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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 ..... 9.20 and 39.21, the expression plates, sheets, film, foil and strip applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut, they become articles ready for use). 15. For the purposes of heading Nos. 39.19, 39.20 and 39.21, the expression film means sheeting of thickness not exceeding 0.25 millimeters." Vide Notification No. 53/88 vide entry No. 35-37 provided following exemptions: - 35. 39.20 Films (other than of regenerated cellulose) 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 under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has already been paid. 36. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 39.15. In other words, the two conditions - (ii) and (iii) stood fulfilled. It is also not in dispute that the final product was not of regenerated cellulose and fell under CH 39.20. The only issue in which there was disagreement between the CERA on one hand and the Department and the noticee on the other hand was the description of the final product. The noitcee had described their final product as foils and not as films though the Chapter heading, i.e. 39.20 given, was in accordance with the specification of the exemption Notification No. 53/88. It was CERAs contention that since the final product manufactured and cleared by the noticee was foils and not films, the noticee was not entitled to the benefit of the exemption Notification No. 53/88. 9. The noticee have challenged the view treating foils as different from films and drawn my attention to Chapter Note No. 10 of Chapter 39 of the Tariff. The said note provides that for the purposes of CH No. 39.19, 39.20 and 39.21 (all three of which deal with inter alia with films), the expression film means sheetings of thickness not exceeding 0.25 mm. 10. Neither the CERA not the Department has disputed the noticees claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all in a category of their own and do not fall in the categories of plates, sheets, foils, strips etc. It was argued that the Commissioner has wrongly relied on the said decision to drop the demands. It was also argued that the arguments film is generic, while a foil is a specie thereof, has been rejected by the Hon'ble Bombay High Court in the case of A.V. Jain (supra). It was argued that in Customs and Excise matters reliance is placed not so much on technical and scientific definition, but on the commercial usage. Since the respondent themselves have cleared the said goods by describing them as foils, they cannot now claim that the same are films. It was argued that not all goods of thickness less than 0.25 mm be classified as films. It was also argued that the rules of interpretation are not interpreted while interpreting an exemption notification, but they are applicable only for classification of goods under the tariff. In support of this assertion, he relied on following decisions: - (a) Samtel India Ltd. Vs. Collector of Customs - 1997 (95) ELT 115 (T) (b) Set Telecommunications Pvt. Ltd. Vs. Collector of Customs - 1997 (19) RLT 629. (c) Khoday Brewing & Distillin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr. M.A. Shenoy of Department of Chemical Technology, Bombay, that there can be nothing which can be called as a foil. It can be seen from the said expert opinion that foil of thickness of less than 0.25 mm. He argued that if the argument of the respondent is accepted then the term foil in the tariff will become redundant. In so far as the term film or the foils are concerned, they referred to different things as has been held by the Hon'ble Bombay High Court in the case of A.V. Jain (supra). In the said decision, the Hon'ble High Court has observed as under: - para 7, 10 and 12. 7. Before turning to the decision in Precise Impex, the trade usage and the academic or academic world, I will consider the question in the light of a proposition canvassed by Mr. Dhanuka. The proposition is that Ex. A must be considered in the proper context and setting. The context is the issue of the Notification under a power conferred upon the Central Government by Section 25 of the Act. This Section empowers the Central Government to exempt generally, either absolutely or subject to such conditions as may be specified, goods of any specified description from the whole or any part of duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implication is that films are covered by the umbrella of all articles, in contradistinction to the exclusions spelt out in the Table. Mr. Dhanuka submitted that the reference to CESTA was inappropriate as the sources of power being considered arose from different enactments. But if there is a reference to a statute when exercising power under another statute, the first cannot be ignored and treated as if totally inappropriate as a device for construction of the 2nd statutes language. prima facie, therefore, petitioner establishes that a film is within the exemption and not the exclusion clause of Ex. A. This satisfies the basic requirement in construing fiscal statutes that a person who wants to take the advantage of a provision relating to a concession or advantage must satisfactorily show that he falls within that provision. [See Dharamsi Morarji Chemical Co. Ltd. v. Union of India, 1980 E.L.T. 454 (Bom.)]. The burden will now shift to the Revenue which is intent upon establishing that petitioner is not entitled to the benefit of the exemption, inasmuch as the article imported was foils. The reply to this is, that this is an innocuous circumstance because the C.T.A. Entry show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom I reproduce the portion relied upon :- Film :- A sheeting having nominal thickness not greater than 0.25 mm. Foil :- Note. In the case of some materials this term is reserved for the thinner materials, e.g., unsupported PVC film is less than 0.003 inch (0.0762 mm). Modern Plastics by Harry Barron (Page 355) defines technically foil, film and sheet, according to thickness. Foil is the term applied to materials which are made in continuous rolls and is less than 1/l000h of an inch thick (0.0254 mm). Foil is familiar as the well-known wrapping materials such as Cellophane. In the book Basic Chemistry of Textile Preparation by S.R. Cockett and K.A. Hilton (page 73) it is stated that thinnest sheet plastics of thickness upto 1 mil (0.025 mm) are termed as foil. From the above information it can be said that a thin film (upto 0.025 mm in thickness) can be recognised as a foil. Although no lower limit of thickness of film has been specified, very thin film of dimension of thickness not exceeding 0.025 mm, can be optionally termed as foil and hence distinguished from film." 12. Now, I turn to how the trade understands the two expressions film and foil. It is not nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and CESTA entries. Additional Duty under C.T.A. is in lieu of excise. Excise is leviable under CESTA. Under CESTA, the Indian manufacturer describes a film as being of 24 micron thickness. The ISI Glossary accepts sheetings of a thickness not greater than 0.25 mm. as being a film. Scientifically and commercially, the imported article would, therefore, be a film, and, not in the generic sense of including a foil, but something distinct and different, therefrom. This brings me to the Precise Impex decision. 2.3 Learned AR also argued that in terms of decision of K. Mohan & Co. (supra), relied by the Commissioner, also the film and foils are separate and different items, and therefore Commissioner has wrongly interpreted the said decision. According to learned AR, Commissioner should have relied on the very same decision of Hon'ble Supreme Court to come to a conclusion that the foils are not covered by the description films. For this purpose, he cited the following para of the said decision which read as under: - 2.?The respondent - M/s K. Mohan & Co. - imported, from Japan, metallised polyester films under an import licence dated 14-5-1978. The goods were admittedly in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rectangular shape merely because, when cut into segments, they may fall into rectangular pieces. 7. The answer given by the Bombay High Court to the contention that the goods were `foils was that while it may be that, technically and scientifically speaking, the articles in question may be capable of being characterised as `foils, one is concerned in a customs or excise matter not so much with the technical or scientific definitions of these terms but rather with commercial usage. One has to see how the trade understands the expression films and one should also bear in mind in this connection that the expressions set out in the table are applicable not merely to the articles with which we are at present concerned but also to various other types of articles of plastics with varied commercial use. The question is whether the trade understands the article presently in question as a `film' or whether there is a distinction in trade usage also between `foils and `films. It has been pointed out by the Bombay High Court, on the basis of the evidence before it, that in the understanding of those who are in this particular trade, metallised polyester films are referred to as `fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force in the contention of Shri Ganesh that if the articles be held not to be `films', because they exceed 0.25 mm in thickness, they would be `sheetings' rather than `sheets' and would therefore not fall within the meaning of the expression 'sheets' in the table. He argued that the interpretation adopted by the Commissioner obliterates the identity of foils from the tariff in so far as to foil would be covered by the term film. 3 Learned Counsel for the respondent argued that the films is generic and foils is species thereof, he argued that all foils would be covered in the description of films. He argued that the decision of Hon'ble Supreme Court in the case of A. Mohan & Co. is clearly applicable to the present case. He argued that in all the invoices, whether under the description the goods were disputed as foils under the heading name of excisable commodity, the same were described as PVC film. He argued that in all the invoices, the name of excisable commodity has been described as PVC film. He produced certain sample invoices. He argued that while in the invoices covered in the show-cause notice issued upto 18.12.1991, the description was given as film in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Revenue, on the other hand, is that coated fabric (in the case of the respondent, rexine cloth) is expressly placed within the purview of the cotton fabric by the Parliament. In the face of such express inclusion, there is no room for arguing that the rexine cloth or coated fabric is not cotton fabric. May be that rexine cloth is not called or dealt with as a cotton fabric in the commercial world or in common parlance but that does not prevent the Parliament from treating it as a cotton fabric for the purposes of the Act and indeed the Parliament has chosen to include it within the ambit of cotton fabrics for the purposes of levying excise duty. Since the power of the Parliament to do so is unquestioned, the respondent's product is bound to be treated as cotton fabrics within the purview of Tariff Item 19 and subjected to duty prescribed under sub-item (III) thereof. So far as the predominance or percentages referred to at the end of the first para of the Tariff 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, a chemical fertiliser. It is difficult to appreciate the contention of Shri Bhat, learned Additional Solicitor General that the spirit of the notification was to give the benefit only to soil fertilisers as final product which could be utilised by the cultivator in agriculture and with that end in view the notification was promulgated. On the express language of the notifications, it is not possible for us to agree with this contention. If that was the view of the Central Government while promulgating the said notification, nothing prevented the Central Government from indicating that it was not seeking to cover the goods mentioned in Chapter Heading No. 31 or in not confining the said exemption notification only to soil fertilisers. In the absence of any such restrictive words in the said notification, the express and wide terminology `fertiliser employed in the notification cannot be curtailed by any process of reasoning about the supposed intention of the Central 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f various types of fertilisers found in Chapter 31 of the Tariff. It has also to be noted that the chapter notes of the Chapters referred to by the said notification have to be read as a part and parcel of the said notification. In this connection, we may usefully refer to a decision of this Court in Fenner (India) Ltd. v. Collector of Central Excise, Madurai [1995 (77) E.L.T. 8 (S.C.)] wherein one of us S.P. Bharucha, J. speaking for a two-Member Bench of this Court observed that the Tariff Schedule contained rules for its interpretation which required that for legal purposes classification would be determined on terms of the headings and any relative Section or Chapter Notes. As we have already seen Note to Chapter 31 dealing with fertilisers clearly states that Heading No. 31.02 would cover mineral or chemical fertilisers even when they are not used as fertilisers. Therefore, it must be held that if molten urea as covered by Heading No. 31.02 was not to be used as 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 ammon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) That Hon'ble Supreme Court in the case of K. Mohan & Co. (supra) has held that the term film is wide enough to cover foil and sheets. We find that the dropping of objection by CERA has no relevance whatsoever for the purpose of adjudication. 4.1 It seen that the sole ground in the entire proceedings to allege that the respondents have cleared Foil is the description on the invoice. No definition of Foil has been relied upon by the appellants in the review order. It has not been stated how the Foil is different from Film. It has not been disputed that the products cleared by the respondents are of less than 0.25 mm thickness as can be seen from the invoices submitted by the respondents. No other material to counter this claim has been produced. We find that the only reason for alleging that Foil has been cleared is the description on the invoices. 4.2 Therefore we examine the invoices produced before us. We find that in all the invoices 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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