2020 (8) TMI 56 - AT - Central Excise

Classification of goods - Kaoline Coated Paper - whether aluminum coated paper/metalized paper cleared by the appellant during the disputed period merits classification under Central Excise Tariff Heading 48101390 or 48115900? - HELD THAT - To qualify classification under Tariff Item No.48115900, the goods should be other than bleached, weighing more than 150 g/m2 and should either be coated with plastic or should be impregnated with plastic or covered with plastic. Also, CRCL vide its report dated 24.11.2011 have categorically reported that the samples were free from plastic material - thus, the classification arrived at by lower authorities is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of aluminum-coated paper/metalized paper.
2. Applicability of Central Excise Tariff Heading 48101390 vs. 48115900.
3. Validity of duty demands based on the classification dispute.
4. Interpretation of tariff headings and the presence of plastic as a condition for classification.

Issue-wise Detailed Analysis:

1. Classification of Aluminum-Coated Paper/Metalized Paper:
The core issue is whether the aluminum-coated paper/metalized paper cleared by the appellant should be classified under Central Excise Tariff Heading 48101390 or 48115900. The authorities below classified the goods under Heading 48115900, while the appellant contended that their product should be classified under Heading 48101390.

2. Applicability of Central Excise Tariff Heading 48101390 vs. 48115900:
The appellant argued that their product, being coated with aluminum, an inorganic substance, falls under Heading 48101390, which covers "Paper and paperboard, coated on one or both sides with kaolin (china clay) or other inorganic substances." The Revenue, however, proposed classification under Heading 48115900, which pertains to "Paper and paperboard, coated, impregnated or covered with plastics (excluding adhesives)."

3. Validity of Duty Demands Based on the Classification Dispute:
The proceedings began following an audit in November 2010, which alleged misclassification and short payment of duty. Multiple Show Cause Notices (SCNs) were issued, culminating in a common Order-in-Original confirming a duty demand of ?1,52,99,433/-. The appellant consistently maintained that their product did not meet the criteria for Heading 48115900, as it was not coated with plastic.

4. Interpretation of Tariff Headings and Presence of Plastic:
The appellant emphasized that Heading 48115900 explicitly requires the presence of plastic for classification, supported by the CRCL report stating that the samples were free from plastic material. The adjudicating authority's interpretation that the presence of plastic is not essential was contested by the appellant, who argued that such a reading would render the phrase "with plastic" meaningless.

Judgment:
The Tribunal examined the conflicting tariff headings and the CRCL report, which confirmed the absence of plastic in the appellant's product. The Tribunal concluded that the product, being coated with an inorganic substance (aluminum), should be classified under Heading 48101390. Consequently, the classification under Heading 48115900 by the lower authorities was deemed unsustainable.

The Tribunal set aside the impugned Order-in-Appeal, allowing the appeal with consequential relief to the appellant. The judgment emphasized the importance of specific tariff entries prevailing over general ones and the necessity of plastic presence for classification under Heading 48115900.

Conclusion:
The Tribunal's decision underscores the correct interpretation of tariff headings and the necessity for precise classification based on the product's characteristics, reaffirming the appellant's classification under Heading 48101390.