Polymer liner classification under plastics heading upheld; Revenue could not tax the captively consumed intermediate plastic sheet.

Polymer liners made of ultra high molecular weight high density polyethylene, when further worked, were treated as classifiable directly under Chapter Heading 3926.90 as other articles of plastics. The Board's circular of 29-9-88 was binding on the Revenue, so it could not insist on first isolating the plastic sheet arising in manufacture as a separate captively consumed intermediate product under Heading 3920.38. The classification accepted in favour of the assessee was therefore maintained, and the attempt to levy duty on the alleged intermediate product failed.

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Issues: Whether polymer liners manufactured by the assessee were classifiable under Chapter Heading 3926.90 of the Central Excise Tariff Act, 1985 in the light of the Board's circular, and whether the Department could still treat the plastic sheet arising in manufacture as a dutiable intermediate product under Chapter Heading 3920.38 of the Central Excise Tariff Act, 1985.

Analysis: The circular dated 29-9-88 stated that polymer liners of ultra high molecular weight high density polyethylene, where further worked, would fall under sub-heading 3926.90 as "other articles of plastics". On that basis, the goods manufactured by the assessee were required to be classified directly under sub-heading 3926.90 without first treating the plastic sheet as a separate intermediate product. Since the circular was binding on the Revenue, it could not insist on treating the plastic sheet as captively consumed dutiable goods under sub-heading 3920.38.

Conclusion: The classification adopted in favour of the assessee was affirmed, and the Revenue's challenge to duty on the alleged intermediate product failed.

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