVC Thermoforming Foils & PVC films and classified the same under heading 3920.11 and 3920.12. At the relevant time, the heading 3920 read as under: - 39.20 Other plates, sheets, film, foil and strip, of plastics, non-cellular, whether .....

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ted or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut, they become articles ready for use). 15. For the purposes of heading Nos. 39.19, 39.20 and 39.21, the expression film means sheeting of thickness not exceeding 0.25 millimeters. Vide Notification No. 53/88 vide entry No. 35-37 provided following exemptions: - 35. 39.20 Films (other than of regenerated cellulose) 25% ad valorem If produced out of goods falling under hea .....

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944) or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has already been paid. 37. 39.21 Cellular plates, sheets, films, foil and strip, other than of polyurethanes 35% ad valorem - Similar Notification No. 14/92 dated 1.3.1992 provided following exemption vide Entry No. 32 and 33: - 32. 39.21 Cellular films or sheets, other than of polyurethanes 25% ad valorem If produced out of goods falling under heading Nos. 39.01 to 39.15, on which the d .....

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refore, it was alleged that they were not entitled to benefit of Notification No. 53/88-CE or 14/92-CE. The Commissioner dropped all the notices on the following grounds: - 7. I have gone through the said Notification No. 53/88. At Sl. No. 35 of the table appended to the notification, films other than of regenerated cellulose falling under Chapter Heading 39.20 have been exempt from Central Excise duty in excess of 25% ad valorem. This exemption is subject to the condition that the said films mu .....

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s, i.e. the final product, must be manufactured out of raw materials falling under Heading 39.01 to 39.15; and (iii) the said raw materials must be duty paid. 8. It has been disputed neither by the CERA nor the Department that the raw materials were indeed duty paid and fell under Headings 39.01 to 39.15. In other words, the two conditions - (ii) and (iii) stood fulfilled. It is also not in dispute that the final product was not of regenerated cellulose and fell under CH 39.20. The only issue in .....

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d to the benefit of the exemption Notification No. 53/88. 9. The noticee have challenged the view treating foils as different from films and drawn my attention to Chapter Note No. 10 of Chapter 39 of the Tariff. The said note provides that for the purposes of CH No. 39.19, 39.20 and 39.21 (all three of which deal with inter alia with films), the expression film means sheetings of thickness not exceeding 0.25 mm. 10. Neither the CERA not the Department has disputed the noticees claim of the sa .....

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ot as film. In this connection, I also rely on the Hon'ble Supreme Court s decision in Collector of Customs Vs M/s K. Mohan & Co., reported in 1989 (43) ELT 811 (SC), holding that the scope of the term film was wide enough to cover foils and sheets. 11. Indeed it was in the face of these facts that the CERA eventually came round to the Department s view and dropped their objection. It was accepted that the impugned final product was in fact a film and eligible for exemption under the Not .....

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therefore, exemption cannot be granted to the said product as exemption is available only to films. (iii) It has been held that plastic films are distinct and separate from plastic foils by various judicial pronouncements: - (a) Collector of Customs Vs. K. Mohan & Co. Exports 1989 (43) ELT 811 (SC). (b) Collector of Customs Vs. Sangli Bank Ltd. 1997 (93) ELT 3 (SC) (c) A.V. Jain Vs. Union of India 1987 (29) ELT 872 (Bom). (d) Precise Impex Ltd. Vs. Collector 1985 (21) ELT 84 (Mad). (e) Conti .....

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aid decision to drop the demands. It was also argued that the arguments film is generic, while a foil is a specie thereof, has been rejected by the Hon'ble Bombay High Court in the case of A.V. Jain (supra). It was argued that in Customs and Excise matters reliance is placed not so much on technical and scientific definition, but on the commercial usage. Since the respondent themselves have cleared the said goods by describing them as foils, they cannot now claim that the same are films. It .....

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) Khoday Brewing & Distilling Inds. Ltd. Vs. Collector of Customs - 1997 (90) ELT 336 (T). (d) Nippon Precision Bearing Inds. Vs. Collector of Customs - 1997 (90) ELT 57 (T). (e) Winter Misra Diamond Tools Ltd. Vs. Commissioner of Central Excise, Jaipur - 1996 (83) ELT 670 (T). (f) Guest Keen Williams Ltd. Vs. Collector of Customs - 1987 (29) ELT 68 (T) It was also asserted that the impugned product which was classified and sold by the assessee as foils is totally different from films thereb .....

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be cleared availing benefit of Sr. No. 35 of Notification No. 53/88. 2.1 The learned AR argued that the impugned order does not deal with all the issues. He argued that the said decision merely relies on the decision of Hon'ble Supreme Court in case of K. Mohan & Co. (supra) to hold that the term film was wide enough to cover foils and sheets. He argued that the Commissioner was unduly influenced by the dropping of CERA objection. He argued that the decision of Hon'ble Supreme Cour .....

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Tax, UP Vs. S.S. Ayodhya Distillery 2009 (233) ELT 146 (SC). He argued that in the said decision, it was held that paddy husk and rice husk do not denote the same commodity. Paddy Husk cannot be treated as rice husk. He argued that every entry is different and distinct meaning from the other entry in the tariff. He argued that any of products of less than 0.25 mm were considered as films as per the expert opinion of Dr. M.A. Shenoy of Department of Chemical Technology, Bombay, that there can be .....

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7, 10 and 12. 7. Before turning to the decision in Precise Impex, the trade usage and the academic or academic world, I will consider the question in the light of a proposition canvassed by Mr. Dhanuka. The proposition is that Ex. A must be considered in the proper context and setting. The context is the issue of the Notification under a power conferred upon the Central Government by Section 25 of the Act. This Section empowers the Central Government to exempt generally, either absolutely or su .....

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y of Additional Duty equal to excise duty. To the extent relevant, Section 3 of the C.T.A. reads thus :- Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this Section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India..... The Explanation goes on to specify what the expression articles made of plastics shall mean. It says that the expression shall have the sa .....

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n the Table. The expression all articles of elastics shall be read in the same manner as in sub-Item (2) of Item No. 15A of the First Schedule to CESTA. Sub-Item (2) of Item No. 15A in the First Schedule to CESTA reads thus :- "Articles of materials described in sub-Item (1), the following, namely :- Boards, sheeting, sheets and films, whether lacquered or metallised or laminated or not; lay flat tubing s not containing any textile materials." Similarly, Item No. 39.3(d) of C.T.A. is w .....

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he necessary implication is that films are covered by the umbrella of all articles, in contradistinction to the exclusions spelt out in the Table. Mr. Dhanuka submitted that the reference to CESTA was inappropriate as the sources of power being considered arose from different enactments. But if there is a reference to a statute when exercising power under another statute, the first cannot be ignored and treated as if totally inappropriate as a device for construction of the 2nd statutes languag .....

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establishing that petitioner is not entitled to the benefit of the exemption, inasmuch as the article imported was foils. The reply to this is, that this is an innocuous circumstance because the C.T.A. Entry shown in the Bills of Entry would cover films as also foils. But the entries reproduced above from the Schedules to the CESTA and C.T.A. are different. In the CESTA Schedule, there is no mention of foil. For the purposes of that Schedule, a film and foil could not be said to be synonymous. .....

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s that the two words mean and imply different things. According to Ex. A, all plastics, except those mentioned in the exclusionary Table, are entitled to exemption from Additional Duty. Therefore, the film would be within the exemption, rather than the exclusion. 10. This brings me to the technical data relied upon by parties. Let me first set out the pleading of respondents on this aspect of the matter. In their affidavit-in-reply, the relevant excerpts read thus :- If the thickness of the film .....

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ation. ... ... ... In effect film and foil upto a thickness of 0.025 mm is synonymous. Technically and scientifically the term foil is very thin film having a thickness upto 0.025 mm. The goods in the present petition being metallised polyester film of a thickness of 25 micron (0.025 mm) therefore fall within the term foil. ... ... ... The expression Foil scientifically and technically means very thin material or sheeting or film having a thickness upto 0.025 mm." Reliance is placed upon .....

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term applied to materials which are made in continuous rolls and is less than 1/l000h of an inch thick (0.0254 mm). Foil is familiar as the well-known wrapping materials such as Cellophane. In the book Basic Chemistry of Textile Preparation by S.R. Cockett and K.A. Hilton (page 73) it is stated that thinnest sheet plastics of thickness upto 1 mil (0.025 mm) are termed as foil. From the above information it can be said that a thin film (upto 0.025 mm in thickness) can be recognised as a foil. A .....

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is, that those words and expressions should be construed in the sense in which they are understood in the trade by the dealer and the consumer. According to the case of Indian Aluminium Cables Ltd., the reason is, that it is the understanding of those who are in the trade which constitutes the definitive index of the legislative intention. Petitioner relies upon Brochures brought out by Japanese manufacturers of polyester films, metallised or otherwise. In the Brochure of Sakurame Metallic Yarn, .....

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hat there cannot be films of lesser microns. As pointed out by Dr. Kantawala, the Import and Export Policy, 1984-85 lists at serial No. 116 in Appendix 13, page 206, the following:- Polyester film plain/metallised except metallised film below 6 microns used in the electronics industry. Petitioner also refers to the CESTA classification made by the only manufacturer of polyester metallised films in India. The relevant documents will be found at Exs. 1 and 2, produced along with the affidavit-in-r .....

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s, foils, sticks, etc. etc.. The legislative intent was to maintain a distinction between the two expressions. This is clear from what has been stated above vis-a-vis the words used in the C.T.A. and CESTA entries. Additional Duty under C.T.A. is in lieu of excise. Excise is leviable under CESTA. Under CESTA, the Indian manufacturer describes a film as being of 24 micron thickness. The ISI Glossary accepts sheetings of a thickness not greater than 0.25 mm. as being a film. Scientifically and c .....

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ve relied on the very same decision of Hon'ble Supreme Court to come to a conclusion that the foils are not covered by the description films. For this purpose, he cited the following para of the said decision which read as under: - 2.?The respondent - M/s K. Mohan & Co. - imported, from Japan, metallised polyester films under an import licence dated 14-5-1978. The goods were admittedly in the shape of film rolls several metres long. They were cleared on payment of customs duty leviable u .....

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nder Section 3 of the CTA was granted in respect of articles made of plastics, all sorts, but excluding those specified in the table annexed hereto and falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The annexed table excepted the following items from the purview of the exemption : Tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including tubings and polyvinyl chloride s .....

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. The department contends that the goods are sheets or foils or other rectangular or profile shapes and hence liable to duty. On the other hand the assessees case is that they are films, a specie of plastic articles different from any mentioned in the table. It is alternatively contended that, even if they are treated only as thin sheets of plastic material, they can be more accurately described only as sheetings and not sheets. It is pointed out that the goods are in the form of large rol .....

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it may be that, technically and scientifically speaking, the articles in question may be capable of being characterised as foils, one is concerned in a customs or excise matter not so much with the technical or scientific definitions of these terms but rather with commercial usage. One has to see how the trade understands the expression films and one should also bear in mind in this connection that the expressions set out in the table are applicable not merely to the articles with which we ar .....

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has been made to the classification made by the only manufacturer of polyester films in India for purposes of CEA. Reference has also been made to the brochures brought out by the Japanese manufacturers of the goods in question which show that metallised polyester film could consist of films of the thickness of even 12 to 25 microns. It has been pointed out that, under the Import-Export Policy of India for 1984-85, reference has been made to metallised polyester films having thickness of even l .....

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ibing them either as foils or as sheets. We are therefore of opinion that the goods under consideration cannot be described either as foils or as sheets . 9. There is also another reason why the articles in the present case, to the extent they have thickness of more than 0.25 mm cannot be described as sheets. Shri Ganesh for the assessee contended - and we think rightly - that a film roll of indefinite length and not in the form of individual cut pieces can be more appropriately described as .....

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goods as being of thickness varying between 0.025 mm and 0.501 mm, it is seen from another of the orders that the goods are 3000 metres in length, 0.501 mm in width and 0.025 mm in thickness. If the latter is the correct version and all the goods are only 0.025 mm in thickness, the question now posed will not at all arise. However, as indicated above, there is force in the contention of Shri Ganesh that if the articles be held not to be films , because they exceed 0.25 mm in thickness, they wou .....

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ble Supreme Court in the case of A. Mohan & Co. is clearly applicable to the present case. He argued that in all the invoices, whether under the description the goods were disputed as foils under the heading name of excisable commodity, the same were described as PVC film. He argued that in all the invoices, the name of excisable commodity has been described as PVC film. He produced certain sample invoices. He argued that while in the invoices covered in the show-cause notice issued upto 1 .....

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erpreting the description in the Notification, the Chapter Notes are relevant. For this purpose, he relied on the decision of Hon'ble Supreme Court in case of Commissioner of Central Excise Vs. Fenoplast 1994 (72) ELT 513 (SC). He relied on para 2, 3 and 7 of the said decision to state that understanding in common parlance or commercial parlance would be relevant only in absence of any definition given in the enactment. The said para reads as follows: - 2. The respondent purchases 100% cotto .....

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hich found favour both with the Collector (Appeals) and the majority of the Members of the CEGAT is that the rexine cloth manufactured by the respondent cannot be called a cotton fabric in view of the fact that cotton fabric represents a mere 8% of the final product (by weight) whereas the remaining 92% is represented by coating material. The respondents case which has been reiterated before us by its learned counsel, Shri Soli Sorbajee is that in commercial or in common parlance, rexine clot .....

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f the respondent, rexine cloth) is expressly placed within the purview of the cotton fabric by the Parliament. In the face of such express inclusion, there is no room for arguing that the rexine cloth or coated fabric is not cotton fabric. May be that rexine cloth is not called or dealt with as a cotton fabric in the commercial world or in common parlance but that does not prevent the Parliament from treating it as a cotton fabric for the purposes of the Act and indeed the Parliament has chosen .....

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inasmuch as the said predominance or percentages are applicable in relation to the base fabric and the base fabric in the case of respondent s product is 100% cotton. 7. Shri Sorabjee cited several decisions of this Court holding that in interpreting the meaning of the words in a taxing statute like the Excise Act, the meaning assigned to the words by the trade and its popular meaning should be accepted and that the test to be applied is to see how the product is identified by the class or se .....

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ify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance .....

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mined. It was held that though Urea was not used as fertilizers, still it was to be considered as fertilizer in terms of the Heading 31.02 in terms of the Chapter Note 31 of Chapter 38. The Hon'ble Supreme Court in the said case observed as follows: - 12. Consequently, on a conjoint reading of the express terms of Notification No. 40 of 1985 and the relevant headings and sub-headings of Chapter 31 of the Tariff Act, it must be held that the appellant by captively consuming ammonia had manufa .....

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ernment while promulgating the said notification, nothing prevented the Central Government from indicating that it was not seeking to cover the goods mentioned in Chapter Heading No. 31 or in not confining the said exemption notification only to soil fertilisers. In the absence of any such restrictive words in the said notification, the express and wide terminology fertiliser employed in the notification cannot be curtailed by any process of reasoning about the supposed intention of the Central .....

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to understand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption was granted. It must be kept in view that the object and purpose of the exemption has to be culled out from the express language of the notification. If the express language of the notification does not indicate a contrary inte .....

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se duty on the captively consumed ammonia if it had resulted in the manufacture of fertilisers and as it had resulted in the manufacture of molten urea which by itself was a chemical fertiliser covered by Chapter 31 expressly mentioned in the said notification, the scope and ambit of the said notification could not be curtailed on the basis of the supposed latent intention underlying the said notification, namely, that only soil fertiliser was required to be produced by the captive consumption o .....

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lisers, namely, chemical fertiliser, soil fertiliser, animal or vegetable fertilisers, as seen from description of various types of fertilisers found in Chapter 31 of the Tariff. It has also to be noted that the chapter notes of the Chapters referred to by the said notification have to be read as a part and parcel of the said notification. In this connection, we may usefully refer to a decision of this Court in Fenner (India) Ltd. v. Collector of Central Excise, Madurai [1995 (77) E.L.T. 8 (S.C. .....

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ore, it must be held that if molten urea as covered by Heading No. 31.02 was not to be used as fertiliser and on the other hand was utilised as an input for producing melamine, still it would remain a chemical fertiliser within the sweep of Chapter 31. If it remained a fertiliser, it could not be said that ammonia which was captively consumed for manufacturing molten urea had not satisfied the condition for earning total exemption under Notification No. 40 of 1985 as ammonia had resulted in the .....

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its coverage goods of the description falling under Chapters 25, 27, 28, 29 and 31 or 32 of the Tariff Act. When there is an express reference in the notification covering the goods, amongst others, those referred to in Chapter 31 and as Chapter 31 in its turn includes chemical fertilisers, it is difficult to appreciate how despite such an express reference in the notification, the supposed common parlance test can be adopted. In fact, such was not the contention of the department even before t .....

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e and not molten urea. On the express language of the notifications, in question, it is not possible to agree with the contention of Shri Bhat, learned Additional Solicitor General that the term fertiliser employed by the said notification must be understood by adopting the common parlance test to be referred to soil fertiliser only. 3.2 Learned Counsel also argued that the individual rate prescribed in the Notification are exclusively for the purpose of countervailing duty and are not intended .....

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re proceedings to allege that the respondents have cleared Foil is the description on the invoice. No definition of Foil has been relied upon by the appellants in the review order. It has not been stated how the Foil is different from Film. It has not been disputed that the products cleared by the respondents are of less than 0.25 mm thickness as can be seen from the invoices submitted by the respondents. No other material to counter this claim has been produced. We find that the only reason for .....

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ibed the product as Foil and as Film at two places in the same invoice during certain period. In all the invoices produced before us the thickness has been given ranging from 0.18 mm to 0.25 mm. It does conform to the description of film. 4.3 The entire argument of the revenue is based on the fact that for some period the product has been described as Foil in the invoices. On the basis of this fact, it was argued that in commercial parlance the product is known as foil. It is not a correct concl .....

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