2011 (2) TMI 549 - AT - Customs

Classification - assessing authority allowed provisional clearance of the goods against a bank guarantee - composition of the sample was reported as aluminium sheet 47.2%, pigmented polyethylene sheet 51.4% and pigmented polyethylene film 1.4% - properties like bonding strength, thermal resistance, water absorption, thermal conductivity, fire resistance, sound transmission etc. should be understood with reference to the aluminium sheets - Supreme Court s judgment in CCE, Hyderabad v. Bakelite Hylam Ltd., (1997 -TMI - 44705 - SUPREME COURT OF INDIA) in support of his argument that the classification of any composite material has to be determined on the basis of its essential character rather than the percentage of components thereof - Rule 3(b) of the General Rules for the interpretation of the said Schedule is to the effect that composite goods consisting of different materials or made of different components, which cannot be classified by the reference to Rule 3(a), shall be classified as if they consisted of the material/component which gives them their essential character - Appeal is disposed of

Summary

Issues:
1. Classification dispute regarding imported 'aluminium composite panels' under Customs Tariff Act.
2. Determination of essential character for classification under relevant Schedule.
3. Application of Supreme Court judgment in CCE v. Bakelite Hylam Ltd.
4. Comparison of properties attributable to aluminium and plastic components in the panels.
5. Interpretation of General Rules for classification of composite goods.
6. Analysis of relevant Headings under Customs Tariff Act for classification.

Analysis:
1. The case involves a classification dispute over 'aluminium composite panels' imported under SH 7610.90 of the Customs Tariff Act. The dispute arose from the composition of the panels, with the Deputy Chief Chemist's report indicating a significant plastic content, leading to a proposed reclassification under Heading 39.20 based on plastic predominance.

2. The appellant argued that the essential character of the panels, used as building material for aesthetic appeal and functional properties, should determine their classification under SH 7610.90. Citing the Supreme Court's Bakelite Hylam Ltd. case, the appellant emphasized considering essential character over component percentages for classification.

3. The Tribunal analyzed the mechanical properties of the panels, attributing essential characteristics like thermal resistance and water absorption to the aluminium component. The judgment highlighted the external use of panels for improving building features, asserting that properties like thermal resistance are primarily due to the aluminium sheets, not the plastic content.

4. Referring to the Bakelite Hylam Ltd. case, the Tribunal emphasized the importance of determining essential character for classification, especially when composite materials are involved. The judgment underscored that properties like heat and moisture resistance should guide classification based on essential characteristics, not mere component percentages.

5. Considering the relevant Headings under the Customs Tariff Act, the Tribunal found that the panels did not fit under any specific entry based on the essential character test. The analysis led to setting aside the previous order and allowing the appeal, directing assessment of the bill of entry accordingly.

6. Ultimately, the Tribunal's decision favored the appellant's argument regarding the essential character of the imported panels, leading to a reclassification under SH 7610.90. The judgment highlighted the significance of essential characteristics over component percentages in determining the classification of composite goods under the Customs Tariff Schedule.