1988 (7) TMI 234 - AT - Customs

Issues Involved:
1. Classification for purposes of additional duty of customs.
2. Admissibility of additional grounds of appeal.
3. Correct classification under Central Excise Tariff.
4. Entitlement to benefit under Notification No. 118/75.

Detailed Analysis:

1. Classification for Purposes of Additional Duty of Customs:
The appellants imported "Polyester Supported PVC orange colour supplied in Rolls" and claimed it should be assessed under Heading 59.01/15 of the Customs Tariff and Item 22B of the Central Excise Tariff for additional duty. The Customs authorities assessed it under Heading 59.01/15-CTA, and there was no dispute regarding this classification before the Assistant Collector. The dispute arose regarding the classification for additional duty, where the Assistant Collector classified it under Item 22(3) of the Central Excise Tariff. The Collector (Appeals) upheld this classification.

2. Admissibility of Additional Grounds of Appeal:
The appellants, through their advocate, sought to introduce additional grounds of appeal, arguing that the correct classification for customs duty should be under Heading 3907 and for Central Excise Tariff under Item 68 instead of Item 22B. However, the Tribunal rejected the plea to contest the customs classification at this stage, as it was not contested before the lower authorities, making the customs classification final.

3. Correct Classification under Central Excise Tariff:
The Tribunal focused on the correct classification for additional duty. The appellants initially claimed Item 22B, but later argued for Item 68. The Tribunal admitted this new claim for consideration, noting it was a legal issue on appeal. The appellants cited several case laws to support their argument that the product should not be classified as fabric since the fabric lost its identity in the final product. The Tribunal agreed with this view, noting that the final product did not physically exhibit fabric characteristics and should be classified under Item 68 of the Central Excise Tariff. Thus, the order of the lower authorities classifying the goods under Item 22(3)-CET was set aside.

4. Entitlement to Benefit under Notification No. 118/75:
The appellants claimed that if the goods were manufactured domestically, they would be exempt from excise duty under Notification No. 118/75. The Tribunal, however, noted that this notification applies only to goods manufactured and used by the same manufacturer in his factory or another factory of the same manufacturer, following specific procedures. Since the goods were imported, they could not fulfill these conditions. The Tribunal referenced the Larger Bench's decision and other case laws to conclude that exemptions for domestic manufacturers do not apply to imported goods. Therefore, the claim for exemption under Notification No. 118/75 was rejected.

Conclusion:
1. The plea to alter the classification from Heading 59.01/15-CTA to 39.07-CTA was not admitted.
2. The goods were correctly classifiable under Item 68 of the Central Excise Tariff, setting aside the lower authorities' classification under Item 22(3).
3. The claim for exemption under Notification No. 118/75 was rejected.
4. The appeal was partly allowed in these terms.

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