2016 (3) TMI 348 - AT - Central Excise

Classification - Fibre Glass Reinforced Plastic namely Missile Container, Logistic Container - Held that - In the present case the pre-dominant input is plastic as compared to Glass fiber therefore the product Missile Container merit classification under Chapter 39 and not under Chapter 70. The submission of the appellant that classification should be based on the end use is not correct for the reason that there is no specific tariff entry for missile container in the Central Excise Tariff Act. The very same issue has been decided by the larger bench and upheld by the Hon ble Supreme court in case of Kemrock Industries & Export Ltd Vs. CCE 2007 (3) TMI 260 - SUPREME COURT OF INDIA as held Fiber Glass Reinforced Plastic Articles, it was held that the Rule 3(b) of Rules for Interpretation of Tariff requires that composite goods, mixtures and goods put up in sets to be classified on the basis of materiel or component which gives the product its essential character. Following the said judgment, in the present case also the plastic being predominant in the product, Missile Container, it merits classification under Chapter 39, in view of above discussion and settled legal position of law, the order passed by the Ld. Commissioner (Appeals) is just and proper which needs no interference

Summary

Issues:
Classification of goods under Chapter 39 or Chapter 70 based on predominant ingredient and end use criteria.

Analysis:
The appeal was against the Order-in-Appeal where the Commissioner (Appeals) allowed Revenue's appeal by setting aside the Order-in-Original. The dispute arose regarding the classification of Missile Container and Logistic Container manufactured by the appellant. The Adjudicating authority initially dropped the proceedings based on end use criteria and lack of support from tariff description and heading note. However, Revenue succeeded in their appeal before the Commissioner (Appeals) who classified the goods under Chapter 39, relying on a specific judgment. The appellant contended that the end use of the product for storing arms and ammunition by defense services should determine the classification. The appellant relied on specific judgments to support their case.

The Revenue, represented by Ld. Superintendent (A.R.), argued that the product's classification was correctly under Chapter 39 based on the predominance principle of glass fiber as a major ingredient. They referred to judgments supporting their stance. The Tribunal carefully considered both sides' submissions and analyzed the composition of the product. The Missile Container, made of plastic (39%) and glass fiber (33%), did not have a specific entry in the tariff act. The classification of such composite products depends on the predominant ingredient, following the Rule 3(b) of the Rules for Interpretation of Tariff. In this case, since plastic was the predominant material, the product was rightly classified under Chapter 39, not Chapter 70. The argument that classification should be based on end use was dismissed due to the absence of a specific tariff entry for Missile Container. The Tribunal upheld the Commissioner (Appeals) order, citing the settled legal position and the judgment in a similar case involving Fiber Glass Reinforced Plastic Articles.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeal and maintaining the classification of the goods under Chapter 39 based on the predominant ingredient principle and established legal interpretations.