TaxTMI 
TaxTMI 
2018 (3) TMI 176
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....inantly consists of synthetic polymer and hence the said blinds are required to be classified under CETH 39253000. Accordingly, show cause notice No. 28/2008 dated 18.8.2008 was issued to the assessee for the period October 2007 to January 2008, inter alia proposing to classify the impugned blinds under 39253000 and for assessment of duty @ 16% adv., to demand Rs. 2,14,789/- along with interest thereon and to impose penalty. On adjudication, the original authority vide order dated 19.3.2009 confirmed the proposed classification and also the demand along with interest and imposed penalty of Rs. 55,000/- under Rule 25. On appeal, the Commissioner (Appeals) vide order impugned dated 18.9.2009 set aside the penalty under Rule 25, however, upheld the remaining portion of the order of the original authority. Aggrieved, the assessee has come in Appeal No. E/240/2010. 2. It appears that the department for subsequent periods had drawn samples of the impugned fabrics for testing by the Chemical Examiner. Based on the Chemical Examiner s report, Show Cause Notice No. 80/2009 dated 23.7.2009 on similar lines was issued inter alia proposing classification under CETH 34253000 demand of differ....
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....als) against the portion of the order passed by the adjudicating authority allowing CENVAT credit to the assessee. Vide Order-in-Appeal No.1/2014 (M-II) (D) dated 2.1.2014, the Commissioner (Appeals) remanded the matter to the original authority for determining the eligibility and quantum of CENVAT credit after verification of relevant documents. Hence assessee has filed Appeal No. E/40528/2014. Department has also filed appeal No. E/40563/2014 against the said Order-in-Appeal No. 1/2014 dated 2.1.2014 on the ground that question of eligibility of CENVAT credit will come into picture only if the impugned goods are classified under CETH 39253000 and that since classification dispute is yet to be settled by Tribunal, the order of the Commissioner (Appeals) is devoid of merits. 4.0 Today, when the matter came up for hearing, on behalf of the assessee, ld. Advocate Shri N. Viswanathan made the submissions which can be broadly summarized as under:- 4.1 The scotch gard admittedly is a chemical and is a 3 M brand product used for protecting fabric, carpets and furniture. It is a fluoro chemical. By no stretch of imagination it can be claimed that the fabric of blinds was coated, cov....
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....ring fabrics and that they were knitted fabric. 5.0 On the other hand, ld. AR opposed the appeals and made submissions which can be broadly summarized as under:- 5.1 The fabric imported by the assessee can only be considered as base fabric. The fabric of the venetian blinds after the manufacturing process were got tested by the chemical examiner and it was found that the impugned goods are coated with polymeric compound; that the said polymeric coating has been put on both sides of the fabric. As the coating is polymeric in nature, that is to be considered only as plastic coated. 5.2 As per Chapter Note, 1(h) of chapter 39 of the CETA, the fabrics being impregnated or coated with plastics, they would be excluded from the purview of classification under Chapter 63 and as per the said Chapter Note, the said goods would therefore be required to be classified only under Chapter 39. 5.3 For these reasons, the impugned orders which have upheld classification under Chapter 39 do not require any interference. 5.4 For the same reasons, the department appeals in respect of the impugned orders to the contrary should be allowed and the order of the original authority restored in....
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....mers is quite large (3500 for pure cellulose), and often is not precisely known. In synthetic polymers this number can be controlled to a predetermined extent, e.g., by short stopping agents (Combinations of two, three, or four monomers are called, respectively, dimers, trimers, and tetramers and are known collectively as oligomers). 7.7 In a paper, Brief introduction to Polymeric Materials , published by Prof. Mark E. Tuttle, Department of Mechanical Engineering, University of Washington and available for reading at url courses.washington.edu/mengr553/Polymers.pdf, polymerization polymers has been defined as follows:- "Fundamental Aspects of Polymer Molecules: The term polymer comes from the Greek words poly (meaning many ) and mers (meaning units ). At the molecular level polymers consist of extremely long, chain-like molecules. Polymer molecules are typically made up of thousands of repeating chemical units, and have molecular weights ranging from about 103 to 107. "As an illustrative example, consider the single chemical mer shown in Figure 5. This mer is called ethylene (or ethane), and consists of two carbon atoms and four hydrogen atoms. The two lines be....
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....uding, rolling or other process into shapes which are retained on the removal of the external influence" 7.10 We therefore find that while all plastics are formed by polymerization, every polymer is not a plastic. True, all single fabric synthetic textiles are made from manmade fibres by joining monomers into polymers through polymerization. However, even though a synthetic fibre is a polymer, it is specifically classified under CET Heading 54 of the CETA and not as a plastic under Chapter 39. By the same analogy, every chemical brought about by polymerization cannot be considered as a plastic unless that is formed under external influence by moulding, casting, extruding, rolling or other process and result into shapes which are retained on the removal of the external influence. Discernibly, a chemical which may have a polymeric composition like the impugned scotchgard but which is capable of being poured, sprayed, coated, impregnated and does not have any specific retained shape surely then cannot come within the fold of plastics for the purposes of Chapter 39. 7.11 From the facts on record, it has been brought out that the scotchgard which has been impregnated / coated onto....
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....d, covered or laminated with plastics . As scotchgard is not a plastic, the impugned goods cannot fall in this Chapter also. 7.15 That bring us to the last option of classification under Chapter 63. The relevant CETH here is CETH 6303, which covers curtains (including drapes) and interior blinds; curtains or bed valances . The important qualification for classificability under CETH 6303 is that the said Heading applies only to made-up articles of any textile fabric which will also have to satisfy the Note 1(h) of Section XI of the Tariff (Textile and Textile Articles), namely, that they are not:- "(h) Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of Chapter 39" 7.16 In consequence, the impugned goods will be required to be considered only as a textile fabric / material, which has been coated with a chemical compound which is not predominant in nature and the fabric per se even after such impregnation will continue to be considered only as a textile fabric. This being so, the made up textile articles made out of such fabric and in particular, interior blinds will be correctly class....