1990 (12) TMI 101 - HC - Central Excise

Issues Involved: Classification of "Stamping Foil" under Tariff Item 15A(2) versus Tariff Item 68 for Excise duty purposes.

Issue-wise Detailed Analysis:

1. Classification of Stamping Foil:
The petitioner company argued that "Stamping Foil," a polyester film metallized and lacquered with added dyes, should be classified under Tariff Item 15A(2). This item covers "articles made of plastics, all sorts," including foils, sheets, and other shapes. The respondents, however, contended that stamping foil is a different product resulting from a manufacturing process and should be classified under the residuary Tariff Item 68, which covers "all other goods, not elsewhere specified."

2. Historical Context and Previous Rulings:
In 1972, the respondents initially attempted to levy Excise duty on metallized and lacquered films under Tariff Item 15A(2). The petitioner challenged this, leading to a statement from the respondents that the petitioner's products did not attract further Excise duty under Item 15A(2) as the necessary duty had already been paid on the plain polyester/PVC/Acetate films. This statement was produced as evidence (Annexure "A").

3. Trade Notices and Departmental Correspondence:
In 1975, the Superintendent of Central Excise sought information on decorative articles produced by the petitioner, potentially classifiable under Tariff Item 68. A Trade Notice issued in 1978 classified "stamping foils" made from duty-paid films under Tariff Item 68. The petitioner contended that stamping foils, being articles of plastic, should fall under Item 15A(2) and not Item 68.

4. Legal Arguments and Submissions:
During the hearing, the petitioner's advocate argued that stamping foil should be covered under Tariff Item 15A(2) due to its nature as a plastic article. The respondents' advocate argued that stamping foil is a new product resulting from a manufacturing process and should be classified under Item 68. Alternatively, even if considered under Item 15A(2), the petitioner should pay Excise duty as it is a new product.

5. Examination of Tariff Items:
The court examined the relevant parts of Tariff Item 15A and Item 68. Tariff Item 15A(2) includes "articles made of plastics, all sorts," explicitly covering foils. The court noted that stamping foils, being metallized and lacquered polyester films, are plastic articles and thus fall under Item 15A(2). The court found no reason to exclude stamping foils from this item, as they are not covered by the exclusions in Explanation II of Item 15A(2).

6. Supporting Precedents:
The petitioner relied on a Supreme Court judgment in Superintendent of Central Excise v. Vac Met Corpn. Pvt. Ltd., which held that metallic yarn made from metallized polyester falls under Tariff Item 15A(2). The court agreed with this interpretation, reinforcing that plastic articles, including foils, are covered by Item 15A(2).

7. Conclusion on Classification:
The court concluded that stamping foils fall under Tariff Item 15A(2) and not the residuary Item 68. The court emphasized that it is against the principle of classification to consign an article to the residuary clause when it reasonably fits under an enumerated item.

8. Decision on Show Cause Notice:
Given the conclusion that stamping foils fall under Item 15A(2), the court found the show cause notice dated 2-5-1980, which sought to classify stamping foils under Item 68, to be incorrect. Consequently, the court directed the respondents not to take any action based on this notice.

9. Refund of Excise Duty:
The petitioner's advocate stated that the petitioner would seek a refund of the Excise duty in accordance with the Act's provisions. Therefore, the court did not pass any orders for the refund.

Final Judgment:
The Special Civil Application was allowed, and it was held that "stamping foils" produced by the petitioner fall under Tariff Item 15A(2). The respondents were directed not to take any action pursuant to the notice dated 2-5-1980. The rule was made absolute to this extent with no order as to costs.

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