2007 (5) TMI 60 - AT - Central Excise

Classification Department contended that appellant goods (Poly-Coated paper) are classifiable under Chapter 39 but as per appellant it is classifiable under Chapter 48 Held that the said good classifiable under Heading 48.11

Summary

Issues: Classification of Poly-Coated Paper under Chapter 39 or Chapter 48

Detailed Analysis:

1. Classification Dispute: The appellants contended that the Poly-Coated Paper they manufacture should be classified under Heading 4811 of Chapter 48, which covers "Paper and paperboard coated, impregnated or covered with plastic." They argued that the product falls under this heading as it is coated with Polyethylene, as per the Chemical Test Report provided.

2. Chapter Note Interpretation: The appellants emphasized Chapter Note 1 of Chapter 48, Clause (g), which specifies that products like "reinforced stratified plastic sheeting" or "one layer of paper or paper-board coated or covered with a layer of plastics" with plastics constituting more than half the total thickness fall under Chapter 39. They argued that since the thickness of the paper predominates over the Polyethylene layer, the product should be classified under Chapter 48.

3. Precedents and Tribunal Decisions: The appellants cited a previous order by the same Commissioner and decisions by the Special Bench of the Tribunal and other cases where similar Poly-Coated Papers were classified under Chapter 48. They highlighted that even if classified under Chapter 39, the duty rates were the same as under Chapter 48, which the Adjudicating Commissioner failed to consider.

4. Inconsistencies and Logic: The Tribunal noted the inconsistency in the Commissioner's decisions for similar products within a short period. They found it surprising that the logic applied in favor of another manufacturer was not extended to the present appellants. The Tribunal criticized the Adjudicating Commissioner for misapplying Rule 3 of the Interpretation Rules and not adhering to the terms of the heading and related chapter notes for classification.

5. Decision and Rationale: After considering the chemical composition and thickness of the Poly-Coated Paper, the Tribunal concluded that the product should be classified under Heading 48.11 of Chapter 48. They emphasized that the terms of the heading and the relevant chapter note clearly indicated the classification under Chapter 48, without the need to apply subsequent rules of interpretation. The Tribunal set aside the impugned order, including the demand and penalty, in favor of the appellants.

6. Final Verdict: The Tribunal's decision to classify the Poly-Coated Paper under Chapter 48 obviated the need to address the submissions regarding duty rates. The appeal was allowed, providing consequential benefits to the appellants, based on the classification under Chapter 48.

This detailed analysis of the judgment highlights the key arguments, interpretations, precedents, inconsistencies, rationale, and final decision made by the Appellate Tribunal CESTAT, KOLKATA regarding the classification of Poly-Coated Paper under Chapter 39 or Chapter 48.