1984 (10) TMI 54 - AT - Customs

Issues Involved:
1. Classification of Synthetic Resin Bonded Paper Cylinders for basic customs duty.
2. Classification of Synthetic Resin Bonded Paper Cylinders for additional customs duty (countervailing duty).
3. Determination of the correct Tariff heading for the goods.
4. Consideration of the goods' essential character and composition.
5. Examination of the goods' applications and form.

Issue-wise Detailed Analysis:

1. Classification for Basic Customs Duty:
The primary issue was the classification of Synthetic Resin Bonded Paper Cylinders under different Tariff headings. The competing headings were:
- 39.07 of the Customs Tariff Act/15A(2) of the Central Excise Tariff (Articles made of plastics and synthetic resins).
- 48.01/21(1) CTA/17 CET (Paper and articles of paper).
- 85.18/27(1) CTA/68 CET (Insulating fittings for electrical equipment).

The Custom House initially classified the goods under Heading 48.01/21(1) CTA/17 CET, considering the goods as articles of paper. However, the appellants argued that the goods, being used for insulation in power transformers, should be classified under Heading 85.18/27(1) CTA as insulating fittings for electrical equipment.

2. Classification for Additional Customs Duty (Countervailing Duty):
The appellants contended that the goods had lost their characteristics as paper and thus should be exempt from countervailing duty. The Appellate Collector had differing views on the two consignments, allowing a refund of countervailing duty for one consignment but not the other.

3. Determination of the Correct Tariff Heading:
A third consignment, described as "Unvarnished S.R.B.P. Cylinders," was assessed under Heading 39.07 CTA/15A(2) CET. The Special Bench 'C' of the Tribunal upheld this classification, but the Special Bench 'D' found that the competing Tariff headings in the current appeals were different, leading to the constitution of a larger Special Bench to resolve the conflict.

4. Consideration of the Goods' Essential Character and Composition:
The goods were described in the supplier's invoices as "Synthetic Resin Bonded Paper Cylinders." The appellants referred to the goods as "Unvarnished Bakelite Cylinders" in internal documents for convenience. The Tribunal noted that the goods were a composite material of paper and synthetic resin. The essential character of the goods was not established to be from synthetic resin, and the Appellate Collector had found paper to be the main constituent material.

5. Examination of the Goods' Applications and Form:
The goods were claimed to have diverse applications, but the appellants provided evidence that the specific grade imported was for use in electrical equipment, specifically transformers. The Tribunal found that the goods were of exact sizes and did not require further processing, countering the Department's objection that they were not ready-to-use fittings.

Conclusion:
The Tribunal ruled that the goods should be classified under Heading 85.18/27(1) CTA as "Insulating fittings for electrical equipment" for basic customs duty. For countervailing duty, the goods were assessed under Item 68 CET, which was exempt from payment at the time of import. The Tribunal allowed both appeals, providing consequential relief to the appellants.

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