2023 (7) TMI 490 - AT - Customs

Classification of export goods - Flexible Intermediate Bulk Containers - to be classified under Tariff Heading 39232990 or not - it was observed that for central Excise purpose the respondent had declared HS code of the subject goods under Chapter 39 and for the Customs purpose they declared HS Code under Chapter 63 - HELD THAT - The decision in the matter of MESSERS CTM TECHNICAL TEXTILES LTD VERSUS UNION OF INDIA 2020 (12) TMI 1100 - GUJARAT HIGH COURT Hon ble Gujarat High Court, dealt with the issue and distinguished the matter from RAJ PACK WELL LTD. VERSUS UNION OF INDIA 1989 (9) TMI 120 - MADHYA PRADESH HIGH COURT as item was made from HDPE Strips/Taps and not from the HDPE fabric - the Hon ble Gujarat High Court found that item will be textile fabric if woven out of any material and same was not an issue before the Court in Raj Pack Well Ltd Vs. UOI case. The Hon ble Court accordingly held that woven fabric will be textile, irrespective of the method of weaving through any technique or material used in weaving, which may also be cotton, silk, rayon, nylon or of other description or made out of any other material. When such material is woven into fabric, what comes into existence is textile. As such, while in the matter of Raj Pack Well Ltd Vs. UOI the input material for HDPE sacks was derived from HDPE strips/tapes/sacks - In the present matter, it is a factum of same being woven which, inter alia qualifies to make it textile - like in the matter of M/s CTM Technical Textiles Ltd Vs. UOI the matter was remitted back to have a relook into the CBEC Circular No. 8/92 dated 24.09.1992 and CBEC and Trade Notice No. 78/94 dated 09.05.1994. While doing so the appellate authority shall consider the parameters laid down by the Hon ble Gujarat High Court in the aforesaid decision and also the relevant section notes and Chapter Notes relating to Chapter 39 as well as Section XI of schedule 1 of the Customs Tariff Act, 1975 as also the Chapter Notes relating to Chapter 54, 59, 60 and 63 to arrive at its decision, it shall also properly identify the product under dispute and whether the same is made from strips of up to 15mm or more. It is found that the EDI System indicates that both Flexible Intermediate Bulk Containers un-coated, as well as without mention of coating were imported during the relevant time, differential treatment may be required to be considered, if goods are different. Further while considering party s classification relating to Central Excise Tariff, the existence of analogous provision under the Customs Act shall also be considered. The EDI System indicates that both Flexible Intermediate Bulk Containers un-coated, as well as without mention of coating were imported during the relevant time, differential treatment may be required to be considered, if goods are different. Further while considering party s classification relating to Central Excise Tariff, the existence of analogous provision under the Customs Act shall also be considered. The observation relating to textile of Hon ble High Court of Gujarat in general, wherever relevant Chapter Notes and section notes are not available shall be duly followed. The matter is accordingly remanded for reconsideration - Appeal is allowed by way of remand.

Summary

Issues Involved:
1. Classification of exported goods under Customs Tariff Act.
2. Provisional assessment and classification discrepancy between Central Excise and Customs.
3. Reliance on previous judgments and statutory definitions.
4. Interpretation of "textile" and "plastic" under various statutes and chapter notes.

Summary:

Issue 1: Classification of Exported Goods
The respondent, M/s. Shankar Packaging Limited, classified their goods under CTH 63053200 for customs purposes and under C.Ex. Tariff 39231090 for central excise purposes. The Adjudicating Authority classified the goods under Tariff Heading 39232990, while the Appellate Authority upheld the classification under 63053200, citing the specific heading for Flexible Intermediate Bulk Containers (FIBC) in Chapter 63. The Appellate Authority relied on the Hon'ble Supreme Court's judgment in CCE, Bhubaneshwar vs. Champdany Industries Ltd.

Issue 2: Provisional Assessment and Classification Discrepancy
The respondent requested provisional assessment of the shipping bills, which was allowed. The department argued that the respondent showed different classifications for the same goods to avail export benefits. The Appellate Authority did not investigate the reason for the dual classification, which the department highlighted as a significant oversight.

Issue 3: Reliance on Previous Judgments and Statutory Definitions
The Adjudicating Authority relied on the 37-B order from 1992 and various judgments, including CC. Goa Vs. Phil Corporation Ltd and M/s. T.P.I. India Ltd Vs. CCE, Mumbai-II, to justify classification under Chapter 39. The department also cited the Board's circular and judgments like Raj Pack Well Ltd Vs. UOI to support their stance. The Appellate Authority, however, did not address these findings adequately.

Issue 4: Interpretation of "Textile" and "Plastic"
The respondent argued that the matter was covered by the Gujarat High Court's decision in M/s CTM Technical Textiles Ltd Vs. UOI, which distinguished between textile and plastic based on the material's composition and weaving process. The department countered that the classification should depend on the material used, not the weaving process, citing the Raj Pack Well Ltd case. The Tribunal found that the Gujarat High Court's interpretation of woven fabric as textile was relevant and remanded the matter for reconsideration, instructing the Appellate Authority to consider various chapter notes and statutory definitions.

Conclusion:
The Tribunal remanded the case for reconsideration, directing the Appellate Authority to review the CBEC Circulars, relevant chapter notes, and statutory definitions. The appeal was allowed by way of remand, and the cross-objection was disposed of accordingly.