1989 (9) TMI 103 - SC - Customs

Classification of metallised polyester films as 'films' for exemption under Notification No. 228/76 upheld by Supreme Court

The Supreme Court upheld the Tribunal's decision that the imported metallised polyester films are entitled to exemption under Notification No. 228/76 as ... 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'? Held that:- As agreeing 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'. We are of opinion that the articles are `film' 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. Issues Involved:1. Whether metallised polyester films imported by the respondent are entitled to exemption from additional duty under Notification No. 228/76.2. Whether the imported goods fall under the categories of 'sheets,' 'foils,' or 'other rectangular or profile shapes' as specified in the exemption table.Issue-wise Detailed Analysis:1. Entitlement to Exemption under Notification No. 228/76:The respondent imported metallised polyester films and claimed a refund of additional customs duty based on Notification No. 228/76, which exempts 'articles made of plastics' from additional duty unless specified in the annexed table. The Tribunal accepted the claim, stating that the imported goods were 'films' and not one of the specified categories. The Supreme Court upheld this view, agreeing with the Tribunal and the decisions of the Madras, Calcutta, and Bombay High Courts that 'films' are distinct from the categories listed in the table. The Court noted various statutory indications and materials supporting this distinction, such as the classification in Chapter 39 of the Customs Tariff Act and the Central Excises and Salt Act, which differentiate between 'films,' 'sheets,' 'foils,' and other plastic articles.2. Classification of Imported Goods:The Revenue contended that the imported goods were 'sheets' or 'foils' or 'other rectangular or profile shapes,' and thus not exempt. The respondent argued that the goods were 'films,' a distinct category. The Court considered several factors:- Statutory Indications: References in Chapter 39 and Item 15A of the CESA Tariff indicate distinct categories for 'films,' 'sheets,' and 'foils.'- Commercial Usage: The Court emphasized the importance of commercial usage over technical definitions. Evidence showed that in trade, metallised polyester films are recognized as 'films,' not 'foils' or 'sheets.'- Thickness and Form: The Court noted that the thickness of the films (0.025 mm to 0.501 mm) and their form as rolls of indefinite length support their classification as 'films' or 'sheetings,' not 'sheets.' The Indian Standards Institution defines 'sheets' as individual pieces, not continuous lengths.- Exemption Notifications: Various exemption notifications under the Central Excise Rules and the Customs Act distinguish between 'films,' 'sheets,' and 'foils,' further supporting the respondent's classification.The Court ultimately concluded that the imported goods are 'films' and do not fall within the categories specified in the table. The expression 'other rectangular or profile shapes' was deemed inappropriate for the imported items, as they are commercially recognized as 'films' and not articles of rectangular or profile shapes.Conclusion:The Supreme Court upheld the Tribunal's decision, confirming that the imported metallised polyester films are entitled to exemption under Notification No. 228/76, as they are classified as 'films' and not as 'sheets,' 'foils,' or 'other rectangular or profile shapes.' The appeals were dismissed with no order as to costs.