TMI Blog2018 (3) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... er CET Heading 54 of the CETA and not as a plastic under Chapter 39. By the same analogy, every chemical brought about by polymerization cannot be considered as a plastic unless that is formed under external influence by moulding, casting, extruding, rolling or other process and result into shapes which are retained on the removal of the external influence. Discernibly, a chemical which may have a polymeric composition like the impugned scotchgard but which is capable of being poured, sprayed, coated, impregnated and does not have any specific retained shape surely then cannot come within the fold of plastics for the purposes of Chapter 39. The scotchgard which has been impregnated / coated onto the fabric of the blinds is a licensed product manufactured by 3M. A perusal of the website of 3M informs that the key ingredient of the said material earlier was PER FLOURO OCTANE SULFONIC ACID (PFOS). After some health concerns were raised in respect of PFOS, the key ingredient in scotchgard has been replaced by PERFLOURO BUTANE SULFONIC ACID (PFBS) with chemical formula C4HF9O3S, a chemical compound with a four carbon fluorocarbon chain and a sulfonic acid functional group. The im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved, the assessee has come in Appeal No. E/240/2010. 2. It appears that the department for subsequent periods had drawn samples of the impugned fabrics for testing by the Chemical Examiner. Based on the Chemical Examiner s report, Show Cause Notice No. 80/2009 dated 23.7.2009 on similar lines was issued inter alia proposing classification under CETH 34253000 demand of differential duty of ₹ 8,46,551/- with interest thereon and for imposition of penalty under Rule 25 ibid. So also another Show Cause Notice No. 116/2009 dated 29.12.2009, based on test report of Chemical Examiner, for the period April 2009 to September 2009 was issued inter alia proposing to demand differential duty of ₹ 17,88,947/- with interest thereon and imposition of penalty under Rule 25. Both these show cause notices were adjudicated by common order dated 31.5.2010 wherein the original authority classified the impugned blinds under 39253000 of CETA, 1985 and in respect of show cause notice dated 23.7.2009 confirmed the proposed demand of ₹ 8,46,551/- with interest and in respect of show cause notice dated 29.12.2009 restricted the demand to ₹ 8,15,034/- with interest but dropped t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Today, when the matter came up for hearing, on behalf of the assessee, ld. Advocate Shri N. Viswanathan made the submissions which can be broadly summarized as under:- 4.1 The scotch gard admittedly is a chemical and is a 3 M brand product used for protecting fabric, carpets and furniture. It is a fluoro chemical. By no stretch of imagination it can be claimed that the fabric of blinds was coated, covered or laminated with plastic. Accordingly, the goods cannot attract the mischief of exclusion clause of Note 1(h) of Section XI of the Schedule to the CETA, 1985. 4.2 The department has not placed any evidence to substantiate that the goods in question are made of plastic to shift the classification out of chapter 63 and thus have not discharged the onus cast on them. 4.3 Reliance was placed on the judgment of Hon ble Tribunal in MAC Venetians Vs. Commissioner of Central Excise, Delhi. 4.4 Heading 3925 is not only general and but also residuary and therefore the more specific heading under heading 6303 is appropriate by relying upon Rule 2(a) of the Interpretative rules. 4.5 Note 2(p) of Section 39 excludes the goods falling under Section XI and therefore also the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said Chapter Note, the said goods would therefore be required to be classified only under Chapter 39. 5.3 For these reasons, the impugned orders which have upheld classification under Chapter 39 do not require any interference. 5.4 For the same reasons, the department appeals in respect of the impugned orders to the contrary should be allowed and the order of the original authority restored in those cases. 6. Heard both sides. 7.1 The core issues that will have a bearing on the decision in all these appeals are as follows:- 7.2 (i) Whether the fabric based blinds for window coverings have been impregnated or coated with plastic of Chapter 39, hence do not qualify for classification under CETA 6303 as other articles of textiles and would require to be classified under CETA 39253000; (ii) Whether in consequence, the impugned goods are eligible for duty exemption under Notification No. 30/2004-CE or otherwise. 7.3 The Revenue holds the view that the fabric used in the blinds is a synthetic fibre impregnated with synthetic polymer hence the blind will have to be classified as a plastic under CETH 39253000 will therefore also not be eligible for the said exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsist of extremely long, chain-like molecules. Polymer molecules are typically made up of thousands of repeating chemical units, and have molecular weights ranging from about 103 to 107. As an illustrative example, consider the single chemical mer shown in Figure 5. This mer is called ethylene (or ethane), and consists of two carbon atoms and four hydrogen atoms. The two lines between the carbon (C) atoms indicate a double covalent bond whereas the single line between the hydrogen (H) and carbon atoms represents a single covalent bond. The chemical composition of the ethylene mer is written C2H4 or CH2=CH2. Under the proper conditions one of the double covalent bonds between the two carbon atoms cab be broken, which allows each of the two carbon atoms to form a new covalent bond with a carbon atom in a neighboring mer. In this way three ethylene mers form a new molecule, whose atomic weight is three times as great as the initial mer. If n ethylene mers join together, the chemical composition of the resulting molecule can be represented C2nH4n where n is any positive integer. In this way a chain of ethylene mers join together to form the well-known polymer polyethylene, as sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich may have a polymeric composition like the impugned scotchgard but which is capable of being poured, sprayed, coated, impregnated and does not have any specific retained shape surely then cannot come within the fold of plastics for the purposes of Chapter 39. 7.11 From the facts on record, it has been brought out that the scotchgard which has been impregnated / coated onto the fabric of the blinds is a licensed product manufactured by 3M . A perusal of the website of 3M informs that the key ingredient of the said material earlier was PER FLOURO OCTANE SULFONIC ACID (PFOS). After some health concerns were raised in respect of PFOS, the key ingredient in scotchgard has been replaced by PERFLOURO BUTANE SULFONIC ACID (PFBS) with chemical formula C4HF9O3S, a chemical compound with a four carbon fluorocarbon chain and a sulfonic acid functional group. From the manner in which the manufacturer has positioned their product and also by common parlance scotchgard is generally understood and recognized only as a chemical, which when applied to fabrics and surfaces impart an ability to repel stains, dust and protect the fabric etc. from such elements. Thus appears to reason that scotchg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be considered only as a textile fabric / material, which has been coated with a chemical compound which is not predominant in nature and the fabric per se even after such impregnation will continue to be considered only as a textile fabric. This being so, the made up textile articles made out of such fabric and in particular, interior blinds will be correctly classifiable under CET Heading 6303 as contended by the assessee. In consequence, the impugned goods will be eligible for duty exemption under Notification No. 30/2004-CE. 7.17 The assessee has also put forth the argument that even if the impugned goods got made on the textile fabric was of plastic, even if the textile fabric was coated or covered on both sides with such plastic and seen in naked eye, the resultant product would necessarily fall under Chapter 39 and not as impregnated, coated, covered or textile or laminated textile fabrics and of Chapter 59. The ld. counsel was at pains to point out that no such coating or impregnation can be seen with the naked eye and hence even if the coating was to be considered as plastic, the fabric concerned will only classified under Chapter 59 and not under 39. While we ..... 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