2018 (9) TMI 453 - AT - Central Excise

Classification of manufactured goods - Printed Heat Transfers - whether the Heat Transfers manufactured by the appellants merit classification under 49011020 or 49089000 or under 491191000 claimed by the appellants during the adjudication proceedings? - time limitation. Held that - Heading no. 49011020 of Central Excise Tariff Act refers to pamphlets, booklets, brochures, leaflets and similar printed matter. Apparently the impugned goods are Printed Heat Transfers and do not fall under above heading by any stretch of imagination. It is found that the appellants have conceded that point during the proceedings with the lower authorities. On perusal of the HSN notes for the heading 4911, it is seen that it refers to only printed matter (including printed pictures and photographs) neither the heading nor the HSN notes thereof refer anything closer to the Heat Transfers that is the impugned goods manufactured by the appellants. Therefore, the contention of the appellants is not acceptable that the same is classifiable under 49119100 - the impugned goods are not anywhere similar or closer to the grouping intended under 4911. Headings of 4908 refer to decalcomania. The appellants attempted to differentiate this heading by saying that Decalcomania refers to Heat Transfers to glass pottery, wood, metal, stone or paper whereas the impugned goods are used for transferring the printed pictures etc., to textile materials; moreover, the heading 4908 essentially refers to use of pigments whereas they are using printing ink; however, among the classification available, heading 4908 appears to be most closer to the grouping. The impugned goods rightly classifiable under 4908.90 as the type of material envisaged in the HSN notes is similar to the impugned goods. Time limitation - Held that - The appellants declared that they are manufacturing Heat Transfers ; they have in regularly filing ER-1 returns only because the Department has verified/scrutinized the records at later date cannot be a conclusive reason for alleging suppression, fraud etc. - Extended period cannot be invoked - demand restricted to normal period. Appeal allowed in part.

Summary

Issues:
Classification of 'Heat Transfers' under Central Excise Tariff Act.

Analysis:
The appeal challenged the Order-in-Original regarding the classification of 'Printed Heat Transfers' by the appellants. The Department contended that the goods should be classified under 49089000 instead of 49011020. The appellants argued that 'Heat Transfers' are distinct from 'Decalcomania Transfers' and should be classified under 49119100. The Chemical Examiner's report supported the appellants' contention. The issue was whether the goods should be classified under 49011020, 49089000, or 49119100.

The Tribunal analyzed the relevant chapter notes and HSN notes for classification. It was found that 'Printed Heat Transfers' did not fall under 49011020, as claimed by the appellants. Heading 4908 referred to 'Transfers (decalcomanias)' and included descriptions of transfers for various purposes. The HSN notes for 4908 aligned closely with the nature of the impugned goods. The Tribunal concluded that the goods were rightly classifiable under 4908.90 based on the characteristics of 'Heat Transfers' and the process involved in transferring designs to fabric.

The Commissioner's observation regarding the end use of the goods in the textile industry supported the classification under 49089000. Reports from the Chemical Examiner and other experts emphasized the suitability of the goods for transfer printing on textile surfaces. The principle of ejusdem generis was applied to interpret the classification. The Tribunal held that 'Heat Transfers' should be classified under 4908.90. The issue of suppression of facts was also addressed, with the Tribunal noting that the appellants had declared the nature of their manufacturing process.

In conclusion, the Tribunal classified the 'Heat Transfers' under 4908.90 and limited the demand to the normal period. The judgment was pronounced on 07/09/2018 by the Tribunal.