1983 (8) TMI 275 - AT - Customs

Issues Involved:
1. Classification of "E class electrical grade insulating papers" under the Customs Tariff Act (CTA).
2. Applicability of Interpretative Rules for classification.
3. Eligibility for concessional rate of duty under Notification No. 37/78.
4. Classification for countervailing duty under the Central Excise Tariff (CET).

Detailed Analysis:

1. Classification of "E class electrical grade insulating papers" under the Customs Tariff Act (CTA):
The primary issue is whether the goods should be classified under Heading No. 39.01/06 (artificial resins and plastic materials) or Heading No. 48.01/21 (paper and paper-board and articles thereof). The Customs authorities initially classified the goods under Heading No. 39.01/06, which was contested by the appellants who claimed reassessment under Heading No. 48.01/21. The Tribunal referenced a previous decision (Order No. 303/83C) which held that similar goods imported by Messrs Yash Udyog were classifiable under Heading No. 39.01/06 because the essential characteristics of the goods came from the plastic portion rather than the paper backing, applying Interpretative Rule 3(b).

2. Applicability of Interpretative Rules for classification:
The appellants argued that Heading No. 48.01/21, which refers to "composite paper or paper-board," should be preferred over Heading No. 39.01/06, invoking Interpretative Rule 3(a). They contended that Rule 3(b) applies only when Rule 3(a) is not applicable. The Tribunal, however, found that the goods did not fall under the specific description of "composite paper or paper-board" as per Heading No. 48.01/21. The Tribunal emphasized that the goods were a composite article of paper and plastic material, and the essential character derived from the plastic portion necessitated classification under Heading No. 39.01/06, as per Interpretative Rule 3(b).

3. Eligibility for concessional rate of duty under Notification No. 37/78:
The appellants claimed that the goods should be eligible for a concessional rate of duty under Notification No. 37/78, which applied to electrical grade insulation paper but not to paper-board. The Appellate Collector had rejected this claim, stating that the goods were undeniably paper-board and thus not eligible for the concession. The Tribunal upheld this view, noting that the goods did not qualify for the exemption as they were not purely paper but a composite material with significant plastic content.

4. Classification for countervailing duty under the Central Excise Tariff (CET):
The appellants argued that if the goods were classified under Heading No. 48.01/21 for basic duty, the countervailing duty should be under Item No. 68 CET, not Item No. 17(2). The Tribunal referenced its decision in the case of Messrs Yash Udyog, where it was held that in the absence of Interpretative Rules in the Central Excise Tariff, the goods should be classified under Item No. 68 CET for countervailing duty. The Tribunal agreed with this logic and allowed the appeal to the extent of ordering consequential relief in the matter of countervailing duty, while rejecting it concerning the assessment to basic Customs duty.

Conclusion:
The Tribunal concluded that the goods in question were correctly classifiable under Heading No. 39.01/06 for the levy of basic Customs duty and under Item No. 68 CET for the levy of countervailing duty. The appeal was allowed only to the extent of ordering consequential relief in the matter of countervailing duty and rejected concerning the assessment to basic Customs duty.

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