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PETITIONER: COLLECTOR OF CUSTOMS, BOMBAY

       Vs.

RESPONDENT: K. MOHAN & CO. EXPORTS

DATE OF JUDGMENT25/09/1989

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. KANIA, M.H.

CITATION:  1989 AIR 2250            1989 SCR  Supl. (1) 231  1989 SCC  Supl.  (2) 337 JT 1989 (3)   740  1989 SCALE  (2)712

ACT:     Customs  Act  1962--Customs  Tariff  Act   1975--Section 3--Import  of  metallised  polyester  films   rolls--Whether entitled  to exemption from payment of  countervailing  duty under  notification No. 228/76 dated 2.8.1976  issued  under Section 25(1) of the Customs Act.

HEADNOTE:     The  Respondent  firm imported from  Japan,  "metallised polyester  films"  which  were in the shape  of  film  rolls several  metres long. The goods were cleared on  payment  of customs duty as well as additional duty/countervailing  duty leviable under section 3 of the Customs Tariff Act. Thereaf- ter  the Respondent firm moved three  applications  claiming refund  of  the additional duty of customs paid by  it.  The claim  was made under the terms of a notification of  exemp- tion  issued under section 25(1) of the Customs  Act.  Under notification No 228/76 dated 2.8.1976, an exemption from the Customs Tariff Act was granted in respect of "articles  made of  plastics, all sort but excluding those specified in  the Table  annexed  and failing under Chapter 39  of  the  First Schedule to the Customs Tariff Act.     The  Tribunal accepted the claim of refund made by  the’ Respondent.  In so doing it relied on the decisions  of  the Madras  High  Court in Precise Impex P. Ltd.  v.  Collector, [1985] 21 ELT 84, of the Calcutta High Court in  Continental Marketing  P.  Ltd. v. Union, [1987] 28 ELT 11  and  of  the Bombay  High  Court in A.V. Jain v. Union, WP 2136  of  1986 decided  on  30.1.1987. The Tribunal also  referred  to  its earlier  decision  in Export India Corporation  P.  Ltd.  v. Collector;  and Collector v. Fancy Dying and Printing  Works Bombay.     The  Tribunal  held that the goods imported by  the  Re- spondent  were  articles  made of  plastics  but  they  were "films"  and  thus  not one of the  Categories  of  articles mentioned in the Table.     Aggrieved by the decision of the Tribunal, the Collector of Customs has filed these appeals under section 130-E(B) of the Customs Act 1962. 232     Before  this  Court the Department  contended  that  the

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goods  are  "sheets"  or "foils" or  other  "rectangular  or profile  shape"  and  hence liable to  duty.  The  assesses’ assertion  is  that the goods are "films" though  specie  of plastics articles yet they are different from any  mentioned in the table. According to it even if they are treated  only as  thin sheets of plastic material, they can  be  described only as "sheetings" and not sheets.     On  consideration of the rival contentions  advanced  by the parties and after making reference to the other relevant notifications  granting exemption issued under rule 8(1)  of the  Central Excise Rules in respect of items falling  under Item  No. 15A of the Central Excise Tariff Act,  this  Court dismissing the appeals,     HELD: Films made of plastic fall in a category of  their own  and do not fail within the categories of  articles  ex- cepted  by  the Table. Film is a  well-known,  distinct  and independent  category of plastic article known to  commerce. [235A]     The Court agreed with the view of the Bombay High  Court that,  though  for certain purposes there is  a  distinction between "films", "foils" and "sheets", so far as the article presently in question is concerned it is recognised in trade only as "film". [238F]     The goods under consideration cannot be described either as  "foils or sheets". A film roll of indefinite length  and not  in the form of individual cut piece can be more  appro- priately  described  as "sheetings" rather  than’  ’sheets". [238G ;239A]     The expression "other rectangular or profile shapes"  in the  table is also not appropriate to bring in the items  in question.  For one thing, the articles have a distinct  name in the market as "films" and therefore they are outside  the table. It will not be possible to accept the contention that articles  which have a clear commercial identity as  "films" should  be  brought  within the wide  and  vague  expression "other  rectangular or profile shapes", because if the  film is  cut into small pieces each piece will be rectangular  in shape. The items imported do not come in a rectangular shape they are imported as rolls of polyester films. They are  not articles  of rectangular shape. Nor would it be possible  to treat them as of other "profile" shape. The Court was unable to attribute any precise meaning to the expression "profile" shape  but it cannot be taken to be comprehensive enough  to take in any shape whatever. If the expression  "rectangular" or other "profile" shape in the table is given 233 such  wide and unrestricted interpretation then  practically any article of plastic can be brought within the meaning  of one  or other of the expressions used in the Table and  thus the  entire  exemption  can be altogether  deprived  of  any content.  The  Court  took the view that  the  articles  are "films"  and,  as, this expression does  not  find  specific mention in the table, the assessee is entitled to  exemption under the main part of the notification. [239E-H; 240A]

JUDGMENT:     CIVIL   APPELLATE  JURISDICTION:  Civil   Appeals   Nos. 1573/88, 3954/87 and 3370 of 1988.     From  the Judgment and Order dated  1.2.1988,  10.6.1987 and  28:4.1988  of  the Customs Excise  and  Gold  (Control) Appellate  Tribunal,  New Delhi in  Appeal  No.  C/1373/85-C Order No. 87.,88-C, 1704/83-D Order No. 463/87-D and  Appeal No. C-605 1986(C) in Order No. 429/88-C respectively.

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   A.K.  Ganguli, P. Parmeshwaran, T.V.S.N. Chari and  Mrs. Sushma Suri for the Appellant. S. Ganesh, K.J. John and San jay Grover for the Respondent. The Judgment of the Court was delivered by     RANGANATHAN,   J. These  three  appeals  under   Section 130-E(b) of the Customs Act, 1962 raise the same issue. They are therefore disposed of by a common order.     The  respondent--M/s.  K. Mohan  &  Co.--imported,  from Japan, "metallised poIyester films" under an import  licence dated  14.6.1978. The goods were admittedly in the shape  of film rolls several metres long. They were cleared on payment of  customs duty leviable under the Customs Act,  1962  (CA) as well as the additional duty of customs (or countervailing duty)  leviable under s. 3 of the Customs Tariff  Act,  1976 (CTA). Subsequently, the respondent firm made three applica- tions for the refund of the amount of the additional duty of customs  paid by it. The claim for refund was based  on  the terms  of a notification of exemption issued under s.  25(1) of the CA. Under notification no. 228/76 dated 2.8.1976,  an exemption  from the customs duty payable under s. 3  of  the CTA  was granted in respect of "articles made  of  plastics, all  sorts, but excluding those specified in the  table  an- nexed  hereto  and falling within Chapter 39  of  the  First Schedule to the Customs Tariff Act, 1975 (51 of 1975)".  The annexed table 234 excepted the following items from the purview of the  exemp- tion: "Tubes,  rods, sheets, foils, sticks, other  rectangular  or profile shapes, whether laminated or not, and whether  rigid or   flexible  including  tubings  and  polyvinyl   chloride sheets". Notification  No.  443 dated 29.11.76 omitted the  words  of notification  no. 228 which have been underlined  above  but left the main notification otherwise untouched.     The  assesses’  claim  for refund was  accepted  by  the Tribunal.  The Tribunal held that the goods imported by  the respondent  were  articles made of plastics. But  they  were ’films’ and not one of the categories of articles enumerated in  the  table.  In reaching its  conclusion,  the  Tribunal followed the decisions, of the Madras High Court in  Precise Impex P. Ltd. v. Collector, [1985] 21 ELT 84, of the Calcut- ta  High  Court in Continental Marketing P. Ltd.  v.  Union, [1987]  28 ELT 11 and of the Bombay High Court in A.V.  Jain v. Union, WP 2136 of 1986, decided on 30.1. 1987. The Tribu- nal  also  referred to its own earlier decisions  in  Export India  Corpn.  P. Ltd. v. Collector and Collector  v.  Fancy Dyeing and Printing works, Bombay. The Collector of  Customs is  aggrieved by the orders of the Tribunal and hence  these appeals. There are three appeals as there were three  appli- cations  for refund by the assessee in respect of  different periods.     There is no dispute before us that the goods in question are  articles made of plastics. This being so, the  assessee is  entitled to the exemption conferred by the  notification unless  the goods answer the description of one or other  of the specific items set out in the table. The onus of showing this is clearly on the Revenue. The department contends that the  goods are "sheets" or "foils" or "other rectangular  or profile shapes" and hence liable to duty. On the other  hand the  assesses’  case is that they are "films", a  specie  of plastic articles different from any mentioned in the  table. It is alternatively contended that, even if they are treated only  as thin sheets of plastic material, they can  be  more accurately  described only as "sheetings" and not  "sheets".

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It  is pointed out that the goods are in the form  of  large rolls  containing  films  several  metres  long.  Such  huge lengths  can only be called "sheetings" for  the  expression "sheets", it is said, connotes only smaller lengths or  bits cut  out  from  "sheetings" which  mean  sheets  of  immense lengths.  Also, being in the form of rolls, they  cannot  be said  to be articles of "rectangular shape" merely  because, when  cut  into  segments, they may  fall  into  rectangular pieces. 235     After  giving the matter our careful  consideration,  we are of opinion that the view taken by the three High  Courts and  the  Tribunal that "films" made of plastic  fall  in  a category of their own and do not fall within the  categories of  articles excepted by the table is correct. We have  come to  this  conclusion  because there  are  various  statutory indications and other material which support such a  conclu- sion:     (1) Duty under the CTA in respect of artificial  resins, plastic  materials of various types and articles thereof  is leviable under s. 3 read with Chapter 39, containing heading nos.  39.01/06  and  39.01/07 in section VII  of  the  First Schedule  to the CTA. This aspect found a reference  in  the original notification no. 228 but was omitted, apparently as being  redundant, by the amendment of 29.11.1976. In Note  3 at the commencement of the said Chapter 39, clause (c) talks of  "seamless  tubes, rods, sticks and profile  shape  while clause  (d)  refers  to "plates, sheets,  films,  foils  and strips".  This indicates that plates, sheets, films,  foils, etc.  are categories of plastic articles distinct  from  one another.     (2)  Notification  No. 228 contains a reference  to  the tariff  schedule under the Central Excises & Salt Act,  1944 (CESA). The CESA, read with item 15A of its First  Schedule, provides for the levy of an ad valorem duty of excise on all "artificial  or synthetic resins and plastic  materials  and cellulose esters and ethers and articles thereof"  described in  greater  detail in sub-items (1) to (4)  thereunder.  Of these, sub-item (2) reads:               (2)  Articles  made  of  plastics  all  sorts,               including tubes, rods, sheets, foils,  sticks,               other  rectangular or profile shapes,  whether               laminated or not, and whether rigid or  flexi-               ble, including lay flat tubings and  polyvinyl               chloride sheets, not otherwise specified";               and Explanation I appended to item 15A  clari-               fies:               "For  the purpose of sub-section  (2),  "plas-               tics" means the various artificial or synthet-               ic  resins or plastic materials  or  cellulose               esters and ethers included in sub-item (1)"- Comparing item 15A of the CESA tariff with the  notification under consideration, it will be seen that the intention  was to  exempt,  from  countervailing duty,  "articles  made  of plastics,  all sorts" (the expression "plastic"  having  the very wide meaning given to it in Explanation 236 I  of the CESA tariff) and falling within the main  part  of sub-item  (2)  of item 15A and to deny  exemption  to  goods which  fall  under the second (inclusive) part of  the  said sub-item. In this context it is of some interest to refer to item 15A as substituted by the Finance Act, 1982. This  item describes in greater detail than before various  "artificial and synthetic resins and plastic materials" liable to  duty. of these item (2) reads:

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             "Article  of materials described  in  sub-item               (1) including the following, namely:                Boards,  sheeting, sheets and films,  whether               lacquered  or metallised or laminated or  not:               lay  flat tubings not containing  any  textile               material. This item, it will be seen, does not stick to the  classifi- cation made earlier in sub-item (2). However, it does make a distinction between "sheeting, sheets and films".     (3) There are a number of exemption notifications issued under  rule 8(1) of the Central Excise Rules in  respect  of items  falling under Item No. 15A of the CESA  Tariff  which make  a  pointed  reference to ’films’ and  draw  a  similar distinction  as  above. Notification No. 68  of  1971  dated 29.5.  1971  exempts articles made of plastics,  all  sorts, falling under sub-item (2) of Item No. 15A except (i)  rigid plastic boards, sheeting, sheets and films, whether laminat- ed  or not; and (ii) flexible polyvinyl  chloride  sheeting, sheets,  films and lay-flat tubings not containing any  tex- tile  material.Notification No.69 of 1971, dated  29.5.1971, read with notification No. 7417 and 107/73, exempts articles made  of  polyurethane foam except, inter alia,  sheets  and sheetings.  Notification No. 70 of 1971, of the  same  date, restricts  the  duty  on rigid  polyvinyl  chloride  boards, sheeting,  sheets  and films. Notification No. 71  of  1971, also of the same date, grants limited exemption, subject  to certain conditions to rigid plastic boards, sheeting, sheets and films, whether laminated or not, other than those  manu- factured from polyvinyl chloride.Notification No.72 of  1971 of the same date limits the excise duty in respect of flexi- ble polyvinyl chloride sheeting, sheets, films and  lay-flat tubings,  not  containing any textile material  and  falling under  sub-item (2) of Item No. 15A to 25 per cent  (amended later  to  30%) ad valorem, subject to  certain  conditions. Notification  No. 39 of 1973 dated 1.3. 1973, exempts  rigid and  flexible  polyvinyl chloride films of  thickness  below 0.25  mm as well as polyvinyl chloride lay flat  tubings  in certain circumstances. By notifi- 237 cation No. 151 of 1975 dated 31.5.1975 exemption was granted in  respect of cellulose tri-acetate, when intended for  use in the manufacture of cine-films, X-ray films or photograph- ic films. Item 15B talks of "film or sheet" of cellulose and a  notification of 1981 specifically added item 15BB to  the Tariff under CESA dealing with polyster films as a  separate item,  though  this entry was subsequently  omitted  by  the Finance  Act  of 1982. All these indicate that ’film’  is  a well-known,  distinct  and independent category  of  plastic article known to commerce.     (4)  There is a like distinction maintained even by  the notifications issued under section 25 of the Customs Act  in regard  to  items  falling within chapter 39  of  the  First Schedule to CETA. Notification No. 227 dated 2.8.1976 limits the  rate of duty on various items, two of which  are--"film scrap"  and "cellulose nitrate sheets and cellulose  nitrate films". We then have notification No. 223 of the same  date, which falls for interpretation now and which omits a  refer- ence  to "films" while enumerating various other  categories of  plastic  articles.  Notification No. 229,  also  of  2nd August,  1976, restricted the customs duty on metallised  or plain plastic films imported for certain specified  purposes to 60%. Notification Nos. 230 dated 2nd August, 1976 and  36 of 1.3. 1978, also granted limited exemption to other  types of  polyster films. (We must, however, point out that  these last  two  notifications  are  somewhat  ambiguous  for  our

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present  purposes as they also specifically provide  for  an exemption  to  the said articles from  the  additional  duty which,  on the argument of the assessee before us, would  be really unnecessary.     The Revenue’s stand is that the articles in question may be  films  in a generic sense but that, in  this  particular case, they are either ’foils’ or ’sheets’. For this  purpose our  attention is drawn to the discussions contained in  the Bombay  case  where the issue was decided on  the  basis  of evidence produced by both parties. This shows that according to the glossary of terms used in the plastic industry issued by  the Indian Standards Institution (IS 2828-1954, as  well as in 1979), a film is "a sheeting having nominal  thickness not greater than 0.25 mm". A report of the Chief Chemist  of the Customs Department as well as extracts from certain text books were produced to show that ’foil’ is the term "applied to materials which are made in continuous rolls and are less than  1/1000th of an inch thick (0.254 mm). In  the  present case, the film rolls were of thickness varying between 0.025 mm  to  0.501 mm. It is, therefore, submitted  that  to  the extent  the material was less than .0254 mm in thickness  it would constitute ’foils’ and to the extent 238 it exceeded 0.25 mm in thickness it will be a ’sheet’. It is urged  that  since  ’sheets’ and  ’foils’  are  specifically mentioned  in the entry in question, the imported goods,  at least  to  the extent indicated above,  cannot  qualify  for exemption.     The answer given by the Bombay High Court to the conten- tion  that the goods were ’foils’ was that while it  may  be that, technically and scientifically speaking, the  articles in  question  may  be  capable  of  being  characterised  as ’foils’, one is concerned in a customs or excise matter  not so  much  with the technical or  scientific  definitions  of these terms but rather with commercial usage. One has to see how  the  trade understands the expression "films"  and  one should also bear in mind in this connection that the expres- sions set out in the table are applicable not merely to  the articles with which we are at present concerned but also  to various  other  types of articles of  plastics  with  varied commercial  use.  The question is whether the  trade  under- stands  the  article presently in question as  a  ’film’  or whether  there is a distinction in trade usage also  between ’foils’  and ’films’. It has been pointed out by the  Bombay High Court, on the basis of the evidence before it, that  in the understanding of those who are in this particular trade, metallised  polyester  films  are referred  to  as  ’films’. Reference  has been made to the classification made  by  the only  manufacturer of polyester films in India for  purposes of  CEA.  Reference  has also been  made  to  the  brochures brought  out by the Japanese manufacturers of the  goods  in question which show that metallised polyester ’films’  could consist of films of the thickness of even 12 to 25  microns. It has been pointed out that, under the Import-Export Policy of India for 1984-85, reference has been made to  metallised polyester  ’films’  having  thickness of even  less  than  6 microns which are used in the electronic industry.     In  the light of the above material and the  absence  of any  additional material led in the present case,  we  agree with  the  view of the Bombay High Court  that,  though  for certain  purposes  there is a distinction  between  ’films’, ’foils’  and  ’sheets’, so far as the article  presently  in question  is  concerned it is recognised in  trade  only  as ’film’.  It is difficult to imagine any person going to  the market and asking for these films by describing them  either

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as ’foils’ or as ’sheets’. We are therefore of opinion  that the goods under consideration cannot be described either  as ’foils’ or as ’sheets’.     There  is  also another reason why the articles  in  the present case, to the extent they have thickness of more than 0.25 mm cannot be described as ’sheets’. Shri Ganesh for the assessee contended--and we 239 think rightly--that a film roll of indefinite length and not in  the form of individual cut pieces can be more  appropri- ately  described  as ’sheetings’ rather than  ’sheets’.  The Indian Standard Institution also defines ’sheets’ as a piece of plastic ’sheeting’ produced as an individual piece rather than  in a continuous length or cut as an  individual  piece from  a continuous length. We have also earlier pointed  out that there are various items in various notifications making distinct  reference  to sheets and sheetings.  Actually,  we also think that there is a factual confusion on this aspect. While  One  of the Collectors has referred to the  goods  as being of thickness varying between 0.025 mm and 0.501 mm, it is  seen from another of the orders that the goods are  3000 metres  in length, 0.501 mm in width and 0.025 mm in  thick- ness. If the latter is the correct version and all the goods are only 0.025 mm in thickness, the question now posed  will not  at  all arise. However, as indicated  above,  there  is force in the contention of Shri Ganesh that if the  articles be  held not to be ’films’, because they exceed 0.25  mm  in thickness,  they would be ’sheetings’ rather  than  ’sheets’ and  would  therefore  not fall within the  meaning  of  the expression "sheets" in the table.     We  would  also like to add that the  expression  ’other rectangular  or  profile shapes’ in the table  is  also  not appropriate  to  bring  in the items in  question.  For  one thing,  the articles have a distinct name in the  market  as ’films’ and therefore they are outside the table as  already pointed  out. For the same reasons as we have  mentioned  in the context of ’foils’ and ’sheets’; it will not be possible to  accept the contention that articles which have  a  clear commercial identity as ’films’ should be brought within  the wide  and  vague expression "other  rectangular  or  profile shapes", because, if the film is cut into small pieces, each piece  will be rectangular in shape, The items  imported  do not come in a rectangular shape; they are imported as  rolls of  polyester  films. They are not articles  of  rectangular shape.  Nor would it be possible to treat them as  of  other ’profile’  shapes.  We are unable to attribute  any  precise meaning  to the expression ’profile’ shape but it cannot  be taken to be comprehensive enough to take in any shape  what- ever,  as is contended for. If we give the expression  ’rec- tangular or other profile shapes’ in the table such wide and unrestricted interpretation as is suggested, then practical- ly any article of plastic can be brought within the  meaning of  one  or other of the expressions used in the  table  and thus the entire exemption can be altogether deprived of  any content. For  the above reasons, we are of opinion that the  articles are 240 ’films’  and,  as  this expression does  not  find  specific mention in the table, the assessee is entitled to  exemption under  the  main part of the  notification.  The  conclusion arrived  at  by the Tribunal is therefore upheld  and  these appeals are dismissed with no orders as to costs. Y.  Lal                                        Appeals  dis- missed.

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