2000 (3) TMI 241 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 52/86 for concessional rate of duty on resi glass tape products; Classification of resin under Chapter 39 as plastic; Applicability of tariff heading in determining eligibility for concessional rate; Limitation period for confirming duty demand.

Interpretation of Notification No. 52/86:
The appeal concerns the interpretation of Notification No. 52/86 for concessional duty rate on resi glass tape products. The appellants argued that their product qualifies for the concessional rate under Serial No. 11 of the notification. The dispute arose from whether the resin used in the manufacturing process should be considered as plastic, thereby excluding the appellants' products from the concessional rate. The appellants contended that resin is distinct from plastic, citing definitions from sources like Webster Dictionary and the Central Institute of Plastic Engineering and Technology. They argued that the notification should be strictly interpreted based on its wording, referencing previous tribunal decisions like Universal Cans & Containers Limited and O.E.N. India Limited. The tribunal examined the notification's language, noting that goods impregnated, coated, or laminated with plastic are excluded from the concessional rate. Despite chemical differences between resins and plastics, the tribunal held that resins are classifiable under Chapter 39, which covers plastics and their articles. Therefore, the tribunal rejected the appellants' argument and upheld the department's decision to deny the concessional rate.

Classification of Resin under Chapter 39:
The central issue revolved around whether resin should be classified as plastic under Chapter 39. The department argued that resin falls under Chapter 39, which pertains to plastic and its products. They contended that since resin is considered a type of plastic, the appellants were not eligible for the concessional rate under the notification. The tribunal analyzed the tariff heading provided in the notification and emphasized that for the purpose of classification under the Central Excise Tariff, resins are to be interpreted in relation to their use, which aligns with the chapter covering plastics. Despite the chemical distinctions between resins and plastics, the tribunal concluded that for tariff purposes, resins are classifiable under plastics and their articles. Therefore, the tribunal upheld the department's decision based on this classification.

Applicability of Tariff Heading in Determining Eligibility:
The tribunal highlighted the significance of the tariff heading in interpreting the notification for determining eligibility for the concessional rate. It emphasized that the tariff interpretation and heading could not be disregarded, even if resins had different chemical compositions from plastics. The tribunal reasoned that since the concessional rate was specific to certain products indicated by the tariff heading, the tariff interpretation was crucial. Despite arguments to ignore the tariff heading completely, the tribunal maintained that resins, for tariff purposes, are classified under plastics and their articles. Therefore, the tribunal rejected the appellant's contention and upheld the department's decision based on the tariff heading's relevance.

Limitation Period for Confirming Duty Demand:
Regarding the limitation period for confirming duty demand, the appellants argued that the demand could only be confirmed prospectively from the date of the show cause notice (SCN) issuance. They contended that during the material period, they were approved for the concessional rate under Notification No. 52/86. The tribunal held that the order confirming the demand before 20-3-1990 was not legally sustainable, as the classification of goods was approved only for the benefit of the notification during that period. However, the tribunal found no evidence supporting the demand confirmation after 20-3-1990, leading to the dismissal of the appeal for the period post that date.