Sharp Industries Ltd. Vs. Commissioner of Central Excise, Mumbai-III  Insc
507 (26 September 2005)
N. Variava & Tarun Chatterjee S. N. Variava, J.
Appeal is against the Judgment dated 11th July, 2000 passed by the Customs, Excise &
Gold (Control) Appellate Tribunal (for short CEGAT).
stated the facts are as follows:
Appellants manufacture a product which consists of aluminum foil, whose
thickness does not exceed 0.2 mm, which is then covered on one side with a
polyester film and on the other side with polyethylene.
Appellants also manufacture pouches out of the same material.
question for consideration is as to whether these products are classifiable
under Tariff Heading 76.07 and 76.12, as claimed by the Appellants, or under
Tariff Heading 39.20.38 and 39.23.90, as claimed by the Respondent. All the
authorities below, including the Tribunal in the impugned Judgment, have held
against the Appellants. The Commissioner (Appeals) and the Tribunal have based
their decisions upon test reports which show that plastic predominates over the
aluminium foil accounting for 2/3rd of the total weight. Reliance has also been
placed on HSN Explanatory Notes. The findings being based on facts and the
Tribunal being the final authority on facts, this Court cannot interfere. It
has been held in the case of J. K. Synthetics Ltd. vs. Commissioner of Central
Excise, Jaipur reported in (2003) 11 SCC 349 that the Tribunal is the best
judge of facts and this Court should not interfere. The same ratio has been
laid down by this Court in the case of Ugam Chand Bhandari vs. Commissioner of
Central Excise, Madras reported in (2004) 5 SCC 757. For this reason itself
this Appeal requires to be dismissed.
as the matter has been argued in great detail and as we find that subsequent to
the impugned Judgment the Tribunal has adopted an erroneous view, we deem it
expedient to also deal with merits and clarify the position.
concerned Tariff Entries read as follows:
Aluminium foil (whether or not printed or backed with paper, paperboard,
plastics or similar backing materials) of a thickness (excluding any backing)
not exceeding 0.2 mm.
casks, drums, cans, boxes and similar containers (including rigid or
collapsible tubular containers), for any material (other than compressed or
liquefied gas), of a capacity not exceeding 300L, whether or not lined or
heat-insulated, but not fitted with mechanical or thermal equipment.
Other plates, sheets, film, foil and strip, of plastics, non-cllular, whether
lacquered or metalised or laminated, supported or similarly combined with other
materials or not xxx xxx xxx 39.20.38 Flexible, laminated 39.23 Articles for
the conveyance or packing of goods, of plastics; stoppers, lids, caps and other
Closures, of plastics xxx xxx xxx 39.23.90 - Other" Tariff Heading 39 is
thus the specific heading which covers such products. This entry covers plates,
sheets, film, foil and strip of plastics, non-cellular, whether lacquered or metalised
the test reports, it is clear that plastic predominates in the product. 70-80%
of the product consists of plastic. There is no denial of this fact. Tariff
Entry 76.07 only deals with aluminium foils which are backed with paper,
paperboard, plastic or similar other backing material. In this case, the
product is not just backed. It is coated with other material on both sides. The
term "backed" necessarily means that the coating can only be on one
side. An aluminium foil which is covered on both sides, by different materials,
cannot be said to be backed. The aluminum foil is in such cases sandwiched
between other materials. It is clear that there can never be backing on both
sides. Chapter Note (d) of Chapter 76 also makes it clear that Tariff Heading
76.07 will not apply to products which assume the character of articles or
products of other headings. In this case, since plastic predominates the
product assumes the character of plastic and for this reason it could not be
classified under Chapter 76. HSN Explanatory Notes to Chapter 39 also clarify
that products consisting of plastic remain covered by Chapter 39 even though
they are separated by a layer of another material such as foil, paper etc.
provided they retain the essential characteristics of articles of plastic. The
test reports show that the concerned products retain the characteristics of
on merits also we find that the view taken by the lower authorities is the
however submitted that subsequent to the impugned Judgment, in a number of
other matters, the Tribunal has taken a contrary view. It was submitted that in
one of the matters, this Court has refused to interfere. In this behalf,
reliance was placed upon the Judgment of the Tribunal in the case of CCE,
Delhi-II vs. R.T. Packaging Ltd. reported in 2002 (51) RLT 291, wherein the
Tribunal relying on the Judgments of the Tribunal in the case of Aluminium Co.
vs. Commissioner of Central Excise reported in 2001 (133) ELT 759 and
Commissioner of Central Excise, Calcutta v. India Foil Limited reported in 2001
(132) E.L.T. 737 held that such products are classifiable under Chapter Heading
76.07.60 and not under Chapter Heading 39.20. It was pointed out that, on 20th February, 2003, this Court dismissed Civil Appeal
No. 5148 of 2002 filed by the Department on the following ground:
the Revenue has accepted the judgment of the Customs, Excise and Gold (Control)
Appellate Tribunal in Commissioner of Central Excise, Calcutta v. Indian Foil
Limited [2001 (132) E.L.T. 737 (Tribunal) = 2000 (39) RLT 304] and that
judgment has been followed in the case by Tribunal, the civil appeal is
costs." Reliance was also placed upon the Judgment of the Tribunal in the
case of C.C.E., Calcutta-I vs. India Foils Ltd. (supra).
subsequent Judgments can have no bearing on the correctness or otherwise of the
impugned Judgment which is a prior.
Revenue appears to have been negligent in not citing the impugned Judgment,
which decided the law correctly, at the time India Foils Ltd's case was being
decided by the Tribunal. Had it been cited it would have been a binding
precedent. The Department's negligence is further brought out by the fact that
the Judgment in India Foils Ltd's case was not carried in Appeal before this
Court. However, merely because the Judgment in India Foils Ltd's case is not
carried in Appeal would not be a ground for setting aside the impugned
Judgment, though it may have been a ground for not interfering with a Judgment
which had followed India Foils Ltd's case.
find on a reading of India Foils Ltd's case that it is based upon decisions of
the Tribunal in the cases of Hindustan Packaging Co. Ltd. vs. CCE, Vadodara
reported in 1995 (75) ELT 313 (by a larger reported in 1998 (99) ELT 101. We,
however, find that in Hindustan Packaging Co. Ltd.'s the question was whether
the product was covered by the Tariff Heading 76.06 or 48.11.29. Chapter Note
(I)(viii) of Chapter 48 provided that metal foil backed with paper or paperboard
was not covered by Chapter 48. There is no such note in Chapter 39. In any
event what the Tribunal seems to have missed in Hindustan Packaging Co. Ltd.'s
case is that the Chapter 76 cannot apply to a product which is covered on both
sides with other products.
Tariff Heading 76.06 to apply the aluminium foil must be backed with paper,
paperboard, plastic or other similar backing material. That would necessarily
mean that the aluminum strip is lined only on one side. Even otherwise a
Judgment dealing with a question whether Tariff Heading 76.06 or Tariff Heading
48.11.29 applied would have no bearing when considering a question as to
whether or not Chapter 39 applied. In the case of Indian Foils Limited vs.
Commissioner of Central Excise, Calcutta-II the question was whether Tariff
Heading 76.07 or Tariff Heading 76.12 applied. That case again had no relevance
for considering whether or not Chapter 39 applied.
the subsequent decisions are clearly erroneous and cannot be the basis for
overruling a correct decision of the Tribunal.
was next placed upon an Order dated 7th July, 2005 passed in the Appellants' case,
wherein it has been held by the Tribunal that the Appellants' product is
classifiable under Tariff Heading 76.07 and not 39.20. This Order is based on
R.T. Packinging Ltd.'s case. We find that the Appellants have been dis-honest
inasmuch as they did not point out to the Tribunal that in their own case, and
for the same period, it has already been held by the Tribunal that the product
is classifiable under Tariff Heading 39.20. Instead of pointing out this, they
rely upon R.T. Packinging Ltd.'s case. This conduct has to be deprecated in no
uncertain terms. In any case, this Judgment is only rendered on 7th July, 2005. Mr. Swami states that the
Department is filing an Appeal against this Judgment. It must be mentioned that
the Department was represented before the Tribunal.
Department has again been negligent in not pointing out to the Tribunal that in
the Appellants' own case and for this very period, it has already been held by
the Tribunal that the product is classifiable under Tariff Heading 39.20.
the above reasons, we see no reason to interfere. The Appeal stands dismissed.
There will be no order as to costs.