1990 (6) TMI 224 - AT - Central Excise

Imported cinematograph film rolls reclassified for customs duty, appeals allowed, providing relief

The Tribunal held that the imported jumbo rolls of cinematograph films should be classified under Item No. 37(I) of the First Schedule for the levy of ... - Issues Involved:1. Liability for payment of additional duty of customs under Section 3 of the Customs Tariff Act (CTA).2. Proper classification of imported jumbo films for the purpose of additional duty of customs.3. Trade parlance and its relevance in determining the classification.4. Impact of previous classifications and notifications on the current classification.Detailed Analysis:1. Liability for Payment of Additional Duty of Customs:The core issue revolves around whether the imported jumbo films should be classified under Item 68 CET or Item 37-I CET for the purpose of additional duty of customs. The appellants argued for classification under Item 37-I CET, while the Department insisted on Item 68 CET. The Assistant Collectors and Collectors (Appeals) had previously held that the proper classification was under Item 68 CET, leading to either rejection of refund claims or confirmation of demands for differential duty.2. Proper Classification of Imported Jumbo Films:The dispute centered on whether the jumbo films, imported for conversion into cinematographic positive films, should be classified as 'cinematographic films, unexposed' under Item 37-I CET or as 'goods not elsewhere specified' under Item 68 CET. The appellants contended that the films should fall under Item 37-I CET, while the Department argued they should be under Item 68 CET due to their jumbo size and the need for further processing (slitting and perforation) before use in cinematography.3. Trade Parlance and Its Relevance:The appellants argued that the term 'cinematographic film' should be understood according to its trade parlance, which, according to them, includes jumbo rolls. They cited various documents, including minutes of meetings and agreements, to support their claim. However, the Department countered that there was no substantial evidence to prove that jumbo films are known in the trade as cinematographic films. The Member (Judicial) emphasized that the appellants failed to provide sufficient proof of trade parlance, relying mostly on their own transactions.4. Impact of Previous Classifications and Notifications:The appellants had previously paid basic customs duty under heading 37.01/08(1) CTA, which, according to the Department, indicated their acceptance that the imported goods were not cinematographic films. The notification No. 220/76, which provided a concessional rate of duty for colour jumbo films, was also cited to support the classification under heading 37.01/08(1). However, the Senior Vice-President argued that the notification itself showed that the Government considered colour jumbo films to fall under heading 37.01/08(1), which should influence the classification under CET as well.Separate Judgments Delivered:Member (Judicial):The Member (Judicial) held that the jumbo rolls could not be classified as cinematographic films under Item 37-I CET because they required further processing before use in cinematography. He emphasized the lack of evidence for trade parlance and the appellants' previous acceptance of classification under heading 37.01/08(1) CTA for basic customs duty. Consequently, he proposed the dismissal of the appeals.Senior Vice-President:The Senior Vice-President disagreed, arguing that the imported jumbo rolls should be classified under Item 37-I CET. He pointed out that the essential characteristics of the films, which make them suitable for cinematography, were already present, and the slitting and perforation were merely mechanical processes. He also cited various judgments to support the view that a general term in fiscal legislation covers all forms of a commodity. He proposed allowing the appeals with consequential relief.Member (Third):The third Member agreed with the Senior Vice-President, emphasizing that the essential characteristics of the imported goods were those of cinematographic films, and the slitting and perforation did not change their classification. He also considered the evidence of trade parlance provided by the appellants and rejected the Department's arguments based on previous classifications and notifications.Final Order:In light of the majority opinion, the Tribunal held that the imported cinematograph films, unexposed, in jumbo rolls correctly fell under Item No. 37(I) of the First Schedule to the Central Excises and Salt Act for the purpose of levy of additional duty of customs. The orders of the lower authorities were set aside, and the appeals were allowed with consequential relief to the appellants.