2015 (8) TMI 1233 - AT - Central Excise

Classification of Flexible Intermediate Bulk Containers (FIBC) - Classification under Heading 392090 / 39232990 or 6305 32 00 - Held that - The Board has issued the clarification for the purpose of All Industry Rates of Duty Drawback and categorically clarified that classification of the product FIBC under drawback tariff item 6305. It is pertinent to state that both the drawback schedule and ITC Code issued by DGFT and CETH are aligned with HSN, the classification issued by the Board assumes vital importance and Revenue cannot change the classification under Central Excise Tariff Chapter 3923. - Point No. 29 of the Minutes of the Meeting of DGFT held on 25.7.2013 clarified item FIBC - Therefore, both the Board s Circular and DGFT have clarified that FIBC is classifiable under Chapter 6305 - Further, the HSN Explanatory Note of Chapter 39 clearly excludes FIBC of Heading 6305 from Chapter 3923. Parallelly HSN Explanatory Note 6305 3200 specifically includes description of FIBC. It is pertinent to state that prior to alignment of Tariff with the HSN Chapter 63 of CETH had only one sub heading i.e. 6301 till 1994-95. With effect from 2005 the Central Excise Tariff was aligned with HSN and the Chapter 63 expanded to include more sub headings from 6301 to 6310. - FIBC is rightly classifiable under 6305 3200 and not under 39232990 - Decied against Revenue.

Summary

Issues Involved:
Classification of Flexible Intermediate Bulk Containers (FIBC) under Chapter Heading 392090 / 39232990 or 6305 32 00 of CETH.

Detailed Analysis:

1. Classification Dispute:
The core issue in these appeals is whether FIBC should be classified under Chapter 39232990 as articles of plastics or under 63053200 as textile articles. The Department issued show-cause notices proposing classification under Chapter 3923 2990, but the Commissioner (Appeals) reclassified them under Chapter 6305 3200, leading to the Revenue's appeals.

2. Revenue's Argument:
The Revenue argued that Chapter 63 applies only to made-up articles of textile fabrics, and since FIBC is made from PP strips, it should be classified under articles of plastics (Chapter 392090 / 39232990). They relied on various case laws and a Board's Circular from 1992, which directed classification of HDPE strips and tapes under Chapter 39. They emphasized that FIBC is known in trade parlance as plastic bags and should be classified accordingly.

3. Respondents' Argument:
The respondents countered that Commissioner (Appeals) correctly classified FIBC under 6305 3200, as supported by HSN Explanatory Notes and various circulars and decisions. They highlighted that HSN Notes for Chapter 39 exclude FIBC, while Chapter 63 specifically includes it. They also referenced a Board's Circular from 2011 and a DGFT meeting which classified FIBC under Chapter 63. Additionally, they pointed to a High Court decision and international trade rulings supporting classification under Chapter 63.

4. Tribunal's Analysis:
The Tribunal examined the submissions, HSN Explanatory Notes, and relevant circulars. It noted that the classification issue arose due to export benefits and not due to a demand for duty. The Tribunal found that the Commissioner (Appeals) had correctly classified FIBC under 6305 3200 based on detailed analysis and alignment with HSN.

5. Board's Circular and DGFT Clarification:
The Tribunal emphasized the importance of the Board's Circular dated 22.9.2011, which clarified that FIBC made of manmade textile material should be classified under 630502. The DGFT meeting also supported this classification, stating that FIBC is a technical textile and should be classified under ITC (HS) Code 63.

6. High Court and International Rulings:
The Tribunal noted that the Hon'ble High Court had previously ruled that FIBC is classifiable under 6305 3200. Additionally, the US International Trade Commission classified FIBC under 6305320010, further supporting the respondents' position.

7. HSN Explanatory Notes:
The Tribunal highlighted that HSN Explanatory Notes for Chapter 39 exclude FIBC, while Chapter 63 specifically includes it. This alignment with HSN post-2005 further supported classification under Chapter 63.

Conclusion:
Based on the Board's Circular, DGFT clarification, High Court rulings, and HSN Explanatory Notes, the Tribunal held that FIBC is rightly classifiable under 6305 3200. The appeals by Revenue were dismissed, and the cross-objections were disposed of accordingly.