1997 (7) TMI 395 - AT - Central Excise

Issues Involved:
1. Classification of Electro Cardiograph (ECG) recording paper.
2. Applicability of Tariff Headings 4823.19 and 4823.90.
3. Interpretation of manufacturing processes and their impact on classification.
4. Consideration of previous Tariff Advice and relevant case laws.
5. Calculation of duty post-1-3-1994 and the applicability of exemptions and Modvat credit.

Issue-wise Detailed Analysis:

1. Classification of Electro Cardiograph (ECG) Recording Paper:
The primary issue in the appeals is the classification of ECG recording paper. The original authority classified the goods under Tariff Heading 4823.90, while the lower appellate authority classified them under Tariff Heading 4823.19. The product is in rolled form, specifically designed for use in ECG machines, and undergoes processes like cutting and slitting to specific sizes.

2. Applicability of Tariff Headings 4823.19 and 4823.90:
The learned lower authority referenced a Tariff Advice valid until 1-3-1994, which considered ECG paper as converted paper eligible for a nil rate of duty under Notification No. 68/76. The lower appellate authority classified the ECG paper under Tariff Heading 4823.19, while the revenue argued for 4823.90, suggesting that the ECG paper should be considered as "other articles of paper" due to its specific use and marketability.

3. Interpretation of Manufacturing Processes and Their Impact on Classification:
The revenue argued that the processes of cutting and slitting transform the jumbo rolls into a new, commercially recognizable product, thus amounting to manufacture. They cited cases like M/s. Dippin Textiles and M/s. Electronic Mechanical Industries, where similar processes were considered manufacturing. However, the appellants contended that the essential character of the paper remains unchanged, and the processes do not constitute manufacturing under Chapter 48.

4. Consideration of Previous Tariff Advice and Relevant Case Laws:
The learned lower authority relied on previous Tariff Advice, which classified ECG paper as converted paper eligible for exemption. The appellants also cited case laws, including M/s. System Packaging and M/s. Pirolite Industries Ltd., which supported the view that slitting and cutting do not change the paper's classification. The Tribunal also referred to the Hon'ble Supreme Court's judgment in Wood Craft Products, emphasizing the relevance of the Harmonized System of Nomenclature (HSN) in interpreting the Central Excise Tariff.

5. Calculation of Duty Post-1-3-1994 and Applicability of Exemptions and Modvat Credit:
Post-1-3-1994, the exemption notification was rescinded, making the appellants liable for duty under Tariff Heading 4823.19. The Tribunal directed the original authority to notify the appellants about the duty based on the correct classification and allow them to address any calculation errors. The cross appeals were allowed to the extent of re-computing the duty as cum-duty price and considering the benefit of Modvat credit.

Conclusion:
The Tribunal concluded that the ECG recording paper should be classified under Tariff Heading 4823.19, based on the scheme of the Tariff and the wording of the Tariff Entry 48.23. The decision was supported by previous case laws and the structure of the HSN. The appeals and cross appeals were disposed of with directions for re-computation of duty and consideration of Modvat credit.

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