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1990 (12) TMI 196 - AT - Central Excise
Issues: Classification of bakalised paper tubes for ring spinning under TI 17(3) CET with exemption Notification No. 66/82-CE; Whether the goods should be classified under TI-68; Differential duty demanded for specific periods.
In this case, the appellants manufactured and cleared bakalised paper tubes for ring spinning, also known as bobbins, which are used in textile spinning frames. The appellants claimed classification under TI 17(3) CET with the benefit of exemption Notification No. 66/82-CE. Show cause notices were issued for reclassification under TI-68, demanding differential duty for specific periods. The impugned orders reclassified the goods under TI-68 after considering the appellants' replies and arguments. The main argument presented by the appellants was that the goods should be classified under TI 17(3) as paper tubes based on IS-3625-83 and common parlance. They contended that even if the bobbins had steel rings, they could still qualify under TI 17(3) as articles of paper. The appellants also relied on a letter from the Ministry of Finance to support their classification. On the other hand, the respondent argued that the goods were composite articles of paper and other materials, not falling under TI 17(3) or (4) of CET. They contended that the bobbins were parts of textile machinery, losing their identity as paper products. The respondent cited a Tribunal judgment in Fibre Foils (P) Ltd. v. Collector of Central Excise to support their argument. The Tribunal examined various documents related to paper cones and tubes but found them irrelevant to the classification of bobbins made for textile machinery. The Tribunal rejected the appellants' argument that an article of paper need not be made exclusively of paper, emphasizing that the basic character of the goods was that of machine parts, not paper products. Two Tribunal judgments further supported this view. Ultimately, the Tribunal dismissed the appeals, ruling that the bakalised paper tubes for ring spinning should be classified under TI-68 as machine parts, not under TI 17(3) as articles of paper. The entry in Chapter 48 HSN (Paper) covering bobbins and spools was deemed irrelevant for the classification at the relevant time.
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