2008 (6) TMI 202 - AT - Central Excise

Exemption to plastic tanks - Notification No.15/94-C.E., dated 1-3-94 held that - The relationship of goods with particular heading depends upon the description, purpose and use of the goods. Note 11(a) of Chapter 39 of the Act, provides that Heading 39.25 applies also to reservoir, tanks, including septic tank, vats and similar containers. The purpose and use of these goods is to hold liquids or something in liquid form in process of manufacture as in tanning and dyeing etc., and thus can be used and are capable of being used for water storage in connection with raising of construction or mixing construction materials - there is no difficulty in holding that the tanks and vats manufactured by the respondent would fall under Heading 39.25 of the Tariff - that tanks and vats manufactured by the respondent are classifiable as builders-ware of plastics not eligible for exemption.

Summary

Issues:
Classification of "Plastic tanks" under Chapter Heading 3925.10 for dutiability and eligibility for exemption under Notification No.15/94-C.E.

Analysis:
The appeal before the Appellate Tribunal CESTAT, MUMBAI involved the classification and dutiability of "Plastic tanks" cleared by the appellant under exemption Notification No.15/94-C.E. The JDR for the revenue argued that the tanks, used to store chemicals, should be classified under Chapter Heading 3925.10, attracting a duty of 25% ad valorem due to their capacity exceeding 300 Ltrs. The JDR contested the reliance on previous judgments by the ld. Commissioner (Appeals), citing a Supreme Court decision that set aside a Tribunal's ruling. The Commissioner (Appeals) had found that the tanks were specialized for chemical storage, distinct from regular water tanks, with unique features and a higher cost, justifying their classification under C.H.S. 3926.90 for exemption under Notification 15/94. The Tribunal noted a previous Tribunal decision that was overturned by the Apex Court, emphasizing the need to align goods' description, purpose, and use with the classification list. The Tribunal concluded that the tanks fell under "builders-ware of plastics" in Heading 39.25, rejecting the exemption claim under sub-heading 3926.90 based on the established relationship between the goods and the tariff classification.

The Tribunal, following the settled law by the full Bench of the Apex Court, overturned the Commissioner (Appeals)'s decision and reinstated the adjudicating authority's order. The Tribunal emphasized the importance of aligning the goods' description, purpose, and usage with the relevant tariff classification, as demonstrated by the relationship between the tanks and Heading 39.25. By establishing the similarity between the goods manufactured by the appellant and the goods under Heading 39.25, the Tribunal rejected the exemption claim under sub-heading 3926.90, affirming the dutiability of the "Plastic tanks" and setting aside the Commissioner (Appeals)'s decision. The appeal was allowed in favor of the revenue based on the established legal principles and the specific characteristics of the tanks for chemical storage, leading to their classification under the appropriate tariff heading.