Tariff definition controls classification of kraft paper, and incorrect disclosure can justify the extended limitation period.

Clear tariff definitions govern classification under Chapter 48: wrapping paper made from chemical sulphate pulp was treated as kraft paper because Note 6 requires only that at least 80% of fibre content be obtained by the chemical sulphate or soda process. The Tribunal stated that trade parlance, finish, tear strength, or market description cannot override an express tariff definition, and accordingly classified the goods under Heading 4804.29 rather than Heading 4805.00. It also held that incorrect disclosure of the goods in classification lists justified invocation of the extended limitation period, as the material fact was not properly revealed and the wrong classification was treated as evasion.

---

---

Issues: (i) Whether wrapping paper manufactured from chemical sulphate pulp was classifiable under Heading 4804.29 as kraft paper or under Heading 4805.00. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether wrapping paper manufactured from chemical sulphate pulp was classifiable under Heading 4804.29 as kraft paper or under Heading 4805.00.

Analysis: Note 6 to Chapter 48 defined kraft paper and paper board by a single criterion, namely that not less than 80% by weight of the total fibre content must consist of fibres obtained by the chemical sulphate or soda process. The goods were admittedly made by the chemical sulphate process. Where the tariff contains a clear and unambiguous definition, classification must follow the tariff definition and not trade parlance or secondary characteristics such as finish, tear strength, or market description. The Tribunal also noted that kraft paper is used for wrapping and packing purposes.

Conclusion: The goods were correctly classifiable under Heading 4804.29 and not under Heading 4805.00, in favour of Revenue.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The assessee had declared kraft paper and wrapping paper under different headings in the classification lists, while the material fact that the wrapping paper was kraft paper within the tariff definition was not correctly disclosed. The approving officer had no basis to detect the incorrect classification from the declarations filed. On those facts, the Tribunal treated the wrong classification as a deliberate act leading to evasion of duty and held that the extended period was attracted.

Conclusion: The demand was not barred by limitation and the extended period was available, in favour of Revenue.

Final Conclusion: The order dropping the demand could not be sustained; it was set aside and the matter was remanded for de novo adjudication in the light of the Tribunal's findings.

Ratio Decidendi: Where the tariff contains a clear statutory definition, classification must be determined by that definition alone, and incorrect disclosure of material facts in classification lists can justify invocation of the extended limitation period.

---