ORDER
Chittaranjan Satapathy, Member (T)
1. Heard both sides.
2. The appellants manufacture Poly-Coated Paper which is supplied to buyers for packing/ wrapping purposes. The said paper has been classified by the Adjudicating Commissioner under Chapter 39 whereas it is the claim of the appellants that the same is classifiable under Chapter 48. Shri S.K. Bagaria, Ld. Sr. Advocate appearing for the appellants states that the product is squarely classifiable under Heading 4811 which reads as under:
Paper and paperboard coated, impregnated or covered with plastic (excluding adhesives):
4811.31- Products consisting of sheets of paper or paper board, impregnated, coated or covered with plastics (including thermoset resins or mixtures thereof or chemical formulations containing melamine, phenol, urea formaldehyde with or without curing agents or catalysts), compressed together in one or more operations. Products known commercially as decorative laminates.
4811.39- Other
He states that the heading specifically covers paper and paper board which is coated, impregnated or covered with plastic. He also refers to the chapter note 1 of chapter 48, Clause (g), which reads as under:
Paper-reinforced stratified plastic sheeting or one layer of paper or paperboard coated or covered with a layer of plastics, the latter constituting more than half the total thickness or articles of such materials, other than wall coverings of heading No. 48.14 (Chapter 39)
He states that in view of the chapter note cited above, only paper reinforced plastic sheet or one layer of paper or paper board coated or covered with a layer of plastics where the plastic layers constitute more than half the total thickness would go to chapter 39. In the case of the appellants, the Chemical Test Report is as follows:
The sample is in the form of cut piece of white sheet of paper, one side of which is smooth and coated with Polyethylene.
Furnish of the paper consist mainly of chemical pulp. Percentage of coating material is = 16.0% by wt.
Average GSM of sample as such is 85.3 without tolerance. Average GSM of paper after removal of coating is 71.6 without tolerance.
Thickness of sample as such is 0.09 mm.
Thickness of Polyethylene is 0.015 mm
Its actual use may be ascertained.
He states that the Chemical Test Report clearly shows that the total thickness is 0.09 mm. within which the classified quoted (Polyethylene) is 0.015 mm. As such, according to the Test Report, the thickness of paper predominates and hence the cited chapter note would have no application and the product would remain under chapter 48 and would get covered under Heading 48.11.
3. He also states that in a similar case of a competing manufacturer, manufacturing similar poly coated paper of similar chemical composition, the same Commissioner has passed an order on 19/2/2004 (present order was passed on 23/3/2004) holding the product of the other manufacturer viz. M/s. Creative products to be classifiable under chapter 48 and not under chapter 39. He further states that Special Bench of the Tribunal in final order No. 376/1994-C dated 15/12/1994 in the matter of CCE Vishakapatnam v. Laminated Packings (P) Ltd. has also held similar products to be classifiable under Sub-Heading-48 11.30. He also points out that the Tribunal in its order in the case of Jewel Papers Pvt. Ltd. v. Commr. of Central Excise, Rajkot reported in 2004 (166) ELT 283 (Tri.-Mumbai) had also noted in passing that Poly coated papers are classifiable under chapter 48. He, further, states that even if the product is classified under chapter 39, the exempted duty rate under the said chapter is equal to the duty rate under chapter 48 which the Adjudicating Commissioner has not taken into account while confirming the demand.
4. Heard the Ld. D.R. who supports the impugned order and states relying on a communication dt. 9/6/2006 from the Commissionerate that the impugned order as well as the order passed in the case of M/s. Creative Polypack Ltd. v. Commr. of C. EX., Kolkata-II Reported in 2001 (137) ELT 172 (tri-Kolkata) have been accepted by the Chief Commissioner. In other words, he has confirmed the Ld. Advocates contention that the Department has not filed any appeal against the order passed in the case of M/s. Creative Polypack Ltd. (cited supra).
5. After hearing both sides and perusal of case records, we are surprised to see that in respect of similar product of similar chemical composition, manufactured by the two competing manufacturers, the same adjudicating Commissioner has taken two diamatrically opposite views within the space of merely one month. It is also equally surprising that both orders have been accepted at the level of the Chief Commissioner. It is also surprising that the logic adopted by the Adjudicating Commissioner (sic) in favour of the Creative Polypack Ltd. (cited supra), has not been applied in the case of the present appellants. Keeping in view the chemical composition of the product and also taking into account that the thickness of the paper predominates over the thickness of the Polyethylene layer as is evident from the chemical test report, we are of the view that the chapter note cited above has no application in the present case and the impugned case cannot be taken out from the purview of the chapter 48 and classified under chapter 39. Besides, we observe that the adjudicating Commissioner has unnecessarily tried to apply Rule 3 of the Interpretation Rules and proceeded to consider essential characteristics of the product giving a go by to the earlier rules which require to classify a product in accordance with the terms of the heading and the related section and chapter notes. In the present case, terms of the heading clearly include paper and paper board covered with plastic and the related chapter note cited above clearly indicates what kind of (sic) papers would go outside the chapter 48. The entry under chapter 48 and the said chapter note are sufficient to determine the classification of the product under chapter 48 and there is absolutely no need to go to the subsequent rules of interpretation.
6. Apart from the fact that the same adjudicating Commissioner has decided two similar cases differently, terms of the Heading and Chapter Note clearly indicate the classification to be under Heading 48.11, our finding as above is also supported by the Special Bench decision cited above by the Ld. Advocates (cited supra).
7. Since we are deciding the classification under chapter 48, we do not feel it necessary to go into the submissions made in regard to the duty rates.
8. We set aside the impugned order including the demand confirmed there under and the penalty imposed and allow the appeal with consequential benefits to the appellants.
(Dictated and pronounced in the open Court)