Character and use test for PET preform kept it within the packing-material entry, not the higher-rate plastic article category.

PET preform was treated as a packing material or container because its commercial and functional purpose was to become a bottle or container for packing liquids. The tribunal applied the character-and-use test and held that preliminary moulding or blowing required to make the article fit for actual use did not change its essential nature. On that basis, the packing-material entry applied rather than the higher-rate plastic article entry, and the higher tax demand was unsustainable.

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Issues: Whether PET preform is classifiable as packing material/container taxable at 4% under the relevant entry, or as a different plastic article taxable at 12.5%.

Analysis: The decisive test was the character and use of the article. PET preform was found to be a plastic article made from granules and intended to be expanded into bottles or containers for packing liquids. The process of blowing or moulding was treated as only a step to adapt the article for actual user and did not alter its essential nature. Applying the principle that an article intended for packing does not lose that character merely because it requires further shaping, the entry for packing materials and containers was held to cover PET preform.

Conclusion: The article was held taxable at 4% and not at 12.5%, and the demand for higher advance tax was unsustainable.

Final Conclusion: The impugned assessment demand was set aside and the petitioners were held entitled to be assessed on the lower rate applicable to packing materials and containers.

Ratio Decidendi: Where a product is commercially and functionally meant to become a packing container, preliminary moulding or transformation required to make it fit for use does not take it outside the relevant packing-material entry.

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