ORDER
G. Sankaran, Senior Vice-President
1. The above two appeals were taken up for hearing together since the goods involved were the same and submissions were also substantially similar. They are, therefore, disposed of by this common order.
2. We have heard Shri V. Lakshmikumaran, Advocate, for the appellants and Shri K.C. Sachar, Departmental Representative, for the respondent-Collector and have perused the record.
3. The goods involved are what are called film laminates. A film laminate is a thin film of electrolyte paste consisting of Zinc Chloride, Ammonium Chloride and Mercuric Chloride Solution on a special carrier paper. The carrier paper and the mixture of chemicals constituting the film together make the film laminates. It is an integral part of Carbon Electrodes required for production of layer-built dry batteries. The film laminate is designed so as to permit maximum ionic migration between the depolarizer mix and zinc in the flat Electrolytic cells.
4. In Appeal No. 223 of 1983, we are concerned with a consignment of film laminate imported by the appellants at Madras Port. The Customs authorities assessed the goods to basic Customs duty (the duty leviable in terms of the First Schedule to the Customs Tariff Act, 1975) as a coated paper under Heading No. 48.01/21(1) and to additional duty of Customs under Item No. 17 of the Central Excise Tariff Schedule (CET, for short). After clearance of the goods on payment of duty so assessed, the appellants filed a claim for refund of Rs. 82,424.92 on the ground that the goods should have been classified as chemicals. A copy of the refund application has been filed by the appellants. It does not elaborate the grounds of claim. If there was any covering letter along with the claim, a copy of the same has not been filed. It is, therefore, not possible to ascertain from the claim itself whether the classification under the Customs Tariff Schedule alone was being disputed or also that under the CET. However, looking to the details of assessment as are available in a photocopy of the Bill of Entry filed by the appellants, it appears that the claim must have been on account of both basic Customs duty and additional duty of Customs. This position is being set out at some length at this stage because, during the course of his submissions, Shri Sachar made a point that there was no evidence to show that the appellants had claimed refund of any part of the additional duty of Customs charged. The Assistant Collector of Customs, by his order dated 2.11.1981, dismissed the claim. His order, while being a model of brevity, does not say anything. The discussion part of the order reads “On examination of the claim it is found that the goods in question were correctly assessed under Heading 48 of the Customs Tariff Act, 1975. Hence assessment is in order and claim is not tenable.” Comment on this order is superfluous. Aggrieved with this order, the appellants preferred an appeal to the Appellate Collector of Customs. It is not clear from the Memo, of Appeal that the appellants had specifically urged the claim on account of additional duty of Customs. The Appellate Collector, by his order dated 12.3.1982 upheld the classification of the goods under Heading No. 48.01/21 of the Customs Tariff Schedule on the ground that it was wide enough to cover paper impregnated with chemicals. It is against this order that Appeal No. 223 of 1983 has been filed. In the statement of facts, it is urged that the goods were not classifiable under Chapter 48 of the Customs Tariff Schedule and that no additional duty was leviable with reference to Item No. 17(2) of the CET. This submission regarding additional duty has been repeated in one of the grounds of appeal. In specific terms, the relief claim is, apart from classification of the goods under Heading 38 of the Customs Tariff Schedule, refund of Rs. 82,424.92. We are, therefore, inclined to concider that a claim both as regards basic duty of Customs and additional duty of Customs has been urged and maintained right through.
5. We have already noted the composition of the goods. It is stated that in the case of round dry cell construction besides carbon electrodes which are round in shape and act as the carrier of electron, a gelatenised electrolyte paste of different chemicals, namely, Ammonium Chloride. Zinc Chloride, Mercuric Chloride is used in the process of manufacture and this provides the necessary separator as well as the medium for the electro-chemical reaction between the cathode mix and zinc anode. The subject film laminate with carbon electrodes used in the construction of layer-built dry batteries is stated to provide a similar function.
6. At the commencement of the hearing itself, Shri Lakshmikumaran, Advocate, fairly stated that the issue regarding classification of the subject goods under the Customs Tariff Schedule had already been concluded against the appellants by this Tribunal in another appeal preferred by the same appellants. The decision is reported in Union Carbide India Ltd. v. Collector of Customs, Calcutta, 1983 ELT 2443 (CEGAT). The arguments put forth by the appellants in support of the claim for classification as chemical under Heading No. 38.04/19(1) were the same as has been urged in the present matter before the lower authorities as well as in the Memo. of Appeal before us. Briefly stated, the grounds urged are that the film laminate does not have any function normally associated with paper. Its function is that of a chemical being used as part of dry battery. The Tribunal considered the submissions as to (1) the classification of similar goods not as paper but as articles not elsewhere specified under the residuary Heading in the Customs Tariff Schedule in force prior to the Customs Tariff Act, 1975, and (2) Board’s Tariff Advice classifying heat-test paper under the residuary Heading Item No. 68 and not Item No. 17 (Paper) of the CET., as not relevant for the present purpose. The Tribunal considered that the description of Heading No. 48.01/21(1) was wide enough to cover paper impregnated or coated with chemicals. Shri Lakshmikumaran, however, urged that the said classification was not correct. In this connection, he drew our attention to the Explanatory Notes appearing at Page 679 under Heading No. 48.07 of the Customs Cooperation Council Nomenclature (CCCN). The notes state that the Heading covers inter alia certain papers impregnated with insecticides or chemicals, for example DDT – impregnated wall paper base. It is Shri Lakshmikumaran’s contention that the function of impregnation or coating of the paper with DDT is for protection of the paper and also of the wall over which the paper is affixed. In other words, the product still remains a paper which, according to the appellants, is not the case with the subject film laminate which is essentially a carrier paper for the chemicals Ammonium Chloride, Zinc Chloride, Mercuric Chloride required for the function of the dry cell. Reference was also drawn to the Rule of Interpretation of the Customs Tariff Schedule Rule 3(b) according to which mixtures and composite goods which consist of different materials or which are made up of different components and which cannot be classified by reference to sub-Rule (a) (“The Heading which provides the most specific description shall be preferred to Headings providing a more general description”) shall be classified as if they consisted of the material or component which gives the goods their essential character, in so far as this criterion is applicable. The contention is that it is the chemicals that give the film laminate its essential function and, therefore, the film laminate should be classified as a chemical under Chapter 38. The paper base, it is claimed, is only a carrier and is not the component which gives the film laminate its essential characteristic. In this connection he drew our attention to the following two decisions: 1) the judgment of the Karnataka High Court in Business Forms Ltd. v. Commissioner of Commercial Taxes, Karnataka, Bangalore (1985) 5 ECC118 and 2) this Tribunal’s decision in Sai Giridhara Supply Co. v. Collector of Central Excise, Bombay, 1987 (28) ELT 438 (Tribunal). The case before the Karnataka High Court related to teleprinter rolls, adding machine rolls and computer output papers, etc. for the purpose of Entry 125 of the Second Schedule to the Karnataka Sales Tax Act. It is seen from the judgment that the Court itself noted that the classification of goods for the purpose of levy under the Central Excises and Salt Act furnishes no guidance for determining the rate of levy under the Sales Tax Act. In the case before the Tribunal the goods were carbon paper and carbonised adding machine rolls. In so far as carbon paper was concerned, the Tribunal relied on the judgment of a Single-Member Bench of the Karnataka High Court in Khoday Industries Ltd. v. Union of India, 1986 (23) ELT 337 in which the Court had held that prior to the change of Tariff description of Item No. 17 by the Finance Act, 1982 (which had the effect inter alia of bringing carbon paper specifically within the ambit of the Item), carbon paper would be classifiable as an article of stationery falling under Item No. 68. The High Court had noticed Item No. 17 both prior to, and after its, amendment on 27.2.1982, the Tariff Advice issued by the Board classifying carbon paper as an article of stationery under Item No. 68, CET. and the intention of the amendment as gathered from the Memorandum of Objects and Reasons accompanying the Finance Bill, and held that carbon paper, during the pre-amendment period, was classifiable under Item No. 68, CET. We will have occasion to revert to this aspect when we re-consider the question about levy of additional duty of Customs but, in our opinion, the judgment is no authority in support of the claim for classification of the subject goods under Chapter 38 of the Customs Tariff Schedule. Heading No. 48.01/21 covers inter alia impregnated or coated paper. The appellants have urged that there is no coating or impregnation of the paper with chemicals but only a deposit of the chemicals on the paper. All that has been done, according to the appellants, is calendaring/dispersing of chemicals on to the carrier paper in a manner so as to enable transference of the chemicals in the electric dry cells to provide the electro-chemical function. Shri Lakshmikumaran, however, did not make any submissions before us on this point made in the Memo, of Appeal. The goods, as seen from the invoice, are described as film laminates. A laminate is nothing but a thin layer of film of a particular material on another layer of the same or another material. There is, therefore, little doubt that the subject film laminate is a kind of coated paper. A sample of the goods was produced before us and it is clear on an inspection of the same that the subject film laminate is composed of a paper as the base with a coating of chemicals on one side. We have, therefore, to proceed on the basis that it is but a coated paper. The question is whether it will fall under Chapter 48. The submission made regarding DDT – impregnated wall paper is not of much help to the appellants because, in the ultimate analysis, it is also a kind of coated paper. The submission that the subject goods are not known in the trade as a coated paper and that it does not have the usual functions associated with paper is also of no help in so far as the Customs Tariff Schedule is concerned. Looking to the description of Heading No. 38.01/19, we do not think that the subject goods can be classified thereunder since it covers chemical products and preparations of the chemical or allied industries not elsewhere specified or included and residual products of the chemical or allied industries, not elsewhere specified or included. No doubt, the chemicals which form the coating on the base paper may fall for classification as chemicals (not in Chapter 38 but in Chapter 28) but it is difficult to see how a film laminate consisting of base paper and chemical coating can be considered to be a chemical product or preparation or a residual product as defined in the Heading. We may also note that Rule 3(b) of the Rules for Interpretation of the Customs Tariff Schedule could be invoked only if sub-Rule (a) is not applicable. This sub-Rule, as already noted, provides that the most specific description shall be preferred to a heading providing a more general description. And, for coated or impregnated paper, Heading 48.01/21(1), being more specific, is to be preferred to the residual Heading 38.01/19(1). Hence we uphold the classification of the goods under Heading No. 48.01/21(1).
7. Now we turn to the submissions regarding classification under the Central Excise Tariff Schedule for the purpose of levy of additional duty of Customs. Shri Lakshmikumaran has drawn our attention to certain authorities in support of the claim for classification under the residual Item No. 68 and not under Item No. 17 of the CET. In Basant Pran Electric Co., Calcutta v. Collector of Central Excise, Calcutta, 1984 (17) ELT 499, the goods under consideration were electric insulating varnished paper. The Tribunal held that to bring an article within the ambit of Item No. 17, CET, it must belong to the family of paper. Merely because the product is known as paper it cannot be brought within the ambit of this entry. Electric insulating varnished paper manufactured by varnishing duty-paid kraft paper with insulating varnish, whose sole use is to serve as electric insulation, and, for that reason, is known as electrical insulator, was, according to the Tribunal, not classifiable as paper under Item No. 17(4), CET. We may, however, note that the dispute in that case related to the period prior to 16-3-1976 during which period Item No. 17 did not, in terms, include coated, inpregnated or laminated paper. The present dispute relates to a much later period and, therefore, the decision cited is not of help to the appellants. The next decision cited is of the Tribunal in the Collector of Customs, Bombay v. Yash Udyog, 7984 (3) ETR 17,1987 . The goods therein were presspahn paper board laminated with plastic film, used for electric insulation purposes. The dispute was whether having regard to the composite nature of the goods and the material contributing to the essential characteristic of electric insulation, they were classifiable under Chapter 39 of the Customs Tariff Schedule and Item No. 17(2) of the CET. The Tribunal held that goods were classifiable under Chapter 39 of the Customs Tariff Schedule read with Item No. 68, CET. But, as correctly pointed out by Shri Sachar, the goods involved in the present dispute are not laminates though they are called film laminates but the result of coating or deposition of three chemicals on the base paper. Similarly, the goods in the case of Sun Rise Electric Corp., Bombay v. Collector of Customs, Bombay, 1984 (3) ETR 348 decided by the Tribunal were similar to the goods in the case of Yash Udyog. The decision of the Tribunal was also the same as in the case of Yash Udyog. The discussions in both the cases were with reference to goods consisting of two or more layers of different materials being laminated together. Such is not the case in the present dispute. These decisions are, therefore, no help to the appellants.
8. In the circumstances, we are of the opinion that the goods were correctly classifiable, under Item 17(2) of the CET and liable to be charged to additional duty of Customs with reference to this heading.
9. Turning now to Appeal No. 30/83, the Assistant Collector by his order dated 28-9-1981 demanded from the appellants Rs. 1,95,003.96 on the basis that the goods were liable to be charged to additional duty of Customs under Item No. 15A(2) of the Central Excise Tariff Schedule. It is curious to note that the Assistant Collector had, in an earlier communication dated 12-9-1978 to the appellants, classified the goods for the purpose of levy of additional duty of Customs under Item No. 17(2) of the CET. In his Order-in-Appeal dated 2-4-1982, the Appellate Collector confirms the classification of the goods under Heading No. 48.01/21 of the Customs Tariff Schedule without, however, ruling on the classification under the CET for the levy of additional duty of Customs. The relief claimed in the appeal before the Tribunal is that the goods should be classified under Heading 38.01/19(1) of the Customs Tariff Schedule and that the levy of additional duty with reference to Item No. 15A(2), CET should be quashed. In the light of the discussions and findings in Appeal No. 223 of 1983, classification under Heading No. 48.01/21 of the Customs Tariff Schedule is correct and is upheld. However, the demand for additional duty with reference to Item No. 15A(2) of the CET is not sustainable and has to be set aside. The demand notice leading to the order of adjudication dated 28-9-1981 by the Assistant Collector is shown in the adjudication order as bearing No. S24(GR I)(P) 80/76A dated 15-1-1979. This document is a letter in the nature of a reminder in response to the appellant’s letter of 15-12-1978 a copy of which is not available in the record. However, the Assistant Collector’s letter of the same number dated 23-3-1978 is available. It is seen therefrom that it was issued in pursuance of finalisation of provisional assessments [under Heading 39.01/06 of the Customs Tariff Schedule read with Item No. 15A(2), CET] of ten consignments. It further reads that, on careful examination, the goods were correctly assessable to duty under Heading 48.01/21(1) of the Customs Tariff Schedule read with Item No. 17(2), CET and calls upon the appellants to pay the extra duty involved. It is not couched in the usual trappings of a show cause notice in the sense that words such as show cause etc. are not to be found. However, it is clear from appellants’ reply dated 3-4-1978 that they had understood the purport of the letter and had, apart from explaining their stand, requested for an opportunity to be personally heard. It is seen from the adjudication order that this representation was not taken into consideration by the Assistant Collector and, as stated earlier, the finding of the Assistant Collector was that the goods were assessable to additional duty of Customs under Item No. 15A(2), CET. The Appellate Collector, on his part, did not give any finding on the classification under the CET. In these circumstances, we cannot uphold the claim for additional duty of Customs as contained in the adjudication order with reference to Item No. 15A(2) of the CET and have, therefore, to set it aside. However, since we have found that the goods were assessable to additional duty of Customs with reference to Item No. 17(2), CET, the respondent will be entitled to recover from the appellants additional duty of Customs with reference to this classification. If the demand has already been honoured by the appellants, and if the amount now found to be recoverable is similar than the amount paid, the balance shall be refunded to the appellants.
10. The two appeals are disposed of in the above terms.