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PETITIONER: FENNER (INDIA) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, MADURAI

DATE OF JUDGMENT28/03/1995

BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) AHMADI A.M. (CJ) PARIPOORNAN, K.S.(J)

CITATION:  1995 SCC  Supl.  (2) 567 JT 1995 (3)   388  1995 SCALE  (2)508

ACT:

HEADNOTE:

JUDGMENT: BHARUCHA, J.: 1.   These  appeals impugn the order dated  14th  September, 1989,  passed  by  the Customs, Excise  and  Gold  (Control) Appellate Tribunal dismissing the appeals filed before it by the two appellants.  Each of the two appellants manufactures PVC impregnated cotton conveyor belting and PVC  impregnated flame  resistant colliery conveyor belting.  The  appellants contended  before  the  Tribunal that  their  products  were classifiable under Tariff Entry 3922.90, whereas it was  the case  of the Excise authorities that they were  classifiable under  Tariff  Entries 3920. 11 or 3920.12,  depending  upon whether  they were rigid or flexible strips.   The  Tribunal upheld the contentions of the Excise authorities basing  it- self,  in the main, upon the dictionary meaning  of  "strip" and  upon  the  judgment of this Court  in  Geep  Flashlight Industries Ltd. vs.  Union of India and ors., 1985 22 E.L.T. 3. 2.   We  are  concerned  in these  appeals  for  the  period December 1986 to June 1987. 3.   With  effect  from  28th February  1986  and  upto  9th February 1987, Tariff Heading 39.20 (so far as is  relevant) read thus:               "39.20  Other plates, sheets, film,  foil  and               strip,  of  plastics,  non-cellular,   whether               lacquered or similarly laminated, supported or               similarly combined with other materials or not               of polymers of vinyl chloride: 390      3920.11   Rigid plates, sheets, film, foil                 and strip          60%      3920.12   Flexible plates, sheets, film                  foil and strip    60%"   Tariff Heading 39.22 read thus:      "39.22 Other articles of plastics and articles of

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            materials of heading Nos.39.01 to 39.14      3922.10   -Articles of polyurethane foam                                    75%      3922.90 - Other               30%" 4.   It  is  relevant  to mention that  the  Central  Excise Tariff Act, 1985, itself contains for the interpretation  of the  tariff  schedules.   Rule  I  states,  "The  titles  of Sections  and  Chapters are provided for case  of  reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Sec- tion  or Chapter Notes and, provided such headings or  Notes do  not  otherwise  require,  according  to  the  provisions hereinafter contained".  Rule 2(a) states that any reference in a heading to goods shall be taken to include. a reference to  those goods incomplete or unfinished, provided that  the incomplete or unfinished goods have the essential  character of the complete or finished goods.  Rule 3 states that  when goods  are  prima  facie  classifiable  under  two  or  more headings, classification will be effected thus: the  heading which  provides  the  most  specific  description  shall  be preferred to headings providing a more general  description. Also,  when goods cannot be classified by reference to  sub- rules  (a) or (b) of Rule 3, they shall be classified  under the  heading which occurs last in the numerical order  among those which equally merit consideration.  Rule 4 states that goods which cannot be classified in accordance with Rules  1 to  3 shall be classified under the heading  appropriate  to the  goods  to  which they are most  akin.   Chapter  39  is entitled "plastics and articles thereof" and Note 11 therein states  that Heading No.39.22 applies, inter alia,  to  "(k) Transmission,  conveyer  or  elevator  belts,  endless,   or cut-to-length  and  joined  end  to  end,  or  fitted   with fasteners." 5.   Subsequent  to 10th February 1987 Tariff Heading  39.22 became Tariff Heading 39.26; it read:               "39.26 Other articles of plastics and articles               of  other  materials of heading  Nos.39.01  to               39.14               3926. 10-  of polyurethane foam                             60% plus Rs.40 per                             Kilogram               3926.90      Other      30%" 6.   Note  11  (K) omitted.  Reference was made  by  Mr.  V. Laxmi  Kumaran, learned counsel for the appellants,  to  the Customs  cooperation Council publication of the  Explanatory Notes  to  the Harmonized Commodity Description  and  Coding Systems  which  is  adopted in  the  Tariff  Schedule.   The explanatory  Note with reference to Tariff Heading 39.26  of the  Harmonised  Coding System states that it  covered  "ar- ticles,   not   elsewhere   specified   or   included,    of plastics......  or of other materials of headings  39.01  to 39.14" and included "(7) Transmission, conveyor or  elevator belts,  endless, or cut to length and joined end to end,  or fitted with fasteners." 7.   The  Tribunal  observed from copies of  the  customer’s orders placed before it by the appellants that the length of the belt- 391 ing in rolls varied from 100 meters to 400 metres, the width varied  from  600 millimetres to 1200  millimetres  and  the thickness  varied between 7 mm and 9.5 mm.  Considering  the length,  width  and thickness of the belting,  the  Tribunal concluded that it fell within the term "strip", as meaning a long   narrow   piece  according  to  the   Concise   Oxford Dictionary.  The name given to the product by the appellants

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was  "belt/belting".   Customers placed  orders  under  this name.  But, according to the Tribunal, the belt/belting  was covered  by the general dictionary meaning of "strip".   The Tribunal  found  that  the belting was  not  exclusively  an article  of plastics and it noted that in the case  of  Geep Flash  Industries Lid. (ibid) this Court had  observed  that articles of plastics did not mean articles made from plastic and other materials. 8.   The   Dictionary  of  Mechanical   Engineering,   Third Edition, published by Butterworths defines belt, thus :               "belt (belting: driving band) An endless  band               of  leather  or other  flexible  material  for               transmitting  power from one shaft to  another               by  running over flat, convex or  grooved  rim               pulleys.   Belts  may be flat,  vee-shaped  or               ribbed  to  fit  on  to  appropriately  shaped               pulleys.  But velocities may be as high as 800               m/s  (15000  ft. min), See  also  anti  static               belting; open belt, etc." 9.   Mr.  V. Laxmi Kumaran laid stress on the Rules for  the interpretation  of the Tariff Schedule hereinabove  referred to and urged that, by reason thereof, classification had  to be  determined "according to the terms of the  headings  and any  relative Section or Chapter Notes." Emphasis  was  laid upon  Chapter Note 11 which specifically stated that  Tariff Heading  39.22 applied to conveyor belts.  In regard to  the Tariff  as  it obtained after 10th February,  1987,  Mr.  V. Laxmi  Kumaran  relied upon the Explanatory Note  to  Tariff Heading  39.26, in identical terms in the Harmonised  Coding System  which was the basis of the present Tariff  Schedule. It expressly stated that Tariff Heading 39.26 included  con- veyor  belts.   Mr. Laxmi Kumaran submitted that,  in  these circumstances,  the  conveyor  belts  manufactured  by   the appellants  could  only  be classified  under  Tariff  Entry 39.22.90 and 39.26.90 for the respective periods. 10.  Mr.  V. Gauri Shankar Murthy, learned counsel  for  the Excise authorities, submitted that the belting  manufactured by  the  appellants was properly classifiable  under  Tariff Heading 59.08, which relates to impregnated, coated, covered or laminated textile fabrics and textile articles of a  kind suitable  for industrial use.  In this behalf he  sought  to draw  our attention to the description of the  manufacturing process given by the appellants in the first appeal in their memorandum of appeal.  He submitted that it was  permissible for the Excise authorities to take this stand because in the show  cause  notice issued to the appellants  in  the  first appeal  "  it  had been stated that it  was  issued  without prejudice to the stay order granted by the Madras High Court in  the  writ petition filed by the appellant in  the  first appeal. 11. It appears that is show cause notice dated 2nd September 1986  had been issued by the Excise authorities to  the  ap- pellant  in  the  first appeal  proposing  to  classify  its belting  under Tariff Heading 59.08. The show  cause  notice was  impugned in the writ petition filed in the Madras  High Court.  The Madras High Court granted stay 392 of   further  proceedings  in  pursuance  of   the   notice. Thereupon the show cause notice dated 11/12th June 1987  was issued, without prejudice to the stay order  aforementioned, seeking  to  classify  the  belting  under  Tariff   Entries 39.20.11  or  39.20.12.  When  the  writ  petition   reached hearing, however, learned counsel for the Excise authorities stated  on  instructions  that they  would  classifying  the belting under Tariff entries 39.20.11 or 39.20.12, a revised

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show cause notice in that behalf would be issued and further action  on the show cause notice dated 2nd September,  1986, which  was  impugned  in  the  writ  petition,  had   become unnecessary.   The  High Court recorded  the  statement  and dismissed  the writ petition as unnecessary.  Having  regard to  the statement made on behalf of the  Excise  authorities before  the  Madras  High  Court that  they  would  seek  to classify  the belting of the appellant in the  first  appeal under  Tariff  Entries 39.20.11 or 39.20.12  and  not  under 59.08, on which statement the High Court acted and dismissed the  writ  petition as unnecessary, it is not  open  to  the Excise authorities to urge that the belting is  classifiable under Tariff Heading     59.08. 12.  As regards the appellant in the second  appeal,     the excise authorities at all times sought to assess its belting under  Tariff Entries 39.20.11 or 39.20.12 and  never  under Tariff  Heading  59.08. It is impermissible for  the  Excise authorities  to  urge for the first time before  this  Court that the belting of the appellant in the second appeal  must be classified under Tariff Heading 59.08. 13.  We have, therefore, declined to permit learned  counsel for the Excise authorities to advance any argument  relative to Tariff Heading 59.08. 14.  Learned   counsel  for  the  Excise  authorities   then submitted that he had nothing to add to what had been stated by the Tribunal in the order under appeal. 15.  The Tribunal’s reliance upon the judgment of this Court in  the  case of Geep Flashlight Industries Ltd.  ,  in  our opinion, misplaced.  The court was there concerned with  the interpretation of tariff item read by itself.  It had not to be  read in the light of terms of headings or relative  Sec- tion or Chapter Notes.  This Court held that plastic torches were not articles made of plastic.  Articles made of plastic meant  articles  made wholly of the  commodity  commercially known  as  plastic and not articles made  from  plastic  and other  materials.  In the instant case the  Tariff  Schedule contains  rules  for its interpretation which  require  that "for  legal  purposes  classification  shall  be  determined according to the terms of the headings and any relative Sec- tion or Chapter Notes......... The Notes relative to Chapter 39  state that Heading 39.22 for the earlier period  applies to  conveyor belts.  For the earlier period  Tariff  Heading 39.26  must,  therefore,  be  read  as  applicable  to   the appellants  conveyor  belts.   For  the  later  period,  the Explanatory  Note to Tariff Heading 39.26 in the  Harmonised Coding System, which is identical to Tariff Heading 39.26 of the  Tariff Schedule, must be taken to be a guide,  for  the Tariff Schedule is based upon the Harmonised Coding  System. That  apart, we are unable to uphold the Tribunal’s  finding that  the belting made by the appellants is a  "strip".   An article  which  is  over  100  metres  but  only  upto  1200 millimeters  in  width  cannot be described  as  a  "strip". Tariff Entries 39.20.11 and 39.20.12 cannot, there- 393 fore,  be  made  applicable  to  the  belting  made  by  the appellants.  For the later period, Tariff Heading 39.26 must be read as applicable to it. 16.  The  appeals,  therefore, succeed.   The  judgment  and order  under  appeal  is set  aside.   The  respondents  are directed  to classify the appellants’ conveyor  beltS  under Tariff Heading 39.22.90 for the period December 1986 to  9th February 1987 and under Tariff Heading 39.26.90 for the  pe- riod 10th February 1987 to June 1987. 17.  The  respondents shall pay to the appellants the  costs of the appeals.

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