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TMI Blog1996 (10) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... ly claimed lower assessment in terms of Government of India, Ministry of Finance, Notification No. 230/83-Cus., dated 18-3-1983. 4. The Customs Authorities had a sample drawn from the consignment tested by the Chemical Examiner of the Kandla Custom House. He opined that the sample is polyester film coated on one side with ferric oxide . On being asked, the Chemical Examiner further opined that as already mentioned the sample is polyester film coated on one side with Iron Oxide. The Iron Oxide (Ferric Oxide or ferrite) used is Magnetic in nature and hence the sample can be considered as the prepared media for sound recording. The Department, therefore, felt that in view of this, the goods cannot be considered as falling under Item 290 Appendix 4A of AM-85 as contended by the appellants. 5. Learned Counsel stated that as has been said earlier, the licence bears the Para 186 endorsement. In terms of sub-para 4 of Para 186 the Additional Licences are valid for the import of items appearing in Appendix 4 but excluding items appearing in Appendix 13. The Department allowed release of the goods after provisional assessment. The appellants paid duty in terms of Notification No. 230/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. (4) Winding up on spools etc. (5) De gauzing of the film to clear magnetic impulses or erratic magnetic signals acquired during the earlier processes. (6) Testing. It, therefore, follows that unless the goods are slit and wound on spool capable of being mounted on a recording gadget, they do not conform to the known description of the term prepared media for sound recording. In the condition in which the goods are imported, the goods cannot be considered as prepared media. Prepared media for sound recording when made of plastic was being assessed to duty under Item 30.01/06 of the ICT. prior to the introduction of Finance Bill for 1984. In this Finance Bill, the text of Item 92.01/13 was amended so as to include the prepared media. The Heading 92.01/13 covers all finished products. The relevant new addition to this item viz., prepared media for sound or similar recording also denotes that the items covered thereby are finished products fit for direct use for recording. It, therefore, follows that the imported materials was a raw-material for prepared media for sound recording and was, therefore, being assessed to duty under Item 39.01/06 and should continue to be so ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interfere with the release of the goods against the licence which was produced and rightly accepted by the learned Assistant Collector without insisting on any ITC Bond. Since the imported goods are not classifiable under Chapter 92 therefore, obviously, they are not covered by this specific entry No. 573. 10. Learned DR drew attention towards the order-in-original and particularly to the findings recorded therein; And stated that he would like to emphasise that the main issue is whether the imported item could be considered as a `prepared media for sound recording. 11. The imported polyester film is coated with ferric oxide on one side and is therefore, magnetic in nature. It can only be considered as a prepared media for sound recording which would not fall under Appendix 4, Part A at Sl. No. 290 of the relevant ITC. 12. Learned Collector has rightly relied in this respect on Materials Hand Book by Brady and Clauser which shows that magnetic tape for recorders is made by coating strong durable plastic tape such as polyester with a magnetic ferrite powder and Encyclopaedia of Chemical Technology by Kirk Othmer, Volume 8, page 881 also shows that ferrites have magnetic pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import of jumbo rolls. 21. As regards customs classification, he would like to cite explanatory notes under Heading 92.12 of CCCN 85.23 of HSN. 22. We have considered the above submissions. We observe that the item imported is undisputably a polyester film coated with ferric oxide (ferrite on one side). 23. Chapter 39 covers polyester films but Chapter Note 3(d) and Heading 39.05 of CCCN excludes such strips which are surface worked but not further worked as evident from the following words used in this Note :- (d) plates, sheets, films, foil and strip (other than that classified in Heading No. 51.01/03 by the application of Note 4 to Chapter 51), whether or not printed or otherwise surface-worked uncut or cut into rectangles but not further worked (even if, when so cut, they become articles ready for use); A question, therefore,, arises whether the imported film is hit by this exclusion clause and if so, whether it could be considered as a prepared media for sound recording and has assumed the characteristics of an audio magnetic tape. 24. We find that the above Chapter Note is based on CCCN Chapter Note 3(d) and HSN Chapter Note 10. Therefore, the explanatory note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording or similar recording of other phenomena fall under Chapter 85 and magnetic tapes fall under 85.23. Explanatory Notes (3) (4) read as follows : 85.23 . PREPARED UNRECORDED MEDIA FOR SOUND RECORDING OR SIMILAR RECORDING OF OTHER PHENOMENA, OTHER THAN PRODUCTS OF CHAPTER 37. Magnetic tapes : (3) Strips or films for mechanical sound recording, made of plastics (usually polyvinyl acetate or chloride), coated with a special wax. (4) Media for magnetic recording, e.g., discs or cards (of plastics or paper), tapes, strips or films (of plastics or metal) or metal wire, either capable of being magnetised or so rendered by coating with a lacquer containing dispersions of magnetic powder or by electrolytic deposit of a ferro-magnetic coating (e.g., for magnetic wire). But again, there is an exclusion Clause (a) which reads as follows : (a) Articles intended for use as media for recording sound or other phenomena but not yet prepared as such; these are classified in their respective headings (for example, in Chapter 39 or 48, or Section XV). 26. Learned Departmental Representative has laid great emphasis on these Explanatory Notes and it is clear from the above reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... magnetic tapes out of polyester films coated with ferric oxide. 31. We, therefore, consider that for the purpose of customs classification, the item is required to be classified under Chapter 39 and not under Chapter 92 and would fall under Heading 39.01/06 and would also, therefore, be liable to the benefit of Notification No. 230/83 which exempts polyester films falling within Chapter 39 used for the manufacture of magnetic tapes, subject to the fulfilment of other conditions mentioned in the notification. 32. As far as import licence is concerned, the one produced before us merely refers to Para 186 of AM-85 Policy and therefore, the question is whether this is sufficient for the purpose of import of such goods. 33. In this respect, learned DR s contention that such an additional licence is only valid for Appendix (4) items is correct and we find that Entry 290 covers polyester film, plain/metallised. 34. The word `metallised is significant because it shows that even a polyester film coated with a metallic compound like ferric oxide is covered by this entry. 35. Insofar as Entry 573 of Appendix 3 Part A is concerned, it admittedly covers only audio magnetic tapes and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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