1995 (3) TMI 215 - AT - Central Excise

Issues Involved:
1. Eligibility of multilayer bags for Entry No. 40 of Notification 53/88-C.E., dated 1st March, 1988.
2. Interpretation of essential characteristics of the multilayer bags.
3. Relevance of previous decisions and departmental orders.
4. Burden of proof and substantiation of claims by the appellant.
5. Consistency in departmental decisions and judicial equity.

Issue-wise Detailed Analysis:

1. Eligibility of multilayer bags for Entry No. 40 of Notification 53/88-C.E., dated 1st March, 1988:
The primary issue was whether the multilayer bags manufactured by the appellant qualify for the benefit of Notification No. 53/88-C.E., dated 1st March, 1988 under Entry No. 40 or Entry No. 40A. The bags in question were made by stitching together three layers: an outermost layer of HDPE woven fabric laminated with kraft paper, a middle layer of kraft paper, and an innermost layer of LDPE. The classification of these bags under sub-heading 3923.90 of the Central Excise Tariff was undisputed. The appellant argued that the essential characteristic of the bags was provided by the LDPE layer, making them eligible for Entry No. 40. However, the respondent contended that the HDPE laminated layer gave the bags their essential character, making them more appropriately covered by Entry No. 40A.

2. Interpretation of essential characteristics of the multilayer bags:
The appellant claimed that the bags were specially manufactured to transport caprolactum, which required protection from moisture provided by the LDPE layer. However, the tribunal noted that the appellant did not substantiate this claim with technical literature. The tribunal examined the composition of the bags and concluded that the HDPE laminated layer provided the essential strength and character to the bags, as the outer layer was necessary to prevent tearing or leaking during transportation. The presence of LDPE was deemed not essential for transporting caprolactum.

3. Relevance of previous decisions and departmental orders:
The appellant cited previous decisions where similar multilayer bags were classified under Entry No. 40 of Notification 53/88-C.E. However, the tribunal distinguished these decisions, noting that irrespective of whether the primary character was provided by HDPE or LDPE, the goods would still be classifiable under Heading 3923.90. The tribunal also highlighted that the order of the Collector (Appeals) in the case of Maris Associates (P) Ltd., which classified similar bags under Entry No. 40, was not binding on the tribunal.

4. Burden of proof and substantiation of claims by the appellant:
The tribunal emphasized that the burden of proof lay on the appellant to substantiate their claim that the LDPE layer provided the essential characteristic to the bags. The appellant failed to provide sufficient evidence or technical literature to support this claim. The tribunal referred to the Condensed Chemical Dictionary, which indicated that LDPE was not essential for transporting caprolactum, undermining the appellant's argument.

5. Consistency in departmental decisions and judicial equity:
The tribunal acknowledged the appellant's point regarding the inconsistency in departmental decisions, as the same type of bags were classified differently in the case of Maris Associates (P) Ltd. However, the tribunal noted that it could not be equated with a court of equity and that the order of the Collector (Appeals) could not bind the tribunal's decision. The tribunal expressed hope that the Board would take appropriate action to ensure uniformity in such matters.

Separate Judgments:

Majority Opinion:
The majority opinion, delivered by Member (Technical) and supported by Member (Judicial) Jyoti Balasundaram, concluded that the appeal should be rejected. The majority held that the bags were essentially made of the laminated layer of HDPE and kraft paper, reinforced by the inner layers of paper and LDPE. The appellant failed to substantiate their claim that LDPE provided the essential characteristic to the bags.

Dissenting Opinion:
Member (Judicial) S.L. Peeran dissented, arguing that the case should be remanded for de novo adjudication. He believed that the appellant should be given an opportunity to substantiate their claim that the LDPE layer provided the essential characteristic to the bags. He emphasized the need for observing the principles of natural justice and reconsidering the matter based on the appellant's submissions and trade parlance.

Final Decision:
In terms of the majority opinion, the appeal was rejected, and the impugned order of the Collector (Appeals) was confirmed.

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