2005 (5) TMI 159 - AT - Central Excise

Classification - HDPE fabrics laminated with LDPE and Kraft Paper - duty demand - Departmental circulars - Process of manufacture - HELD THAT - In the present case, the goods are classifiable under Chapter 59 in view of the Circular dated 18-8-1989 of the Board wherein Board has dealt with the very same goods viz HDPE fabrics laminated with LDPE and kraft paper. It is well settled that circulars issued by the Board are binding on the departmental officers, even if it is inconsistent with the law/judgment. Hence, the circular dated 18-8-1989 was binding on the Revenue should have been applied. In any case, the bags in question would be classifiable under Heading 63.01 as other made-up textile articles, attracting then the same rate of duty as discharged, as applying Section Note 5 which defines 'made-up'. Since there is statutory definition of 'made-up', resort cannot be made to general understanding of 'made-up'. Note 5(e) defines 'made-up' means, assembled by sewing, gumming or otherwise. When the bags in question are assembled by cutting, gumming and stitching, then the bags in question satisfy the definition of 'made-up' given in Section Note 5(e) to Section XI of the Schedule. Since HSN General Explanatory Notes to Chapter 63. A perusal of these HSN Explanatory Notes to Chapter 63 and Heading 63.05 would clearly indicate that the bags in question would be made-up textile articles, as made of textile materials. Hence, the bags in question would correctly fall under Heading 63.05 of the HSN. The Central Excise Tariff Heading 63.01 is a consolidated heading, covering all goods covered by Chapter 63 of HSN Explanatory Notes. Therefore, such bags would fall under Heading 63.01 of the Central Excise Tariff. The US Customs Ruling dated 13-11-1991 produced by the appellant holds goods they classified such woven bags of polypropylene strips for packing onions under Heading 63.05 of HSN. Similarly, the Ruling dated 20-1-1995 classified bags made from polyethylene strips under Heading 63.05 would supplement the view on classification being arrived by us. In view of the findings arrived the matter is remitted back to the adjudicator to re-determine the demands, only, if any in terms of the above findings. Appeal allowed as remand in above terms.

Summary

Issues:
Classification of HDPE fabrics laminated with LDPE and Kraft Paper and bags made therefrom under different headings, applicability of Section 37B order for classification, reliance on circulars issued by the Board, classification of bags under Heading 63.01 as "other made-up textile articles," and remand for redetermination of demands.

Classification of HDPE fabrics and bags:
The appeal involved the classification of HDPE fabrics laminated with LDPE and Kraft Paper along with bags made from them. The appellant classified the goods under heading 59.09, paying duty at 15% ad valorem, while the department classified them under sub-heading 3923.20, attracting duty at 30% ad valorem. The core issue was the correct classification of these goods.

Applicability of Section 37B order:
The department's classification was primarily based on a Section 37B order dated 24-9-1992 by the Central Board of Excise and Customs, which relied on a decision of the MP High Court. The appellant contested the binding nature of this order, citing various decisions to support their argument that the order should not dictate the classification of unrelated goods.

Reliance on circulars issued by the Board:
The appellant argued that a Circular dated 18-8-1989 of the Board classified similar goods under Chapter 59, which should have been applied in this case. They contended that circulars issued by the Board are binding on revenue officials, even if inconsistent with the law, citing relevant decisions to support their stance.

Classification of bags under Heading 63.01:
The appellant further argued that the bags in question should be classified under Heading 63.01 as "other made-up textile articles," based on Section Note 5 defining 'made-up.' They referenced HSN Explanatory Notes and US Customs Rulings to support their classification under Heading 63.05, emphasizing the nature of the bags as textile articles used for packing goods.

Remand for redetermination of demands:
After considering the arguments and evidence presented, the Tribunal found in favor of the appellant's classification arguments. Consequently, the matter was remitted back to the adjudicator to re-determine any demands in line with the findings. The appeal was allowed for remand in the specified terms.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT, Mumbai, providing a comprehensive understanding of the classification dispute and the legal reasoning behind the decision.