Essential character governs tariff classification of container-sealing discs, and additional duty must be computed on a cum-duty basis.

Aluminium foil discs cut to shape and used on containers as closing accessories were held to be classifiable by their essential character as seals and packing accessories under Heading 83.09, not as foil under Heading 76.07. Note (d) to Chapter 76 was treated as inapplicable where the goods had assumed the character of another heading. For duty computation, any further demand had to be recalculated on a cum-duty basis by treating the sale price as inclusive of duty already embedded in it, with abatement of that element from the realised price.

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Issues: (i) Whether aluminium foil discs cut to shape and used on containers were classifiable under Heading 83.09 or Heading 76.07 of the Central Excise Tariff. (ii) Whether the duty demand had to be recalculated on a cum-duty price basis.

Issue (i): Whether aluminium foil discs cut to shape and used on containers were classifiable under Heading 83.09 or Heading 76.07 of the Central Excise Tariff.

Analysis: The product was printed and cut into circular shapes according to customer specifications and was used on containers for closing them as packing accessories. Heading 83.09 covers seals and other packing accessories of base metal. Note (d) to Chapter 76 does not apply where the goods assume the character of articles of another heading. On the record, the goods had the character of seals and packing accessories rather than foil.

Conclusion: Classification under Heading 83.09 was upheld and the claim for Heading 76.07 was rejected.

Issue (ii): Whether the duty demand had to be recalculated on a cum-duty price basis.

Analysis: Where further duty is demanded, the wholesale price has to be treated as inclusive of duty already suffered or embedded in the sale price. The demand therefore had to be worked out by abating the duty element from the price actually realised and receivable.

Conclusion: Recalculation of duty on a cum-duty price basis was directed in favour of the assessee.

Final Conclusion: The classification dispute was decided against the assessee, but the duty computation was required to be redone on a cum-duty basis, resulting in only partial relief.

Ratio Decidendi: Goods cut and used as container-sealing packing accessories are classifiable by their essential character under the specific tariff heading for seals and packing accessories, and any additional duty demand must be computed on a cum-duty sale price.

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