2016 (7) TMI 152 - AT - Central Excise

Tribunal classifies product as films under heading 39.20 for tax exemption

Commissioner of Central Excise, Mumbai-II Versus M/s Amartara Ltd.

The Tribunal upheld the Commissioner's decision that the product manufactured by M/s Amartara Ltd. should be classified as films under heading 39.20, ... Classification of FOIL - PVC foils versus PVC films - heading 3920.11 and 3920.12 read with chapter notes - rate of duty / benefit of exemption - respondent / assessee argued that the films is generic and foils is species thereof, he argued that all foils would be covered in the description of films - Revenue asserted that the impugned product which was classified and sold by the assessee as foils is totally different from films thereby the exemption under Sr. No. 35 of Table of Notification No. 53/88 and under Sr. No. 30 of the table of the Notification No. 14/92 is not available. Held that:- The entire argument of the revenue is based on the fact that for some period the product has been described as Foil in the invoices. On the basis of this fact, it was argued that in commercial parlance the product is known as foil. It is not a correct conclusion reached on any reasonable basis. It is noticed that the same invoice also describes the product as PVC Films. If revenue wanted to distinguish Film from Foil they have to first describe the attributes of both Film and Foils. It is undisputed that the product in question answers to the definition of Films given in the Chapter Notes. In absence of any definition of Foil, it is not reasonable to assert that the product, which does answers to the description of Film, is a Foil. Revenue has not given any definition of the term Foil. The invoices describe the product both as Foil and Film at different places during certain period and as Film only for the rest of the period. The sole ground of the revenue that invoices for a part of the period described the product as both Foil and Film, is not sufficient to discharge the burden. - Decided against the revenue. Issues Involved:1. Classification of the product as PVC films or PVC foils.2. Eligibility for exemption under Notification No. 53/88-CE and 14/92-CE.3. Interpretation of the term 'film' in the context of the exemption notifications.Detailed Analysis:1. Classification of the Product:The primary issue was whether the product manufactured by M/s Amartara Ltd., described in their invoices as Rigid PVC Foils, Rigid PVC Thermoforming Foils, and PVC films, should be classified under heading 3920.11 and 3920.12 as PVC films or foils. Chapter Note 10 and 15 of Chapter 39 were pivotal in this determination. Notably, Chapter Note 15 defined 'film' as sheeting of thickness not exceeding 0.25 millimeters. The Commissioner found that the products in question were indeed plastic sheeting of thickness less than 0.25 mm, thereby qualifying as films under the tariff heading 39.20, regardless of their description as foils in the invoices.2. Eligibility for Exemption:The exemption under Notification No. 53/88-CE and 14/92-CE was contingent on the product being classified as films. The Commissioner determined that the conditions for exemption were met, as:- The final product was films falling under CH 39.20.- The raw materials used fell under headings 39.01 to 39.15 and were duty-paid.- The final product was not of regenerated cellulose.The Commissioner concluded that the product, being a plastic sheeting of less than 0.25 mm thickness, was indeed a film and thus eligible for the exemption.3. Interpretation of 'Film':The Revenue's appeal argued that plastic films are distinct from plastic foils and that the exemption for films does not cover foils. They cited various judicial pronouncements to support their claim. However, the Commissioner relied on the Hon'ble Supreme Court's decision in Collector of Customs Vs M/s K. Mohan & Co., which held that the term 'film' was wide enough to cover foils and sheets. The Commissioner noted that the product in question met the definition of 'film' as per the chapter notes, and the description in the invoices as foils did not alter this classification.Separate Judgments:The Tribunal, upon reviewing the arguments and evidence, upheld the Commissioner's order, emphasizing that the product's description in the invoices as foils did not negate its classification as films under the tariff heading. The Tribunal noted that the product's thickness conformed to the definition of films, and the Revenue failed to provide a distinct definition of foils that would exclude the product from the exemption. The Tribunal dismissed the Revenue's appeal, affirming that the product qualified for the exemption under the relevant notifications.Conclusion:The Tribunal concluded that the product manufactured by M/s Amartara Ltd. was correctly classified as films under heading 39.20, meeting the conditions for exemption under Notification No. 53/88-CE and 14/92-CE. The description in the invoices as foils did not alter this classification, and the Revenue's appeal was dismissed.