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TMI Blog1999 (1) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... or aseptic packaging of milk together with the objective of ensuring better distribution of pasteurised milk and for providing a reasonable guaranteed market to the rural milk producer throughout the year particularly during flush seasons. The NDDB approached the Ministry of Industry, Department of Industrial Development for grant of industrial Licence for the manufacture of laminated paper for packaging milk which was granted. The NDDB also approached the Ministry of Finance for grant of total exemption from payment of excise duty both on laminated paper as well as on its constituents viz. paper/paper board and polyethelene and accordingly the Government issued the following Notifications in 1982: (a) Notification 46/82-C.E., dated 28-2-1982 exempting low density polyethelene required for use in the manufacture of laminated paper to be used for packing of milk from the whole of the excise duty payable thereon subject to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise and subject to following of the procedure set out in Chapter X of the Central Excise Rules, 1944. (b) Notification 63/82, dated 28-2-1982 exempting converted type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e here, a plastic layer deposited while liquid state on the metal or non metal surface is called coating. In my opinion, the sample can, therefore, to be treated as coated paper. The appellants represented to the Collector of Central Excise, Vadodara that the paper manufactured by them was laminated paper as understood technically and the Collector directed the Jurisdictional Assistant Collector to allow the appellants to continue to avail of the exemption both on the finished product as well as raw materials and he also referred the matter to the Government of India which on consideration of the situation, amended Notification 43/86, dated 10-2-1986 vide Notification 161/87-C.E., dated 5-6-1987 by extending the benefit of exemption to coated papers in addition to laminated paper. Samples of the paper were also sent to the Deputy Director, National Test House, Calcutta who opined as under : Two samples labelled as (i) sample No. l Paper laminated with LDPE (ii) sample No. 2 Paper laminated with LDPE and aluminium foil have been received for ascertaining that the samples are laminated or coated papers. There is no method of test by which the material may be classified as coated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinted in four colours on flexographic printer. The paper so printed is then laminated with low density polythelene by extrusion coating process. This is then slit to required size and sold to the customers duly packed. In the extrusion coating process the LDPE granules are fed through extrudor where a layer of thin film is formed which falls on the paper. Such process is repeated to obtain number of plastic films to be laminated. 6. The expression laminated and coated have not been defined in the Central Excise Tariff and, therefore, classification of the product is to be arrived at on the basis of the dictionary meaning, technical literature and commercial parlance. 6.1 Dictionary Meaning (a) Oxford Dictionary : (i) Laminate means manufacture by placing layer over layer. (ii) Coating: Coating means layer of paint or other substance put on a surface at one time. (b) Random House Dictionary: Laminate means, construct by placing layer upon layer. From the Dictionary meanings it is evident that the product manufactured by the appellant can correctly been said to be a laminated paper as the said product consists of five layers which are placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ric, although the hot calender and extrusion coating process is classified as lamination coating, the term lamination generally refers to a process that uses sheet or film at a point more remote from its location of formation. Thus calender coating and extrusion coating are basically coating processes though some lamination also take place in the process. Plastic lamination : Strictly speaking, lamination is a process of bringing two or more webs (films, papers and foils) together and bonding them with an adhesive or by application of heat. Laminates consist of base or reinforcing material and resins. The properties and end uses of laminated plastics are governed primarily by the properties of webs (or base materials) and resin rather than by changes in processing. A plastic laminate is defined as a combination of one or more distinctly different plastic films of some or different material or a plastic or non-plastic materials (paper fabric etc.) wherein each major ply is generally thicker than 1/4 mil., regardless of the method of manufacture. There is no upper limit to the possible numbers of plies, but two is the obvious minimum. (iv) Shri A.S. Athalye in his Book Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Collector of Customs reported in 1989 (43) E.L.T. 91, the Tribunal held that a laminate is nothing but a thin layer of film of a particular material on another layer of the same or another material and, therefore, there was no doubt that the subject film laminate is a thin film of electrolyte paste consisting of zinc chloride, ammonium chloride and mercuric chloride solution on a special carrier paper, which is a kind of coated paper. 7.1 In the case of Collector of Customs, Kandla v. Purity Flex Pack Ltd., Order No. C/117/93-132, dated 12-10-1993, C.C., Kandla v. Purity Flex Pack Ltd. (Tribunal) 1994 (69) E.L.T. 293 (Tribunal) the Tribunal considered the issue of eligibility of multilayer coater/extruder machine imported by the respondents therein to exemption in terms of Notification 250/88-Cus., dated 16-9-1988. According to the Department, the machine was essentially laminator and, therefore, not covered by the Notification while according to the respondents, the machine was essentially a multilayer coater/extruder and the lamination function was covered by the term extrusion coating. The Tribunal held in para 9 of its order that the lamination in that case was a part a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial licence and the request to the Ministry of Finance for issue Notification granting exemption on laminated paper and raw materials used thereon. Therefore, we hold that in any event, the appellants cannot be said to have suppressed or misdeclared any vital facts with intent to evade payment of duty. The case law relied upon by the learned DR viz. judgment of the Hon ble Apex Court in the case of Marco Textiles v. Union of India reported in 1996 (83) E.L.T. 17 (S.C.) and the Tribunal s order in the case of Paharpur Cooling Towers Ltd. v. C.C.E., Calcutta is distinguishables - in the case before the Hon ble Supreme Court, there was no material on record to show that the appellants bona fide believed that the goods manufactured by them were embroidered fabrics and thus entitled to exemption under the law and, therefore, the Apex Court upheld the findings of the Courts below that the recovery was not barred by limitation. In the second case, extended period of limitation was held to be attracted in the light of the background of detection of manufacture and clearance of FRP Towers only on the visit of the Central Excise Officers to the appellants premises and no efforts had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of demands on base paper and LDPE is not tenable, as it is clear both from the notice and the adjudication order that the provisions of Rule 196 have been held to be applicable to the demands on these two items. We, therefore, hold that these two demands are governed by the provisions of Rule 196. However, we agree with the learned Counsel for the appellants that even in such cases, the demand has to be raised within a reasonable period of time. In the case of Government of India v. Citadel Fine Pharmaceuticals reported in 1989 (42) E.L.T. 515 (S.C.) the Hon ble Apex Court held that in the absence of any period of limitation provided in Rule 12 of the Medicinal Toilet Preparation (Excise Duties) Rules, 1956 corresponding to Rule 10A of the Central Excise Rules, 1944, the authority is to exercise powers within a reasonable period. In the case of UP State Cement Corporation v. Union of India reported in 1996 (86) E.L.T. 6 (All.), the Hon ble Allahabad High Court held that the provisions of Section 11A of the Central Excise Act have to be read into Rule 196 of the Central Excise Rules. The earlier decisions of the Tribunal relied upon by the learned DR are, therefore, no longer goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of polyethylene and it is further coated with polyethylene on both the sides. 14. The National Test House, Calcutta was also the opinion that out of the two samples sent to it one sample was that of paper coated with LDPE and the second sample was product of - a combination of laminating and coating process - on one surface the paper is bonded with aluminium foil and then on surface of aluminium coating process. Hence this product has been produced by adopting both laminating and coating process. 15. In the literature under the heading Plastic Coating and Lamination Industry in India it has been mentioned inter alia - Plastic coatings and laminations are recent additions to the application of plastics for packaging, construction and industrial application. ......... Plastic laminated and coated products based on paper, textiles, fabrics and aluminium foils along with normal laminates are beginning to be in vogue ........ Coating and lamination are both interlinked processes. In coating some lamination may also take place and in lamination some adhesive material is generally coated to the base materials. A plastic coating is a layer of a plastic material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lamination and (b) Co-extrusion. 18. In the appellants written brief about manufacturing of paper for packaging of milk in Tetra Brick/ Tetra Pack Aseptic Packaging Machines flow diagrams have been enclosed. What is significant is that the process has been described as that of extrusion lamination and the literature submitted by them shows that this was used for lamination coating as well. 19. The test reports by the Chemical Examiner and the National Test House, Calcutta and the above literature filed by the appellant themselves in the open Court show that extrusion process could be used both in plastic coating and plastic lamination and the appellants were producing two types of products mentioned in the report of the National Test House, Calcutta. 20. The test reports and the literature also show that the process and the product can be of three types - (1) Coating simpliciter (whether on one or both sides). The product will then be a coated product; (2) Lamination simpliciter (whether on one or both the side). The product will be the laminated product; and (3) A combination of coating and lamination (with one side coated and another laminated) and this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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