By TIOL News Service

CHENNAI, DEC 07, 2015: REVENUE is in appeal before the CESTAT against the orders of Commissioner (Appeals). The Department issued show-cause notices to the respondents proposing to classify the goods FIBC under Chapter 3923 2990 as articles of plastics. The adjudicating authority in Order-in-Original classified the FIBC under Chapter 3923 2990. On appeal by the respondents, the Commissioner (Appeals) in the impugned orders allowed the appeals and classified the goods under Chapter 6305 3200 of CETH and set aside the adjudication order. Hence Revenue has preferred these appeals.

It is contended by revenue that Chapter Note 1 of Chapter 63 provides that the said Chapter applies only to made-up articles of any textile fabrics. This implies that only articles made up of textile fabrics are covered under Chapter 63 whereas FIBC is made from PP strips and classifiable under articles of plastics under Chapter 392090 / 39232990.

After hearing both sides, the Tribunal held:

- The only issue in these appeals is whether FIBC is classifiable under Chapter 39232990 as contended by Revenue or under 63053200 as held by Commissioner (Appeals). There was no demand of any duty or dispute on rate of duty. The issue of classification of FIBC had arisen purely on account of export of FIBC and claiming export benefit of rebate / drawback.

- Board has issued clarification for the purpose of All Industry Rates of Duty Drawback and categorically clarified that classification of the product FIBC under drawback tariff item 6305. It is pertinent to state that both the drawback schedule and ITC Code issued by DGFT and CETH are aligned with HSN, the classification issued by the Board assumes vital importance and Revenue cannot change the classification under Central Excise Tariff Chapter 3923.

- Besides, the US International Trade Commission rulings dated 1.9.2011 for Tariff No. 6305 3200 10 for the classification of FIBC originated from Indonesia wherein the Commission has given ruling that FIBC is classifiable under 6305320010 of US (HTS). The HSN Explanatory Note of Chapter 39 clearly excludes FIBC of Heading 6305 from Chapter 3923. HSN Explanatory Note 6305 3200 specifically includes description of FIBC.

- Thus in view of the specific clarification of the Board and by following the Madras High Court's order in - 2015-TIOL-17-HC-MAD-CUS, it is held that FIBC is rightly classifiable under 63053200 and not under 39232990. There is no infirmity in the order passed by the Commissioner (Appeals) and the same is upheld.

(See 2015-TIOL-2591-CESTAT-MAD)