of Customs, Bombay Vs. K. Mohan & Co. Exports
 INSC 288 (25
S. Rangnathan, S. Kania, M.H.
1989 AIR 2250 1989 SCR Supl. (1) 231 1989 SCC Supl. (2) 337 JT 1989 (3) 740
1989 SCALE (2)712
Act 1962--Customs Tariff Act 1975--Section 3--Import of metallised polyester
films rolls--Whether entitled to exemption from payment of countervailing duty
under notification No. 228/76 dated 2.8.1976 issued under Section 25(1) of the
Respondent firm imported from Japan, "metallised
polyester films" which were in the shape of film rolls several metres
long. The goods were cleared on payment of customs duty as well as additional
duty/countervailing duty leviable under section 3 of the Customs Tariff Act.
Thereafter the Respondent firm moved three applications claiming refund of the
additional duty of customs paid by it. The claim was made under the terms of a
notification of exemption issued under section 25(1) of the Customs Act. Under
notification No 228/76 dated 2.8.1976, an exemption from the Customs Tariff Act
was granted in respect of "articles made of plastics, all sort but
excluding those specified in the Table annexed and failing under Chapter 39 of
the First Schedule to the Customs Tariff Act.
Tribunal accepted the claim of refund made by the' Respondent. In so doing it
relied on the decisions of the Madras High Court in Precise Impex P. Ltd. v.
Collector,  21 ELT 84, of the Calcutta High Court in Continental Marketing
P. Ltd. v. Union,  28 ELT 11 and of the Bombay High Court in A.V. Jain v.
Union, WP 2136 of 1986 decided on 30.1.1987. The Tribunal also referred to its
earlier decision in Export India Corporation P. Ltd. v. Collector; and
Collector v. Fancy Dying and Printing Works Bombay.
Tribunal held that the goods imported by the Respondent were articles made of
plastics but they were "films" and thus not one of the Categories of
articles mentioned in the Table.
by the decision of the Tribunal, the Collector of Customs has filed these
appeals under section 130-E(B) of the Customs Act 1962.
Before this Court the Department contended that the goods are
"sheets" or "foils" or other "rectangular or profile
shape" and hence liable to duty. The assesses' assertion is that the goods
are "films" though specie of plastics articles yet they are different
from any mentioned in the table. According to it even if they are treated only
as thin sheets of plastic material, they can be described only as "sheetings"
and not sheets.
consideration of the rival contentions advanced by the parties and after making
reference to the other relevant notifications granting exemption issued under
rule 8(1) of the Central Excise Rules in respect of items falling under Item
No. 15A of the Central Excise Tariff Act, this Court dismissing the appeals,
Films made of plastic fall in a category of their own and do not fail within
the categories of articles excepted by the Table. Film is a well-known,
distinct and independent category of plastic article known to commerce.
The Court agreed 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".
[238F] The goods under consideration cannot be described either as "foils
or sheets". A film roll of indefinite length and not in the form of
individual cut piece can be more appropriately described as "sheetings"
rather than' 'sheets".
;239A] The expression "other rectangular or profile shapes" in the
table is also not appropriate to bring in the items in question. For one thing,
the articles have a distinct name in the market as "films" and
therefore they are outside the table. It will not be possible to accept the
contention that articles which have a clear commercial identity as
"films" should be brought within the wide and vague expression
"other rectangular or profile shapes", because if the film is cut
into small pieces each piece will be rectangular in shape. The items imported
do not come in a rectangular shape they are imported as rolls of polyester
films. They are not articles of rectangular shape. Nor would it be possible to
treat them as of other "profile" shape. The Court was unable to
attribute any precise meaning to the expression "profile" shape but
it cannot be taken to be comprehensive enough to take in any shape whatever. If
the expression "rectangular" or other "profile" shape in
the table is given 233 such wide and unrestricted interpretation then
practically any article of plastic can be brought within the meaning of one or
other of the expressions used in the Table and thus the entire exemption can be
altogether deprived of any content. The Court took the view that the articles
are "films" and, as, this expression does not find specific mention
in the table, the assessee is entitled to exemption under the main part of the
notification. [239E-H; 240A]
APPELLATE JURISDICTION: Civil Appeals Nos. 1573/88, 3954/87 and 3370 of 1988.
the Judgment and Order dated 1.2.1988, 10.6.1987 and 28:4.1988 of the Customs
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. C/1373/85-C Order No. 87.,88-C, 1704/83-D
Order No. 463/87-D and Appeal No. C-605 1986(C) in Order No. 429/88-C
P. Parmeshwaran, T.V.S.N. Chari and Mrs.
Suri for the Appellant.
K.J. John and San jay Grover for the Respondent.
Judgment of the Court was delivered by RANGANATHAN, J. These three appeals
under Section 130-E(b) of the Customs Act, 1962 raise the same issue. They are
therefore disposed of by a common order.
respondent--M/s. K. Mohan & Co.--imported, from Japan, "metallised poIyester
films" under an import licence dated 14.6.1978. The goods were admittedly
in the shape of film 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 s. 3 of the
Customs Tariff Act, 1976 (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 s. 25(1) of the CA. Under notification no. 228/76 dated
2.8.1976, an exemption from the customs duty payable under s. 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 234 excepted the following items from the purview of the
rods, sheets, foils, sticks, other rectangular or profile shapes, whether
laminated or not, and whether rigid or flexible including tubings and polyvinyl
No. 443 dated 29.11.76 omitted the words of notification no. 228 which have been
underlined above but left the main notification otherwise untouched.
assesses' claim for refund was accepted by the Tribunal. The Tribunal held that
the goods imported by the respondent were articles made of plastics. But they
were 'films' and not one of the categories of articles enumerated in the table.
In reaching its conclusion, the Tribunal followed the decisions, of the Madras
High Court in Precise Impex P. Ltd. v. Collector,  21 ELT 84, of the
Calcutta High Court in Continental Marketing P. Ltd. v. Union,  28 ELT 11
and of the Bombay High Court in A.V. Jain v. Union, WP 2136 of 1986, decided on
30.1. 1987. The Tribunal also referred to its own earlier decisions in Export
India Corpn. P. Ltd. v. Collector and Collector v. Fancy Dyeing and Printing
works, Bombay. The Collector of Customs is
aggrieved by the orders of the Tribunal and hence these appeals. There are
three appeals as there were three applications for refund by the assessee in
respect of different periods.
is no dispute before us that the goods in question are articles made of
plastics. This being so, the assessee is entitled to the exemption conferred by
the notification unless the goods answer the description of one or other of the
specific items set out in the table. The onus of showing this is clearly on the
Revenue. The department contends that the goods are "sheets" or
"foils" or "other rectangular or profile shapes" and hence
liable to duty. On the other hand the assesses' case is that they are
"films", a specie of plastic articles different from any mentioned in
alternatively contended that, even if they are treated only as thin sheets of
plastic material, they can be more accurately described only as "sheetings"
and not "sheets".
pointed out that the goods are in the form of large rolls containing films
several metres long. Such huge lengths can only be called "sheetings"
for the expression "sheets", it is said, connotes only smaller
lengths or bits cut out from "sheetings" which mean sheets of immense
lengths. Also, being in the form of rolls, they cannot be said to be articles
of "rectangular shape" merely because, when cut into segments, they
may fall into rectangular pieces.
After giving the matter our careful consideration, we are of opinion that the
view taken by the three High Courts and the Tribunal that "films"
made of plastic fall in a category of their own and do not fall within the
categories of articles excepted by the table is correct. We have come to this conclusion
because there are various statutory indications and other material which
support such a conclusion:
Duty under the CTA in respect of artificial resins, plastic materials of
various types and articles thereof is leviable under s. 3 read with Chapter 39,
containing heading nos. 39.01/06 and 39.01/07 in section VII of the First
Schedule to the CTA. This aspect found a reference in the original notification
no. 228 but was omitted, apparently as being redundant, by the amendment of
29.11.1976. In Note 3 at the commencement of the said Chapter 39, clause (c)
talks of "seamless tubes, rods, sticks and profile shape while clause (d)
refers to "plates, sheets, films, foils and strips". This indicates
that plates, sheets, films, foils, etc. are categories of plastic articles
distinct from one another.
Notification No. 228 contains a reference to the tariff schedule under the
Central Excises & Salt Act, 1944 (CESA). The CESA, read with item 15A of
its First Schedule, provides for the levy of an ad valorem duty of excise on
all "artificial or synthetic resins and plastic materials and cellulose
esters and ethers and articles thereof" described in greater detail in
sub-items (1) to (4) there under. Of these, sub-item (2) reads:
Articles made of plastics all sorts, including tubes, rods, sheets, foils,
sticks, other rectangular or profile shapes, whether laminated or not, and
whether rigid or flexible, including lay flat tubings and polyvinyl chloride
sheets, not otherwise specified";
Explanation I appended to item 15A clarifies:
the purpose of sub-section (2), "plastics" means the various
artificial or synthetic resins or plastic materials or cellulose esters and
ethers included in sub-item (1)"Comparing item 15A of the CESA tariff with
the notification under consideration, it will be seen that the intention was to
exempt, from countervailing duty, "articles made of plastics, all
sorts" (the expression "plastic" having the very wide meaning
given to it in Explanation 236 I of the CESA tariff) and falling within the
main part of sub-item (2) of item 15A and to deny exemption to goods which fall
under the second (inclusive) part of the said sub-item. In this context it is
of some interest to refer to item 15A as substituted by the Finance Act, 1982.
This item describes in greater detail than before various "artificial and
synthetic resins and plastic materials" liable to duty.
these item (2) reads:
of materials described in sub-item (1) including the following, namely:
sheeting, sheets and films, whether lacquered or metallised or laminated or
flat tubings not containing any textile material.
item, it will be seen, does not stick to the classification made earlier in
sub-item (2). However, it does make a distinction between "sheeting,
sheets and films".
There are a number of exemption notifications issued under rule 8(1) of the
Central Excise Rules in respect of items falling under Item No. 15A of the CESA
Tariff which make a pointed reference to 'films' and draw a similar distinction
as above. Notification No. 68 of 1971 dated 29.5. 1971 exempts articles made of
plastics, all sorts, falling under sub-item (2) of Item No. 15A except (i)
rigid plastic boards, sheeting, sheets and films, whether laminated or not; and
(ii) flexible polyvinyl chloride sheeting, sheets, films and lay-flat tubings
not containing any textile material. Notification No.69 of 1971, dated
29.5.1971, read with notification No. 7417 and 107/73, exempts articles made of
polyurethane foam except, inter alia, sheets and sheetings. Notification No. 70
of 1971, of the same date, restricts the duty on rigid polyvinyl chloride
boards, sheeting, sheets and films. Notification No. 71 of 1971, also of the
same date, grants limited exemption, subject to certain conditions to rigid
plastic boards, sheeting, sheets and films, whether laminated or not, other
than those manufactured from polyvinyl chloride.Notification No.72 of 1971 of
the same date limits the excise duty in respect of flexible polyvinyl chloride
sheeting, sheets, films and lay-flat tubings, not containing any textile
material and falling under sub-item (2) of Item No. 15A to 25 per cent (amended
later to 30%) ad valorem, subject to certain conditions.
No. 39 of 1973 dated 1.3. 1973, exempts rigid and flexible polyvinyl chloride
films of thickness below 0.25 mm as well as polyvinyl chloride lay flat tubings
in certain circumstances. By notifi237 cation No. 151 of 1975 dated 31.5.1975
exemption was granted in respect of cellulose tri-acetate, when intended for
use in the manufacture of cine-films, X-ray films or photographic films. Item
15B talks of "film or sheet" of cellulose and a notification of 1981
specifically added item 15BB to the Tariff under CESA dealing with polyster
films as a separate item, though this entry was subsequently omitted by the
Finance Act of 1982. All these indicate that 'film' is a well-known, distinct
and independent category of plastic article known to commerce.
There is a like distinction maintained even by the notifications issued under
section 25 of the Customs Act in regard to items falling within chapter 39 of
the First Schedule to CETA. Notification No. 227 dated 2.8.1976 limits the rate
of duty on various items, two of which are--"film scrap" and
"cellulose nitrate sheets and cellulose nitrate films". We then have
notification No. 223 of the same date, which falls for interpretation now and
which omits a reference to "films" while enumerating various other
categories of plastic articles. Notification No. 229, also of 2nd August, 1976,
restricted the customs duty on metallised or plain plastic films imported for
certain specified purposes to 60%. Notification Nos. 230 dated 2nd August, 1976
and 36 of 1.3. 1978, also granted limited exemption to other types of polyster
films. (We must, however, point out that these last two notifications are
somewhat ambiguous for our present purposes as they also specifically provide
for an exemption to the said articles from the additional duty which, on the
argument of the assessee before us, would be really unnecessary.
Revenue's stand is that the articles in question may be films in a generic
sense but that, in this particular case, they are either 'foils' or 'sheets'.
For this purpose our attention is drawn to the discussions contained in the
Bombay case where the issue was decided on the basis of evidence produced by
both parties. This shows that according to the glossary of terms used in the
plastic industry issued by the Indian Standards Institution (IS 2828-1954, as
well as in 1979), a film is "a sheeting having nominal thickness not
greater than 0.25 mm". A report of the Chief Chemist of the Customs
Department as well as extracts from certain text books were produced to show
that 'foil' is the term "applied to materials which are made in continuous
rolls and are less than 1/1000th of an inch thick (0.254 mm). In the present
case, the film rolls were of thickness varying between 0.025 mm to 0.501 mm. It
is, therefore, submitted that to the extent the material was less than .0254 mm
in thickness it would constitute 'foils' and to the extent 238 it exceeded 0.25
mm in thickness it will be a 'sheet'. It is urged that since 'sheets' and
'foils' are specifically mentioned in the entry in question, the imported goods,
at least to the extent indicated above, cannot qualify for exemption.
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 'films'.
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 'films' could consist of films of the
thickness of even 12 to 25 microns.
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 6 microns which are used in the electronic industry.
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'.
is also another reason why the articles in the present case, to the extent they
have thickness of more than 0.25 mm cannot be described as 'sheets'. Shri Ganesh
for the assessee contended--and we 239 think rightly--that a film roll of
indefinite length and not in the form of individual cut pieces can be more
appropriately described as 'sheetings' rather than 'sheets'. The Indian
Standard Institution also defines 'sheets' as a piece of plastic 'sheeting'
produced as an individual piece rather than in a continuous length or cut as an
individual piece from a continuous length. We have also earlier pointed out
that there are various items in various notifications making distinct reference
to sheets and sheetings. Actually, we also think that there is a factual
confusion on this aspect.
One of the Collectors has referred to the goods as being of thickness varying
between 0.025 mm and 0.501 mm, it is seen from another of the orders that the
goods are 3000 metres in length, 0.501 mm in width and 0.025 mm in thickness.
If the latter is the correct version and all the goods are only 0.025 mm in
thickness, the question now posed will not at all arise. However, as indicated
above, there is 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.
also like to add that the expression 'other rectangular or profile shapes' in
the table is also not appropriate to bring in the items in question. For one
thing, the articles have a distinct name in the market as 'films' and therefore
they are outside the table as already pointed out. For the same reasons as we
have mentioned in the context of 'foils' and 'sheets'; it will not be possible
to accept the contention that articles which have a clear commercial identity
as 'films' should be brought within the wide and vague expression "other
rectangular or profile shapes", because, if the film is cut into small
pieces, each piece will be rectangular in shape, The items imported do not come
in a rectangular shape; they are imported as rolls of polyester films. They are
not articles of rectangular shape. Nor would it be possible to treat them as of
other 'profile' shapes. We are unable to attribute any precise meaning to the
expression 'profile' shape but it cannot be taken to be comprehensive enough to
take in any shape whatever, as is contended for. If we give the expression
'rectangular or other profile shapes' in the table such wide and unrestricted
interpretation as is suggested, then practically any article of plastic can be
brought within the meaning of one or other of the expressions used in the table
and thus the entire exemption can be altogether deprived of any content.
the above reasons, we are of opinion that the articles are 240 'films' and, as
this expression does not find specific mention in the table, the assessee is
entitled to exemption under the main part of the notification. The conclusion
arrived at by the Tribunal is therefore upheld and these appeals are dismissed
with no orders as to costs.