2001 (5) TMI 470 - AT - Central Excise

Summary

Issues: Classification of filter paper packs under CETA, 1985 - Heading 4823.90 or 8421.90

Detailed Analysis:

1. Classification Dispute: The appellants challenged the order of the Commissioner (Appeals) classifying filter paper packs under Heading 4823.90 of CETA, 1985, confirming duty demand.

2. Appellants' Claims: The appellants argued that the filter paper packs should be classified under Heading 8421.90 as integral parts of filtering machines, based on specific part numbers assigned to them.

3. Manufacturing Process: The filter paper packs are processed to be impervious to moisture, lacquered for stiffness, and boiled in transformer oil to be compatible. They are then assigned a product code and fitted into filter chambers of filtering machines.

4. Legal Grounds for Classification: The appellants cited Rule 3A of the Rules of Interpretation, exclusion under Section Note 1(d), and commercial trade parlance for classification based on marketability.

5. HSN Notes Interpretation: The Tribunal analyzed HSN Notes under Heading 8421, noting that filtering elements made of paper fall under Heading 48.12, and filtering elements are excluded from Heading 84.21. The Tribunal confirmed classification under Heading 48.23 for paper products.

6. Statutory Rules of Interpretation: The Tribunal emphasized that commercial trade parlance tests are non-statutory and cannot override statutory rules. Classification must adhere to the terms of headings and relevant notes.

7. Integral Parts Classification: The Tribunal rejected the argument that filter elements, as integral parts of machines, should be classified under machinery parts. Filter elements retain their identity even when supplied separately as replacements.

8. Duty Classification: The Tribunal clarified that duty liability arises at the time of manufacture, regardless of subsequent use or supply as replacement parts. Orders classifying goods differently based on removal were deemed incorrect.

9. Dismissal of Appeal: Based on the analysis, the Tribunal found no merit in the appeal and dismissed it, upholding the classification of filter paper packs under Heading 48.23 of CETA, 1985.

By thoroughly examining the manufacturing process, legal grounds, HSN Notes interpretation, and statutory rules of classification, the Tribunal concluded that the filter paper packs should be classified under Heading 48.23, dismissing the appeal against the duty demand under Heading 4823.90.