1989 (9) TMI 120 - HC - Central Excise

HDPE strips held plastic, not synthetic textile; classified under 39.20, 39.23 instead of Heading 54.06 for excise

HC held that HDPE strips/tapes used for manufacturing HDPE woven sacks are goods of plastic, not synthetic textile material. Relying on technical ... Classification - Plastic - difference between HDPE tape and textile tape - MODVAT benefit - manufacturing HDPE woven sacks and for that purpose they have installed HDPE tape plants for manufacture of oriented tape (plastic tape) - HELD THAT:- As such the woven sacks are not treated as an item of textile by the Commissioner of Textiles and the DGTD (Plastic and Polymer Directorates) has registered it as an Industry producing HDPE woven sacks. The raw material used for the production of the HDPE strips is covered under Chapter 39 and in absence of anything on the record to show that the HDPE strips are synthetic textile material the only fact that their width is less than 5 mm would not automatically put that item under entry No. 54.06 of Chapter 54 of the Central Excise Tariff of India. What the learned Asst. Collector, C. Excise and the Collector Appeals, Central Excise have done is that they have considered only the width of the strip and have come to the conclusion that since the strip is of less than 5 mm, therefore, it falls within 54.06 ignoring the fact that in addition to this there should be something to arrive at a conclusion that the aforesaid strip is of synthetic textile material. If the strip is a strip of plastic only and not a synthetic textile material and is also known in the common parlance as a commodity of plastic, and the finished goods i.e. the HDPE woven sacks are also known in the common parlance as plastic woven sacks, then it cannot be held that the strips with which such bags are woven are the strips of synthetic textile material. The view of the Textile Commissioner as discussed, the registration by the DGTD of the factory of the petitioner, the definition of 'textile' and 'fibre' as discussed above, the process of the manufacture of the HDPE tapes, the earlier judgments of the CEGAT approved by the Supreme Court and accepted by the Department, all clearly go to show that the HDPE bags are the bags woven by the plastic strips and they, therefore, are goods of plastic and the material used for weaving those bags being the strips of plastic made from plastic granules, the strips of plastic used for weaving the aforesaid HDPE woven sacks has to be classified as an Item under entry 39.20 of Chapter 39 and not under entry 54.06 of Chapter 54. Accordingly the entries of the finished goods have also to be made under the proper Chapter of the Tariff Act treating them as the finished goods made of plastic strips. In the result we hold that HDPE strips or tapes fall under the Head. 39.20, sub-heading 3920.32 of the Central Excise Tariff Act and not under Head. 54.06, sub-heading 5406.90. Similarly the HDPE sacks fall into Heading 39.23, sub-heading 3923.90. Consequently the petition filed by the petitioners are allowed. The order impugned passed by the Assistant Collector Central Excise, Indore Division and that of the Collector (CE) Appeals, New Delhi are quashed. The respondents are directed to classify the goods accordingly. No other points pertaining to other issues were raised before us during the course of the arguments. There shall be no order as to costs. Issues Involved:1. Classification of HDPE woven sacks under the Central Excise Tariff Act, 1985.2. Availability of alternative remedy and jurisdiction of the High Court to entertain the writ petition.3. Applicability of previous judgments and circulars in the context of the new Tariff Act, 1985.Summary:1. Classification of HDPE woven sacks under the Central Excise Tariff Act, 1985:The petitioners, limited companies manufacturing HDPE woven sacks, contended that their products should be classified under Chapter 39 of the Central Excise Tariff Act, 1985, as articles of plastic. The Assistant Collector, Central Excise, classified the HDPE strips under sub-heading 5406.11 and Polypropylene under sub-heading 5406.90, with fabrics thereof under heading 5408.00, thus requiring duty payment under Chapter 63.01 at 12% ad valorem. The petitioners argued that HDPE tapes fall under Heading 39.20, HDPE fabrics under Heading 39.26, and HDPE sacks under Heading 39.23 sub-heading 3923.90. They cited differences between HDPE and textile materials, supported by various reports and expert opinions, and argued that in common parlance, HDPE woven sacks are known as plastic sacks. The court held that HDPE strips or tapes fall under Heading 39.20, sub-heading 3920.32, and HDPE sacks under Heading 39.23, sub-heading 3923.90, thus quashing the orders of the Assistant Collector and Collector (CE) Appeals.2. Availability of alternative remedy and jurisdiction of the High Court to entertain the writ petition:The respondents argued that the petitioners should have exhausted alternative remedies available under the Central Excise Law, specifically by appealing to the Central Excise Gold Appellate Tribunal. The petitioners countered that the impugned order was manifestly illegal and based on an incorrect interpretation of the tariff entry, making it challengeable directly before the High Court. The court, referencing the Supreme Court judgment in A.V. Venkateswaran, held that the availability of an alternative remedy does not bar the High Court from exercising its jurisdiction under Art. 226/227 of the Constitution, especially when the order is manifestly illegal.3. Applicability of previous judgments and circulars in the context of the new Tariff Act, 1985:The petitioners cited previous judgments of the Central Excise Gold Appellate Tribunal, which classified HDPE woven sacks as articles of plastic, a finding upheld by the Supreme Court. They argued that these judgments should be binding despite the introduction of the new Tariff Act, 1985. The respondents contended that the new Tariff Act, based on the harmonized system of nomenclature, necessitated a different classification. The court found that the judgments and circulars issued under the old tariff were still relevant and that the HDPE woven sacks should be classified as articles of plastic under the new tariff as well.Conclusion:The court allowed the petition, quashing the orders of the Assistant Collector and Collector (CE) Appeals, and directed the respondents to classify the HDPE woven sacks under Chapter 39 of the Central Excise Tariff Act, 1985. No other points pertaining to other issues were raised during the course of the arguments. There was no order as to costs.