ORDER
C.N.B. Nair, Member (T)
1. The appellant M/s J.K. Synthetics Ltd. claimed central excise classification for flanged bobbins manufactured by them under Tariff Heading 3326.90. This was approved and they cleared the said bobbins on payment of duty.
2. Subsequently, show cause notice dated 19.9.90 was issued proposing to change the approved classification to heading 7616.90 and recover short-levy amount of over Rs. 3 lakhs. The appellant resisted the proposed change of classification by contending that the correct classification is as originally approved under heading 3326.90. In adjudication, the Assistant Collector confirmed the changed classification and the demand.
3. This order was taken up in appeal before the Collector (Appeals). The assessee failed in that forum also. Thereupon, an appeal was filed before this Tribunal and the Tribunal allowed the appeal by holding that since the original payment of duty was in terms of an approved classification, there could be no short levy to be recovered. In the passing of that order, the Tribunal was following the judgment of the Hon’ble Supreme Court in the case of C.C.E., Baroda v. Cotspun Ltd. .
4. Aggrieved by the order of the Tribunal, Revenue filed an appeal before the Hon’ble Supreme Court. By that time, Section 11A of the Central Excise Act had been amended by the Finance Act, 2000, permitting the reopening of assessments made in terms of approved classification also. In view of the changed law, the Hon’ble Supreme Court allowed the appeal of the revenue vide judgment dated 15th December 2005 and remanded the case to the Tribunal for passing a fresh order on merits. This is how the matter is before us again.
5. When the case was fixed for hearing on 8.5.06, none appeared for the assessee, despite notice. Accordingly, fresh notice of hearing for today was issued to the assessee as well as to its counsel. The notice issued to the assessee which was sent by post, has come back and the counsel is not present. In these circumstances, we are proceeding with the appeal after hearing the learned SDR and perusing the record.
6. The submission of the learned SDR is that the issue of limitation dogs not survive any more and the case is required to be considered only on merits of the classification. His contention is that classification is to be made depending upon the main material from which the bobbin in question is made. It is being pointed out that the assesses are making plain aluminium bobbins and flange aluminium bobbins. According to the learned SDR, in either case, the basic material from which bobbin is made is aluminium and fixing of plastic flange at either end of the aluminium tube is only for providing additional protection/convenience. It is the SDR’s submission that the item is required to be classified depending upon the material or component which gives the item its “essential character”. The learned SDR would point out that the order of the lower authorities have been passed on the above principle which is laiddown in Rule 3(b) of Rules for Interpretation of Schedule of Tariff. According to the learned SDR, the orders are entirely in terms of the appropriate heading of the Tariff and Rule relevant to Interpretation of Tariff and are therefore, the order is required to be upheld.
7. The contention of the appellant is to be found in para 3 of the appeal. We read that para:
3. These plastic flanged bobbins are used on spinning machines and the yarn is wrapped around the aluminium tube because of the flange fixed at each end of the pipe. Without the flange, yarn cannot be wrapped on the pipe and as such flanges are essential for the purpose of wrapping the yarn around the bobbins. These flanged bobbins are not only used for winding of the yarn at the spinning machines but also for unwinding of the yarn for further processing such as twisting or weaving of the yarn. The yarn wound on these bobbins is cross ways on the tube and for that purpose plastic flanges are fixed on both sides for supporting of the yarn. The flanges counteract the centrifugal forces developed during the working process and as such give an essential character to the bobbins.
The appeal also points out that note 1(c) to Section XVI of the Tariff specifically excludes bobbins etc. falling under Chapter 39, 40, 49 etc. Reliance has also been placed on notes under Chapter 84.48, which specifically mentions that “bobbins… and similar supports (classified according to their constituent materials)” are excluded from 84.48
8. Thus, both sides are agreed on the principle of classification, that classification is that of the material which imparts the ‘essential character’. The dispute is as to whether aluminium provides the essential character or plastic imparts the essential character. Bobbin is a spool/rod on which yarn is wrapped (rod in the present case). It is clear from para 3 of the appeal that yarn is wound on the aluminium rod (bobbin). Plastic flanges at either end of the bobbin are only attachments.
9. As already noted, bobbins are either plain aluminium or flanged with plastic material. In either case, yarn is wound around the aluminium rod. Therefore, aluminium rod provides the essential character of holding yarn. In this view of the matter, both varieties of bobbins, merit classification as articles of aluminium under 7616.90 as ordered in the impugned order.
10. The Rules for interpretation of the schedule of the Tariff supply the guidelines where different classifications offer themselves for the same item. Rule 3(b) indicates how mixtures, composite goods consisting of different materials are to be classified. We may reproduce that Rule 3(b):
Mixtures, composite goods consisting of different material or made up different components and goods put up in sets, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character so far as this criterion is applicable.
11. It is the above rule that was specifically relied upon by both the lower authorities for classification. In the facts of the present case, that rule is attracted and the authorities were right in going by it. The section and chapter notes relied upon by the assessee also mandate determining classification according to main article of which the composite item is made.
12. In passing, we may also note that the classification of bobbins remains specifically mentioned in the subsequent 8 digits Central Excise Tariff under 7616.9930. This is an indication that under earlier 6 digits heading also, the correct classification would be under 7616.90.
13. In view of what is stated above, there is no merit in the assessee’s appeal in regard to classification and duty demand for the period 31.3.90 to 31.8.90.
14. The appeal fails and is rejected.
(Dictated and pronounced in open Court)