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TMI Blog2016 (7) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... he attributes of both Film and Foils. It is undisputed that the product in question answers to the definition of Films given in the Chapter Notes. In absence of any definition of Foil, it is not reasonable to assert that the product, which does answers to the description of Film, is a Foil. Revenue has not given any definition of the term Foil. The invoices describe the product both as Foil and Film at different places during certain period and as Film only for the rest of the period. The sole ground of the revenue that invoices for a part of the period described the product as both Foil and Film, is not sufficient to discharge the burden. - Decided against the revenue. - Appeal No. E/609/07 - Order No. A/87875/16/EB - Dated:- 10-6-2016 - SHRI S.S. GARG, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) Shri Hitesh Shah, Commissioner (AR), for Appellant Shri Gajendra Jain, Advocate with Shri Rajesh Ostwal, Advocate, for Respondent ORDER Per: Raju M/s Amartara Ltd. are manufacturers of plastic products. They were engaged in clearance of what they described in their invoices as Rigid PVC Foils, Rigid PVC Thermoforming Foils PVC films and class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similar Notification No. 14/92 dated 1.3.1992 provided following exemption vide Entry No. 32 and 33: - 32. 39.21 Cellular films or sheets, other than of polyurethanes 25% ad valorem If produced out of goods falling under heading Nos. 39.01 to 39.15, on which the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 (1 of 1944) or the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has already been paid. 33. 39.21 Cellular plates, sheets, films, foil and strip, other than of polyurethanes 35% ad valorem -- For the period 1.3.1990 to 28.2.1994, 10 notices were issued to the respondents alleging that the product cleared by them was PVC foils and not PVC films and therefore, it was alleged that they were not entitled to benefit of Notification No. 53/88-CE or 14/92-CE. The Commissioner dropped all the notices on the following grounds: - 7. I have gone through the said Notification No. 53/88. At Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Chapter 39, so long as the final product is a plastic sheeting of thickness not exceeding 0.25 mm, it is a film. As noted earlier, the impugned final product manufactured by the noticee was indeed a plastic sheeting of under 0.25 mm thickness. It was, therefore, indeed a film for the purpose of exemption Notification No. 53/88, regardless of the fact that the noticee had described it as foil and not as film. In this connection, I also rely on the Hon'ble Supreme Court s decision in Collector of Customs Vs M/s K. Mohan Co., reported in 1989 (43) ELT 811 (SC), holding that the scope of the term film was wide enough to cover foils and sheets. 11. Indeed it was in the face of these facts that the CERA eventually came round to the Department s view and dropped their objection. It was accepted that the impugned final product was in fact a film and eligible for exemption under the Notification No. 53/88. 12. Given these facts of the case, no case is made out against the noticee. The ten show-cause cum demand notices listed in para 1 supra are unsustainable. Aggrieved by the said order, Revenue is in appeal inn this Tribunal on the following grounds: - (i) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Inds. Vs. Collector of Customs - 1997 (90) ELT 57 (T). (e) Winter Misra Diamond Tools Ltd. Vs. Commissioner of Central Excise, Jaipur - 1996 (83) ELT 670 (T). (f) Guest Keen Williams Ltd. Vs. Collector of Customs - 1987 (29) ELT 68 (T) It was also asserted that the impugned product which was classified and sold by the assessee as foils is totally different from films thereby the exemption under Sr. No. 35 of Table of Notification No. 53/88 and under Sr. No. 30 of the table of the Notification No. 14/92 is not available. 2. Learned Commissioner (AR) relies on the grounds of appeal. He argued that words in the notification need not be interpreted in terms of the Chapter Note. He argued that word film in the notification is the description of goods which are covered in the Notification. He argued that this does not employ that anything which is less than 0.25 mm can be cleared availing benefit of Sr. No. 35 of Notification No. 53/88. 2.1 The learned AR argued that the impugned order does not deal with all the issues. He argued that the said decision merely relies on the decision of Hon'ble Supreme Court in case of K. Mohan Co. (supra) to hold that the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorts. What is the extent of the exemption? According to Ex. A, it is payment of so much of the duty of customs as is leviable thereon under Section 3 of the Customs Tariff Act, 1975. This provision, namely Section 3 of the Customs Tariff Act - hereinafter referred to as the C.T.A. - deals with the levy of Additional Duty equal to excise duty. To the extent relevant, Section 3 of the C.T.A. reads thus :- Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this Section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India..... The Explanation goes on to specify what the expression articles made of plastics shall mean. It says that the expression shall have the same meaning as in sub-Item (2) of Item No. 15A of the First Schedule to the Central Excises and Salt Act (CESTA), 1944. The Table gives the Items excluded from the exemption and one such Item is foils. A reasonable reading of Ex. A would be that Additional Duty leviable on imported articles would be the same as is excise duty leviable upon like articles if manufactured or produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But the entries reproduced above from the Schedules to the CESTA and C.T.A. are different. In the CESTA Schedule, there is no mention of foil. For the purposes of that Schedule, a film and foil could not be said to be synonymous. Even in the C.T.A. Schedule, films and foils are not treated as synonyms but separately specified. This would show the legislative intent to treat the two entries as distinct and different. It would, therefore, mean that films mentioned in CESTA Item No. 15A(2) would be within the sweep of the words all articles made of plastics. Though foil is mentioned in the C.T.A. Schedule, it is not so specified in the CESTA Schedule, but the C.T.A. Schedule refers to films and foils both. The conclusion is that the two words mean and imply different things. According to Ex. A, all plastics, except those mentioned in the exclusionary Table, are entitled to exemption from Additional Duty. Therefore, the film would be within the exemption, rather than the exclusion. 10. This brings me to the technical data relied upon by parties. Let me first set out the pleading of respondents on this aspect of the matter. In their affidavit-in-reply, the relevant excerpts r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the proposition that one principle fairly well-settled in determining the meaning or connotation of words and expressions describing an article in a tariff schedule, is, that those words and expressions should be construed in the sense in which they are understood in the trade by the dealer and the consumer. According to the case of Indian Aluminium Cables Ltd., the reason is, that it is the understanding of those who are in the trade which constitutes the definitive index of the legislative intention. Petitioner relies upon Brochures brought out by Japanese manufacturers of polyester films, metallised or otherwise. In the Brochure of Sakurame Metallic Yarn, polyester films, metallised with micron 12 to 25, are categorised as films. In Dia Luster Film Brochure, the thickness of films is shown to range from 0.012 mm. to 0.025 mm. In the Nakai Mamilon Brochure, material of 12 to 25 microns Brochure, the fine metallic yarn produced by them is described as an Item made of 12 microns or 25 microns polyester film which is metallised. In the Brochure of Sanwa, metallised polyester film is shown as being of 12 microns or 25 microns. This would not mean that there cannot be films of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m rolls several metres long. They were cleared on payment of customs duty leviable under the Customs Act, 1962 (CA) as well as the additional duty of customs (or countervailing duty) leviable under Section 3 of the Customs Tariff Act, 1975 (CTA). Subsequently, the respondent firm made three applications for the refund of the amount of the additional duty of customs paid by it. The claim for refund was based on the terms of a notification of exemption issued under Section 25(1) of the CA. Under Notification No. 228/76, dated 2-3-1976, an exemption from the customs duty payable under Section 3 of the CTA was granted in respect of articles made of plastics, all sorts, but excluding those specified in the table annexed hereto and falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The annexed table excepted the following items from the purview of the exemption : Tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including tubings and polyvinyl chloride sheets. Notification No. 443 dated 29-11-1976 omitted the words of Notification No. 228 which have been un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reference has been made to the classification made by the only manufacturer of polyester films in India for purposes of CEA. Reference has also been made to the brochures brought out by the Japanese manufacturers of the goods in question which show that metallised polyester `film could consist of films of the thickness of even 12 to 25 microns. It has been pointed out that, under the Import-Export Policy of India for 1984-85, reference has been made to metallised polyester `films having thickness of even less than 5 microns which are used in the electronic industry. 8. In the light of the above material and the absence of any additional material led in the present case, we agree with the view of the Bombay High Court that, though for certain purposes there is a distinction between `films, `foils and `sheets, so far as the article presently in question is concerned it is recognised in trade only as `film. It is difficult to imagine any person going to the market and asking for these films by describing them either as `foils or as `sheets. We are therefore of opinion that the goods under consideration cannot be described either as `foils or as `sheets . 9. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of show-cause notices issued thereafter the description has been given as film and not foils. He argued that this fact was recorded in the show-cause notices, where it was alleged that they were clearing Rigid PVC Thermoforming foils by claiming the same as Rigid PVC Thermoforming film. He argued that in all the invoices, they have described the goods as PVC films under the heading name of excisable commodity. He argued that while interpreting the description in the Notification, the Chapter Notes are relevant. For this purpose, he relied on the decision of Hon'ble Supreme Court in case of Commissioner of Central Excise Vs. Fenoplast 1994 (72) ELT 513 (SC). He relied on para 2, 3 and 7 of the said decision to state that understanding in common parlance or commercial parlance would be relevant only in absence of any definition given in the enactment. The said para reads as follows: - 2. The respondent purchases 100% cotton cloth and coats it with P.V.C. resin and other plasticizers. The product is popularly known in the market as rexine cloth. The composition of the rexine cloth manufactured by the respondent is to the following effect : (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Item is concerned, they are wholly irrelevant in the case of the respondents product inasmuch as the said predominance or percentages are applicable in relation to the base fabric and the base fabric in the case of respondent s product is 100% cotton. 7. Shri Sorabjee cited several decisions of this Court holding that in interpreting the meaning of the words in a taxing statute like the Excise Act, the meaning assigned to the words by the trade and its popular meaning should be accepted and that the test to be applied is to see how the product is identified by the class or section of people who deal in the product or who use the product. There can be no quarrel with the said proposition but it applies only when the words in question are not defined in the Act. This is so held by this Court in Indo International Industrial v. Sales Tax Commissioner, Uttar Pradesh [1981 (2) S.C.C. 528]. It says: it is well settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government underlying the issuance of the said notification. It is also not possible to agree with the contention of Shri Bhat, learned Additional Solicitor General placing reliance on a decision of this Court in The Tata Oil Mills Co. Ltd. v. Collector of Central Excise [1989 (43) E.L.T. 183 (S.C.)] that the supposed object and purpose of exemption should also be kept in view. In paragraph 6 of the Report, Ranganathan, J. speaking for a two-Member Bench of this Court has observed that in trying to understand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption was granted. It must be kept in view that the object and purpose of the exemption has to be culled out from the express language of the notification. If the express language of the notification does not indicate a contrary intention conveyed by the wide words employed by the notification, full effect has to be given to the wide terminology employed by the notification otherwise the result would be that in trying to search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fertiliser and on the other hand was utilised as an input for producing melamine, still it would remain a chemical fertiliser within the sweep of Chapter 31. If it remained a fertiliser, it could not be said that ammonia which was captively consumed for manufacturing molten urea had not satisfied the condition for earning total exemption under Notification No. 40 of 1985 as ammonia had resulted in the manufacture of molten urea being a fertiliser. 14. Shri Bhat, for the Revenue, next contended that the term `fertiliser as employed by the notification must be given its ordinary meaning that is accepted in common parlance. He submitted that to a common man fertiliser would denote only a soil fertiliser which could be utilised by the agriculturist for improving his agricultural yield. It is difficult to appreciate this contention. As noted earlier, the notification in terms seeks to encompass in its coverage goods of the description falling under Chapters 25, 27, 28, 29 and 31 or 32 of the Tariff Act. When there is an express reference in the notification covering the goods, amongst others, those referred to in Chapter 31 and as Chapter 31 in its turn includes chemical fertilise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the product has been described at two places. At the top of the invoice in the column Name of Excisable Commodity the product has been described as the PVC Film during the entire disputed period. However in the column Description the product has been described as Foil during some period and as film later on. The respondents have described the product as Foil and as Film at two places in the same invoice during certain period. In all the invoices produced before us the thickness has been given ranging from 0.18 mm to 0.25 mm. It does conform to the description of film. 4.3 The entire argument of the revenue is based on the fact that for some period the product has been described as Foil in the invoices. On the basis of this fact, it was argued that in commercial parlance the product is known as foil. It is not a correct conclusion reached on any reasonable basis. It is noticed that the same invoice also describes the product as PVC Films. If revenue wanted to distinguish Film from Foil they have to first describe the attributes of both Film and Foils. It is undisputed that the product in question answers to the definition of Films given in the Chapter Notes. In absence of any d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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