By TIOL News Service

MUMBAI, AUG 07, 2014: THIS is a Revenue appeal.

The CCE, Pune-I classified “asceptic packaging paper” manufactured by the respondent under CETH 48119092 and allowed exemption under Notification 4/2006-CE dated 01/03/2006 as amended. The adjudicating authority relied upon the test report of the product given by M/s. ARAI wherein it was confirmed that the paper content was 80.12%, plastic content 15.40% and aluminium content 4.48%.

It is the contention of the Revenue that the adjudicating authority has overlooked Note 2(n) to Ch. 48 which specifically provides that the said Chapter does not cover “metal foil backed with paper or paperboard” and the correct classification should be under CETH 7607 2090 as aluminium and articles thereof. Reliance is placed on the LB decision in Hindustan Packaging Co. Ltd. 2002-TIOL-322-CESTAT-DEL-LB which has been upheld by the apex court. It is, therefore, submitted that the duty demand of Rs.17.65 crores short-paid by the appellant merits to be upheld along with interest thereon and also penalty.

After hearing the submissions made by the respondent, the Bench observed -

++ From the manufacturing process given, it can be seen that the aluminium foil is not backed with any material. On the other hand, it is covered on both sides by plastic material and is laminated on one side of the paperboard. Thus, it is the aluminium foil which forms the backing and not the other way . Further, as per the test report, paper accounts for 80% of the material and aluminium, barely 5%.

++ After the introduction of a specific entry for asceptic packaging paper, the scope of CETH 4811 has undergone a change and paper or paperboard backed by a metallic foil merits classification under Chapter 48 which was not the position earlier. The HSN explanatory notes also underwent a change to incorporate within the scope of CETH 4811 such paper.

++ A reading of the revised HSN Explanatory Notes clearly shows that paper and paperboard covered on both faces with thin transparent sheets of plastics with or without a lining of metal foil are also classified under CETH 4811.

Holding that the decisions of the apex Court in the case of Business Forms Ltd. 2002-TIOL-277-SC-CUS-LB &Wood Craft Products Ltd. 2002-TIOL-278-SC-CX-LB squarely applies to the facts of the case, the Bench held that the product manufactured by the appellant is more appropriately classifiable under CETH 4811 as asceptic packaging paper.

The Bench also mentioned that the rulings given by the UK and US authorities classifying identical products under CETH 4811, though not binding, also support this view. The case law cited by the Revenue of Hindustan Packaging 2002-TIOL-322-CESTAT-DEL-LB was held to not support the Revenue as it pertained to the period prior to the changes made in the tariff creating a specific entry for asceptic packaging paper.

Holding that there was no infirmity in the order passed by the CCE, Pune-I, the appeal filed by the Revenue was dismissed.

(See 2014-TIOL-1440-CESTAT-MUM)