1996 (7) TMI 421 - AT - Customs

Tribunal Upholds Countervailing Duty on Polyester & Polyamide Chips, Rejects Refund Claims

NIRLON SYNTHETIC FIBRES AND CHEMICALS Versus COMMR. OF CUS., BOMBAY

The Tribunal upheld the classification of imported polyester and polyamide chips under Item No. 15-A of the Central Excise Tariff, subjecting them to ... Countervailing duty - Classification of goods Issues Involved:1. Classification of imported polyester and polyamide chips under Item No. 15-A of the Central Excise Tariff.2. Applicability of countervailing (CV) duty on the imported goods.3. Eligibility for refund of CV duty paid.4. Applicability of exemption notifications No. 244/67-C.E. and No. 38/73-C.E.5. Classification under residuary entry Item No. 87 of the Customs Tariff.6. Consideration of imported goods as waste for exemption purposes.Detailed Analysis:1. Classification of Imported Polyester and Polyamide Chips under Item No. 15-A of the Central Excise Tariff:The appellants imported polyester polymer chips and polyamide chips for manufacturing polyester yarn and nylon yarn. They argued that these chips should not be classified under Item No. 15-A of the Central Excise Tariff, which covers artificial or synthetic resins and plastic materials. They contended that the chips were not plastics but were raw materials for textile products. The Tribunal, however, noted that Item No. 15-A has a wide coverage, including artificial or synthetic resins and plastic materials in any form. The Tribunal referred to various definitions and technical descriptions, concluding that the chips were indeed synthetic resins and fell under Item No. 15-A. The Division Bench of the Bombay High Court had also held that polyester polymer chips were synthetic resins liable to duty under Item No. 15-A.2. Applicability of Countervailing (CV) Duty on the Imported Goods:Section 2A of the Indian Tariff Act, 1934, mandates that imported goods are liable to customs duty equal to the excise duty leviable on similar goods manufactured in India. The Tribunal upheld that the imported polyester and polyamide chips were correctly classified under Item No. 15-A for CV duty purposes. The Tribunal referred to the Division Bench decision of the Bombay High Court, which had overruled earlier Single Judge decisions and confirmed that polyester chips of textile grade were synthetic resins and thus subject to CV duty.3. Eligibility for Refund of CV Duty Paid:The appellants sought refunds on the grounds that the imported goods were not plastics and thus should not attract CV duty. The Tribunal found that the refund claims were rejected by the original authorities as unsubstantiated. The Tribunal upheld these rejections, noting that the goods were synthetic resins and correctly classified under Item No. 15-A, thus attracting CV duty.4. Applicability of Exemption Notifications No. 244/67-C.E. and No. 38/73-C.E.:The appellants argued that the imported goods should benefit from exemption notifications No. 244/67-C.E. and No. 38/73-C.E. The Tribunal noted that these notifications applied to indigenous goods and required compliance with Chapter X procedures. The Tribunal referred to the Supreme Court's decision in Thermax Pvt. Ltd., which clarified that exemption notifications could apply to imported goods if the intended use could be established. However, the Tribunal found that the appellants did not have the necessary CT-2 certificates or L-6 licenses to claim these exemptions, except for polymer polyester chips imported during the currency of Notification No. 38/73-C.E., which were exempted unconditionally.5. Classification under Residuary Entry Item No. 87 of the Customs Tariff:The appellants sought classification under Item No. 87, a residuary entry for articles not otherwise specified. The Tribunal rejected this, citing the Supreme Court's principle that goods reasonably classifiable under an enumerated item should not be consigned to a residuary entry. The Tribunal found that the imported goods were synthetic resins and correctly classified under Item No. 15-A, not Item No. 87.6. Consideration of Imported Goods as Waste for Exemption Purposes:J.K. Synthetics claimed that their imported goods were waste and eligible for exemption under Notification No. 26-B/72-C.E. The Tribunal found no evidence that the goods were waste, noting that they were synthetic resins in granule form. The Tribunal held that the exemption for waste under Item No. 18 of the Central Excise Tariff did not apply, as the goods were not classified under Item No. 18 and did not arise in the manufacture of fibres and yarns.Conclusion:The Tribunal rejected all 14 appeals, upholding the classification of the imported polyester and polyamide chips under Item No. 15-A of the Central Excise Tariff and the applicability of CV duty. The Tribunal found no merit in the refund claims and held that the appellants did not meet the conditions for exemption under the cited notifications. The appeals were dismissed accordingly.