CX - Manner of classification in Punjab General Sales Tax Act is not same as that adopted in CE Tariff - HSN clearly recognizes non-woven textile manufactured by thermal/mechanical bonding of yarn under Ch.56: CESTAT
By TIOL News Service
MUMBAI, AUG 09, 2016: THE appellant was issued notice demanding duty on the ground that they had wrongly classified their products as non-woven textile fabrics falling under CETA 56.03 whereas the correct classification of the same is 39231090.
The CCE, Nagpur upheld the demand and, therefore, the appellant is before the CESTAT.
They have also filed a miscellaneous application contending that in case the appeal is decided against them they would be entitled to CENVAT Credit on the inputs.
The contending entries are -
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3923
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Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures of plastics
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5603
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Non-woven, whether or not impregnated, coated, covered or laminated - Of man-made filaments
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Kg
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12%
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The appellant argued that the product manufactured is a flexible product which is cleared in roll form and cannot be treated as an article for conveyance or packing of goods;that the said heading 39.23 is intended to cover articles like, boxes, cases, crates, etc. The appellant justified the classification made by them under heading 56.03 by informing that the said non-woven fabrics are manufactured from the polypropylene chips procured by them by melting the same; passing through spinnerets and thereafter filament yarn is made out of the polypropylene chips;that the said filament yarn is spread thinly and pressed under heat to manufacture the finished goods. Reliance is also placed on the HSN Explanatory notes and the clarification given by HMRC as regards classification of non-woven spun fabrics.
The AR submitted that the material which is predominant in the said product is plastic as it is manufactured out of granules of Chapter 39 and, therefore, it should be classified under Chapter 39. Reliance is also placed on the decision in Shree Baidyanath Ayurved Bhawan Ltd - 2009-TIOL-53-SC-CX to assert that common parlance test is very important and not scientific or technical meaning while deciding the classification of the product; that the product is used as a packing material for conveyance of goods and, therefore, rightly classifiable under heading 3923; that as per the appellant the product is used in manufacture of sanitary napkins as it only provides a leak proof covering of the Napkins and not the absorbent material.
The Bench observed thus-
"5. …We find that the show-cause notice is based on the following observations of Hon'ble Supreme Court in the case of Porritts & Spencer (Asia) Ltd. - 1983 (13) ELT 1607 (SC). Apex Court concluded taking note of dictionary meaning of the textile as follows:
x x x
The judgement was given while interpreting classified under Punjab General Sales Tax. While the manner of classification in the Punjab General Sales Tax Act was not the same as the manner of classification adopted in the Central Excise Tariff. The said Central Excise tariff is a very advanced scientific method of classification. The said tariff is backed by the explanatory notes which is explain the scope of each heading. We find that the HSN explanatory notes to Chapter Heading 5603 specifically covered non-woven fabrics. We find that heading 5602 of the Central Excise Tariff is specifically covers felt. The decision in the case of Porritts& Spencer (Asia) Ltd. (supra) was given in respect of felt. Felt is clearly classifiable under heading 5602. Thus, we find that the reliance placed on the said decision in the show-cause notice is totally irrelevant. We find that the HSN clearly recognize non-woven textile manufactured by thermal/mechanical bonding of yarn as textile falling under Chapter 56…."
By setting aside the order, the appeal was allowed. The Miscellaneous application was disposed of.
(See 2016-TIOL-2010-CESTAT-MUM)
