1998 (10) TMI 216 - AT - Central Excise

Summary

Issues: Classification of PSLS paper and Thermal paper under relevant Tariff sub-headings.

PSLS Paper Classification:
The appeal concerns the classification of PSLS paper and Thermal paper under specific Tariff sub-headings. The appellants argue that both types of paper should be classified under Tariff sub-heading 4811.90, eligible for exemption under Notification 49/87-C.E., dated 1-3-1987. However, lower authorities classified PSLS paper under Tariff sub-heading 4811.20 as "Gummed or adhesive paper" and Thermal paper under sub-heading 4810.10 as paper "of a kind used for writing, printing or other graphic purposes."

The test reports of the samples reveal the composition and characteristics of the papers. The PSLS paper consists of a white sheet coated with adhesive based on acrylic resin, while the Thermal paper is heat-sensitive coated with a chemical that turns blue upon heating. The lower authorities confirmed the classifications made, denying the exemption benefit to PSLS paper due to the adhesive component, while extending it to Thermal paper.

The appellants argue that PSLS paper differs significantly from adhesive paper in manufacturing process, composition, and end-use. They emphasize that PSLS paper serves informative, instructional, or decorative purposes, with the adhesive primarily keeping the label in place. On the other hand, the lower authorities maintain that PSLS paper is adhesive in character, falling under the specific sub-heading 4811.20 for adhesive paper.

Thermal Paper Classification:
Regarding Thermal paper, the appellants rely on a previous Tribunal judgment for classification under sub-heading 4811.90. The lower authorities, however, classify it under sub-heading 4810.10 as paper used for writing, printing, or graphic purposes, due to its heat-sensitive nature and usage in ECG and FAX machines.

After considering the arguments from both sides, the Tribunal analyzed the characteristics and intended use of both types of paper. The Tribunal concluded that PSLS paper's adhesive nature aligns with the classification under sub-heading 4811.20 for adhesive paper, rejecting the alternative classification suggested. For Thermal paper, the Tribunal found that its heat-sensitive coating and usage for graphic purposes make sub-heading 4810.10 more appropriate than the general sub-heading 4811.90.

In conclusion, the Tribunal partially allowed the appeal, upholding the classification of PSLS paper under sub-heading 4811.20 and Thermal paper under sub-heading 4810.10, based on their respective characteristics and intended uses as per the Tariff sub-headings.