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TMI Blog2023 (2) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 0.2 mm nor a finding that the same is part of a structure or prepared for use in structures to come to a conclusion that it falls under Heading 7610. Nowhere the Tribunal has distinguished the opinions published by the Worlds Customs Organization. It was necessary for the Tribunal to consider the submissions made on behalf of the Appellants as well as the Respondent Revenue and give factual findings with detailed reasoning before confirming the orders of the Commissioner and dismissing the Appeals. The Tribunal is the last fact finding authority and is expected to come to a conclusion of a product under a Heading after a detailed factual analysis of the product in question and not merely on the basis of judgments cited before it - the Tribunal ought to have independently come to a conclusion after considering and exhaustively dealing with the material furnished by the Appellants. The matters are remanded back to the Tribunal - appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of the said entry 6, namely:- SCHEDULE Aluminium, its alloys and products covered from time to time, under the heading, listed below of the Central Excise Tariff Act, 1985 (5 of 1986):- Sr.No. Central Excise Tariff Heading Name of the Commodity (1) (2) (3) 6 7606 Aluminium plates, sheets (including circles) and strips, of a thickness exceeding 0.2 mm Note.-(1) The Rules for the interpretation of the provisions of the Central Excise Tariff Act, 1985 read with the Explanatory Notes as updated from time to time published by the Customs Co-operation Council, Brussels apply for th interpretation of this notification. Note.-(2) Where any commodities are described against any heading or, as the case may be, sub-heading, and the aforesaid description is different in any manner from the corresponding description in the Central Excise Tariff Act, 1985, then only those commodities described as aforesaid will be covered by the scope of this notification and other commodities though covered by the corresponding description in the Central Excise Tariff will not be covered by the scope of this notification. Note.-(3) Subject to Note 2, for the purpose of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner was challenged by the appellants before the Tribunal in three different appeals registered as VAT appeals bearing Nos. 278 of 2015, 279 of 2015 and 280 of 2015 respectively. Before the Tribunal, the appellants raised an alternative contention, that if ACP is not covered by CET Heading 7606, then it would fall within the purview of CET Heading 3920. Statedly, the alternative contention that ACP would fall under Heading 3920 has been given up by the Appellants in the Appeals before us. 10. By common order dated 27 February 2017, the Tribunal dismissed the appeals filed by appellants and confirmed the order passed by the Commissioner. The present appeals have been preferred against the order dated 27th February 2017 passed by the Tribunal. 11. By order dated 24th August, 2022 the appeals have been admitted on following substantial question of law- "Whether in facts and circumstances of the case, the aluminium composite panel in question is classifiable under Schedule Entry C-6 read with Entry No.6 of Notification dated 01.06.2005 issued thereunder read with Heading 76.06 of Schedule to Central Excise Tariff Act, 1985 as claimed by the assessee or Heading 76.10 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, has passed a common judgment. As the issue with respect to Heading 3920 has been statedly not pressed, the relevant portion of the Tribunal order which is germane to our discussion is quoted as under : "33. Lastly, we must also consider alternate argument of the appellants that their product falls under CET Heading 7606, if not under residuary sub-heading 3920 as claimed above. So far as this argument is concerned, Mr. Thakar, the learned Advocate, has relied upon the observations in the case of Commissioner of Customs (Import), Chennai V/s. ICP India Ltd. reported in 2012 (284) E.L.T. 106 (Tri-Chennai) decided on 02/05/2012. Wherein following observations are recorded by CESTAT in para 2 and 3 of its judgment:- 2. The respondents have imported the impugned goods describing the same as 'aluminum composite panels' seeking classification under CTH 7606 and claiming concessional rate of duty under Notification No. 21/2002. The original authority held the impugned goods to be classifiable under CTH 7610. On an appeal from the respondents, the lower appellate authority has, however classified the impugned goods under CTH 7606 leading to the present appeal by the Department, 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration. In that case, also no extra work has been done on the panels which would have indicated that material was meant for use as a part of the structure. Still the CESTAT observed that the essential characteristics of the product were indicating that the same was meant for the use of giving better look to the structure from the outside. Since there is absolutely no difference between the description in the item before us and description in the item that was before the CESTAT for consideration, we are not inclined to take a different view. 36. Shri. Thakar in respect of his contention that his product is not a part of structure, placed his reliance on the judgment of the Hon'ble Bombay High Court in the case of Permasteelisa (India) Pvt. Ltd. V/s. State of Maharashtra and Others reported in (2016) 91 VST 129 (Bom) decided on 6th May, 2016. It must be mentioned that issue for consideration before the Hon'ble High Court was whether on the facts and circumstances of the case of Tribunal was justified in holding that the contracts of construction of glass curtain wall executed by the appellant would not constitute contracts for construction of buildings, as mentioned in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Organization, Brussels. He placed reliance on Volume published by the Committee in the year 2002 for the relevant periods 1998-1999 and 1999-2000. He invited our attention to entry No. 327 on page no. 140. The entry reads as follows:- DESCRIPTION OF GOODS HS HEADINGS UNDER CONSIDERATION CLASSIFICATION DECISION CLASSIFICATION RATIONALE AND OBSERVATIONS RELEVANT DOCUMENTS DECISION ON TAKEN CLASSIFICATION OPINION 327 Laminated aluminum products, consisting of two flat rolled sheets of aluminum which constitute the outer layer of the terminated product and one sheet or layer or core. The outer layers usually have individual thicknesses up to 2.54 mm, and the core thickness may range from approximately 0.02 mm to 2.29 mm. The products are usually in colls with the width up to approximately 1600 mm or may be cut into sheets. The core imparts superior sound damping quality to the products. The products are used for external cladding of buildings, internal decoration, automotive body panels, home appliances, business machines etc. (C.O. 7606.11 to 7606.92/1) See also No. 319 (File 2843) 76.06/76.13 1606.11 to 7606.92 It was agreed that the product at issue was a composite go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther it falls under Heading 30.03 as drug or it falls under Heading 33.04 of the CET as a cosmetic. It was brought to the notice of Delhi High Court that somewhat similar product manufactured by Jonson and Johnson Ltd. was held to be a product falling under CET Heading 33.04. It was argued before the Delhi High Court that both products are similar and Nycil Prickly Heat Powder should be classified under CET Heading 33.04. In both the cases i.e. in the case of Nycil Prickly Heat Powder as well as Jonson's Prickly Heat Powder, opinion was given by Harmonized System Committee, Brussel. For making this distinction between two products, Harmonized Systems Committee looked into all components of both the products. In Nycil Prickly Heat Powder, the following components were present:- Chloroprene's IP - 1% w/w Zink Oxide IP - 16 % w/w Starch IP - 51 % w/w Talk Purified IP to - 100% w/w Identical ingredients were not present in Johnsons Prickly Heat Powder. The Committee opined that Nycil Prickly Heat Powder would fall under CET Heading 30.03 and Johnson's Prickly Heat Powder would fall within CET Heading 33.04. This distinction made by the Committee is justified by the Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by some of the interested parties that at some places "Aluminum Composite Panels" are being classified under 7606 and thus the same also be excluded. On verification, it was found that "Aluminum Composite Panels" are not manufactured by Hindalco. Thus, without going into the issue of classification of the same product, the product has not been part of safeguard investigation." 44. These observations clearly go to show that notification does not make any classification of the product of the appellant. 45. Mr. Thakar during the course of the argument placed reliance on the judgment of the State of Andhra Pradesh and Another V/s. Concap Capacitors and Others reported in (2007) 10 VA ST 204 decided on 12th October, 2007. The ratio of this judgment is that once the item is classified as per the classification done by some other authorities, then Sales Tax Department cannot have its own interpretation. We have already distinguished the opinion of the Harmonized System committee and it is not necessary to go into the details of the judgment of the Hon'ble Supreme Court. 46. Mr. Thakar also placed his reliance on the judgment of Hon'ble Bombay High Court in the case of Samruddhi I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tories by heating in a furnace at temperature between 65 degrees Centigrade and 900 degrees Centigrade hammering and pressing. According to Revenue, the Appellants were bringing a new product into existence, and as such they were taxing it under tariff entry no.68 and the Appellants were claiming that their products were falling under Schedule entry 26AA (iv). The entry was in respect of "pipes and tubes including (including blanks therefor) all sorts, whether rolled, forged, spun, cast, drawn, annealed, welded or extruded." The question before the Hon'ble Supreme Court was whether the pipe fittings manufactured by the Appellants constitute different item or they remained same, which were items falling within the purview of Schedule Entry 26AA(iv). In our view, following observations of the Hon'ble Supreme Court are most relevant - "In other words unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. We do not think this has been done. Looking at tariff item 26AA(iv), it encompasses all sorts of pipes and tubes. It is also clear that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule Entry C-I of the MVAT Act. In support of the contention, Mr. Thakar strongly relied upon the judgment of Gujrat VAT Tribunal in the case of M/s. Umiya Flexifoam Pvt. Ltd. V/s. The State of Gujarat in Appeal No.11 of 2007 decided on 17/08/2009 and the judgment of Delhi VAT Tribunal in the case of M/s. Gurind Traders V/s. Commissioner, Trade & Taxes, Delhi in Appeal No.06/ATVAT/06-07 decided on 29th April, 2013. According to him, these decisions are under VAT provisions and therefore, they are binding. 54. We have gone through those judgments. The Notification dt.31/12/2006 published by Government of Gujrat bearing No.GHN-33D/VAT-2006/SCH-II/(42A)(5) is reproduced by the Appellant. Sr. No.172 of the notification describes a product namely "Other plates, sheets film, foil, tape and strip of plastics, non-cellular, whether lacquered or metalised or laminated and not reinforced laminated supported or similarly combined with other materials" and attempt was made by Mr. Thakar to contend that product falls within purview of entry pertaining to industrial input. We are not inclined to accept the contention of Mr. Thakar. The entry at sr. no.172 of the notification issued by Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) totally wipe out the liability of any and every dealer. 11. The Commissioner is expected to exercise this discretionary power so as not to defeat the law or render its provisions meaningless or redundant. The power must be exercised bearing in mind the facts and circumstances in each case. No general rule can be laid down. The exercise of this discretionary power must be bonafide and reasonable so also subserving the larger public interest. The highest officer in the hierarchy is chosen by the legislature as there is a presumption that this executive functionary will exercise the discretion in genuine and bonafide cases. He must be satisfied that there is a real need and the circumstances warrant exercise of the same. The power being wide the satisfaction must be backed by cogent and strong reasons which can be tested in a Court of law. 12. The words are of wide amplitude and if the Commissioner exercises the discretion injudiciously or arbitrarily and contrary to the object and purpose sought to be achieved by the enactment itself, his exercise of the discretionary power is always capable of being questioned. Therefore, when the Commissioner finds that there was never a disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the Appellant to grant prospective effect. Therefore, we pass the following order : ORDER VAT Appeals Nos.278, 279 and 280 of 2015 are dismissed. Request of the Appellants to grant prospective effect is also rejected. No order as to costs. Copy of this judgment and order be kept in all the above proceedings." 17. Learned Senior Counsel for the Appellants have argued that the decision of the Tribunal that the classification of aluminium composite panel is under the Heading 76.10 since ACP is either parts of structure or products prepared for use in structure is incorrect. It is submitted that the Tribunal has relied upon the last leg of the Heading i.e. prepared for use in structure to decide the classification of ACP under CET 7610. That ACP is neither prepared for use in structure nor is ultimately used in structures. That in the present case ACP is manufactured and cleared in sheet form of standard sizes, specifications including 4 feet x 8 feet or 4 feet x 10 feet etc. from its factory without undertaking any process on it such as drilling, bending, notching etc. Further, after clearing ACP from its factory various other processes are performed on the ACP by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 610. Therefore, the carrying out of any of these processes before clearing from the factory is a must in order to classify such products under the Heading 7610. It is submitted that, therefore, the ACP cleared by the Appellants cannot be treated as item prepared for use in structures classifiable under the Heading 7610 under Central Excise Act 1985. 21. Further, it has been submitted that the contention that ACP would fall within CET Heading 7610 as Aluminium plates prepared for use in structure has been raised by Revenue without leading any evidence and that impugned goods do not fall under the expression "prepared for use in structure". That, the burden to prove classification claimed by the Revenue is on the Revenue. 22. Without prejudice to the foregoing, it is submitted that Heading 7610 covers (i) structures, (ii) parts of structures and (iii) aluminium plates, rods, profiles, tubes and the like, prepared for use in structures. The last part of the expression "aluminium plates, rods, profiles, tubes and the like" do not cover "aluminium sheets". That the Glossary of Terms relating to aluminium and aluminium alloys, published by the Bureau of Indian Standards defines a "Plat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, applies mutatis mutandis to Explanatory Note to Heading 7608. 27. Therefore, for a product to be covered under Heading 7610, it has to be an "identifiable part of a structure". It is submitted that the expression "parts of structures" means identifiable parts of structures, that have acquired a shape or characteristic, such that they can be recognised only as a part of that structure, and not otherwise. 28. The example of "parts of structures" in the HNS explanatory notes to Heading 7308 (Bridges and Bridge Section, doors and windows and their frames, thresholds for doors, roofs, roofing frameworks etc.) makes it clear that reference to "parts of structures" is only to those parts which are identifiable with that structure. A bridge Section is identifiable with a bridge. Similarly, doors and windows are identifiable with a building. 29. That, a bridge Section has no other use/purpose, other than becoming a part of a structure viz. a bridge. Another example is the door of a car, which when customized and designed for a particular car, becomes clearly "identifiable" as a "part" of a car, and has no other use/purpose. 30. In view of the above, it is submitted that plain ACP s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er elucidated in the Technical Manual on record. She would submit that before using the composite panel there is a coating of Polyvinylidene difluoride (PVDF) to be applied which is to prepare the ACP for use in an exterior structure. Learned Special Counsel refers to the Eurobond Manual and submits that the coating is an essential component of the ACP which is the subject matter of these Appeals. That the coating is applied so as to prepare the ACP for use as an external part of a structure as can be seen from the description of the coating as well as he predominant use of the ACP. Learned Special Counsel submits that ACP is admittedly trimmed and cut to the desired size as can be seen from the Manual. It is not the case that the ACP is sold by the Appellants as a standard product, even though it may have a standard size which is most commonly used. She would submit that it is an admitted fact that the predominant use of the ACP is for external cladding or facades of buildings and refers to the Manual in support of her contention. 38. Learned Special Counsel for the Revenue would submit that the ACP falls under Heading 7610 and the same is borne out by the following facts : "a. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed or any other unsubstantial erection for which the word "building" cannot be used." (emphasis supplied) She submits that the meaning of term structure is extremely wide and includes not only buildings but also a wall, shed or other unsubstantial erection. 42. She also refers to the decision of the Hon'ble Apex Court in the case of Indian City Properties Ltd. vs. Municipal Commissioner of Greater Bombay (2005) 6 SCC 417 and particularly paragraph 19 thereof to submit that the word "structure" is wider than the term building. The term structure is wide enough to include a wall and certainly includes a building. It also includes the other structures referred to in the Eurobond Manual in which ACP is a part (viz. Exteriors of Multi Storey Apartment, Curtain Wall, Industrial & Commercial Constructions, Wall Cladding, Hospitals, Parapet Walls / Copings etc). The word building includes within its scope the fabric of which it is composed. Where ACP is used in the building, this is part of the structure. Accordingly, since the predominant use of ACP is as part of buildings, it follows that ACP is part of a structure. Since the predominant use of the ACP is as part of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and it would still be classifiable under CETH 7610. Learned Special Counsel relies upon the case of D&M Building Product Pvt. Ltd. vs. Commissioner of Customs (supra) where she submits that at para 8 the CESTAT held that the product, aluminium profiles, would fall under CETH 7610 even though they were being cut, drilled etc at the site. Reliance has also been placed upon the decision in Commissioner of Central Excise v Pushpadeep Enterprises 2010 SCC Online Kar 5363. At para 9 the Court held that the process of "cutting, grooving and routing of aluminium sheets to make composite panels amounts to manufacture as a new product emerges. The goods in the instant case cannot be equated with the aluminium sheets in running length used for manufacturing of the aluminium composite panels." Since the Appellants in the present case are admittedly cutting the sheets to the "desired size" and then selling them for use in structures, the ACP sold by the Appellants fall within the scope of CETH 7610, even assuming some additional work may be done at the site. 47. Learned Special Counsel would submit that, therefore, the entry 7610 is more specific and should be preferred to entry 7606 as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinions published by the Worlds Customs Organization. 50. In our view, it was necessary for the Tribunal to consider the submissions made on behalf of the Appellants as well as the Respondent Revenue and give factual findings with detailed reasoning before confirming the orders of the Commissioner and dismissing the Appeals. The Tribunal is the last fact finding authority and is expected to come to a conclusion of a product under a Heading after a detailed factual analysis of the product in question and not merely on the basis of judgments cited before it. In our view, the Tribunal ought to have independently come to a conclusion after considering and exhaustively dealing with the material furnished by the Appellants. To this extent, we agree with the submissions made on behalf of the Appellants. We are, therefore, not inclined to express any opinion on merits. 51. In this view of the matter, we deem it appropriate to remand the matters back to the Tribunal. Accordingly, the common judgment of the Tribunal dated 27th February, 2017 is hereby set aside. The Tribunal is directed to pass a fresh order / judgment after considering and dealing with all the factual submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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