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CASE NO.: Appeal (civil)  5242 of 2000

PETITIONER: M/s Sharp Industries Ltd.                                            

RESPONDENT: Commissioner of Central Excise, Mumbai-III                    

DATE OF JUDGMENT: 26/09/2005

BENCH: S. N. Variava & Tarun Chatterjee

JUDGMENT: J U D G M E N T

S. N. VARIAVA, J.

       This Appeal is against the Judgment dated 11th July, 2000  passed by the Customs, Excise & Gold (Control) Appellate Tribunal (for  short CEGAT).          Briefly stated the facts are as follows: The Appellants manufacture a product which consists of aluminum foil,  whose thickness does not exceed 0.2 mm, which is then covered on  one side with a polyester film and on the other side with polyethylene.  The Appellants also manufacture pouches out of the same material.  The question for consideration is as to whether these products are  classifiable under Tariff Heading 76.07 and 76.12, as claimed by the  Appellants, or under Tariff Heading 39.20.38 and 39.23.90, as claimed  by the Respondent.    All the authorities below, including the Tribunal  in the impugned Judgment, have held against the Appellants.  The  Commissioner (Appeals) and the Tribunal have based their decisions  upon test reports which show that plastic predominates over the  aluminium foil accounting for 2/3rd of the total weight. Reliance has  also been placed on HSN Explanatory Notes.  The findings being based  on facts and the Tribunal being the final authority on facts, this Court  cannot interfere.  It has been held in the case of J. K. Synthetics Ltd.  vs. Commissioner of Central Excise, Jaipur     reported in (2003) 11  SCC 349 that the Tribunal is the best judge of facts and this Court  should not interfere.  The same ratio has been laid down  by this Court  in the case of Ugam Chand Bhandari vs. Commissioner of Central  Excise, Madras reported in (2004) 5 SCC 757.  For this reason itself  this Appeal requires to be dismissed.         However, as the matter has been argued in great detail and as  we find that subsequent to the impugned Judgment the Tribunal has  adopted an erroneous view, we deem it expedient to also deal with  merits and clarify the position.            The concerned Tariff Entries read as follows: "76.07 Aluminium foil (whether or not printed or  backed with paper, paperboard, plastics or  similar backing materials) of a thickness  (excluding any backing) not exceeding 0.2  mm.

76.12  Aluminium casks, drums, cans, boxes and  similar containers (including rigid or  collapsible tubular containers), for any  material (other than compressed or liquefied  gas), of a capacity not exceeding 300L,  whether or not lined or heat-insulated, but  not fitted with mechanical or thermal

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equipment.

39.20 Other plates, sheets, film, foil and strip, of  plastics, non-cllular, whether lacquered or  metalised or laminated, supported or similarly  combined with other materials or not

       xxx                     xxx                     xxx

39.20.38 \026 Flexible, laminated

39.23 Articles for the conveyance or packing of  goods, of plastics; stoppers, lids, caps and  other Closures, of plastics                  xxx                     xxx                     xxx

39.23.90 - Other"

Tariff Heading 39 is thus the specific heading which covers such  products. This entry covers plates, sheets, film, foil and strip of  plastics, non-cellular, whether lacquered or metalised or laminated.       From the test reports, it is clear that plastic predominates in the  product.   70-80% of the product consists of plastic. There is no denial  of this fact.  Tariff Entry 76.07 only deals with aluminium foils which  are backed with paper, paperboard, plastic or similar other backing  material.  In this case, the product is not just backed.  It is coated  with other material on both sides.  The term "backed" necessarily  means that the coating can only be on one side. An aluminium foil  which is covered on both sides, by different materials, cannot be said  to be backed. The aluminum foil is in such cases sandwiched between  other materials. It is clear that there can never be backing on both  sides.  Chapter Note (d) of Chapter 76 also makes it clear that Tariff  Heading 76.07 will not apply to products which assume the character  of articles or products of other headings.  In this case, since plastic  predominates the product assumes the character of plastic and for this  reason it could not be classified under Chapter 76. HSN Explanatory  Notes to Chapter 39 also clarify that products consisting of plastic  remain covered by Chapter 39 even though they are separated by a  layer of another material such as foil, paper etc. provided they retain  the essential characteristics of articles of plastic. The test reports show  that the concerned products retain the characteristics of plastic.  Therefore on merits also we find that the view taken by the lower  authorities is the correct view.    It was however submitted that subsequent to the impugned  Judgment, in a number of other matters, the Tribunal has taken a  contrary view. It was submitted that in one of the matters, this Court  has refused to interfere. In this behalf, reliance was placed upon the  Judgment of the Tribunal in the case of CCE, Delhi-II vs. R.T.  Packaging Ltd. reported in 2002 (51) RLT 291, wherein the Tribunal  relying on the Judgments of the Tribunal in the case of Aluminium Co.  vs. Commissioner of Central Excise reported in 2001 (133) ELT 759   and Commissioner of Central Excise, Calcutta v. India Foil Limited  reported in 2001 (132) E.L.T. 737 held that such products are  classifiable under Chapter Heading 76.07.60 and not under Chapter  Heading 39.20.  It was pointed out that, on 20th February, 2003, this  Court dismissed Civil Appeal No. 5148 of 2002 filed by the Department  on the following ground: "Since the Revenue has accepted the judgment of the

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Customs, Excise and Gold (Control) Appellate Tribunal in  Commissioner of Central Excise, Calcutta v. Indian Foil  Limited [2001 (132) E.L.T. 737 (Tribunal) = 2000 (39) RLT  304] and that judgment has been followed in the case by  Tribunal, the civil appeal is dismissed.

       No costs."

       Reliance was also placed upon the Judgment of the Tribunal in  the case of C.C.E., Calcutta-I vs. India Foils Ltd. (supra).         These subsequent Judgments can have no bearing on the  correctness or otherwise of the impugned Judgment which is a prior.    The Revenue appears to have been negligent in not citing the  impugned Judgment, which decided the law correctly, at the time India  Foils Ltd’s case was being decided by the Tribunal. Had it been cited it  would have been a binding precedent.  The Department’s negligence is  further brought out by the fact that the Judgment in India Foils Ltd’s  case was not carried in Appeal before this Court.  However, merely  because the Judgment in India Foils Ltd’s case is not carried in Appeal  would not be a ground for setting aside the impugned Judgment,  though it may have been a ground for not interfering with a Judgment  which had followed India Foils Ltd’s case.    

We find on a reading of India Foils Ltd’s case that it is based  upon decisions of the Tribunal in the cases of  Hindustan Packaging Co.  Ltd. vs. CCE, Vadodara reported in 1995 (75) ELT 313 (by a larger  Bench of the Tribunal) and India Foils Ltd. Vs. CCE, Calcutta II  reported in 1998 (99) ELT 101.  We, however, find that in Hindustan  Packaging Co. Ltd.’s the question was whether the product was  covered by the Tariff Heading 76.06 or 48.11.29. Chapter Note (I)(viii)  of Chapter 48 provided that metal foil backed with paper or  paperboard was not covered by Chapter 48.  There is no such note in  Chapter 39.  In any event what the Tribunal seems to have missed in  Hindustan Packaging Co. Ltd.’s case is that the Chapter 76 cannot  apply to a product  which is covered on both sides with other products.   For Tariff Heading 76.06 to apply the aluminium foil must be  backed  with paper, paperboard, plastic or other similar backing material.  That  would necessarily mean that the aluminum strip is lined only on one  side.  Even otherwise a Judgment dealing with a question whether  Tariff Heading 76.06 or Tariff Heading 48.11.29 applied would have no  bearing when considering a question as to whether or not Chapter 39  applied. In the case of Indian Foils Limited vs. Commissioner of  Central Excise, Calcutta-II the question was whether Tariff Heading  76.07 or Tariff Heading 76.12 applied.   That case again had no  relevance for considering whether or not Chapter 39 applied.            Thus, the subsequent decisions are clearly erroneous and cannot  be the basis for overruling a correct decision of the Tribunal.         Reliance was next placed upon an Order dated 7th July, 2005  passed in the Appellants’ case, wherein it has been held by the  Tribunal that the Appellants’ product is classifiable under Tariff  Heading 76.07 and not 39.20.  This Order is based on  R.T. Packinging  Ltd.’s case.  We find that the Appellants have been dis-honest  inasmuch as they did not point out to the Tribunal that in their own  case, and for the same period, it has already been held by the Tribunal  that the product is classifiable under Tariff Heading 39.20.  Instead of  pointing out this, they rely upon R.T. Packinging Ltd.’s case.   This  conduct has to be deprecated in no uncertain terms.  In any case, this  Judgment is only rendered on 7th July, 2005. Mr. Swami states that  the Department is filing an Appeal against this Judgment.  It must be  mentioned that the Department was represented before the Tribunal.  The Department has again been negligent in not pointing out to the  Tribunal that in the Appellants’ own case and for this very period, it  has already been held by the Tribunal that the product is classifiable  under Tariff Heading 39.20.         For the above reasons, we see no reason to interfere.  The

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Appeal stands dismissed.   There will be no order as to costs.