Full Judgment Text
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PETITIONER:
FENNER (INDIA) LTD.
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, MADURAI
DATE OF JUDGMENT28/03/1995
BENCH:
BHARUCHA S.P. (J)
BENCH:
BHARUCHA S.P. (J)
AHMADI A.M. (CJ)
PARIPOORNAN, K.S.(J)
CITATION:
1995 SCC Supl. (2) 567 JT 1995 (3) 388
1995 SCALE (2)508
ACT:
HEADNOTE:
JUDGMENT:
BHARUCHA, J.:
1. These appeals impugn the order dated 14th September,
1989, passed by the Customs, Excise and Gold (Control)
Appellate Tribunal dismissing the appeals filed before it by
the two appellants. Each of the two appellants manufactures
PVC impregnated cotton conveyor belting and PVC impregnated
flame resistant colliery conveyor belting. The appellants
contended before the Tribunal that their products were
classifiable under Tariff Entry 3922.90, whereas it was the
case of the Excise authorities that they were classifiable
under Tariff Entries 3920. 11 or 3920.12, depending upon
whether they were rigid or flexible strips. The Tribunal
upheld the contentions of the Excise authorities basing it-
self, in the main, upon the dictionary meaning of "strip"
and upon the judgment of this Court in Geep Flashlight
Industries Ltd. vs. Union of India and ors., 1985 22 E.L.T.
3.
2. We are concerned in these appeals for the period
December 1986 to June 1987.
3. With effect from 28th February 1986 and upto 9th
February 1987, Tariff Heading 39.20 (so far as is relevant)
read thus:
"39.20 Other plates, sheets, film, foil and
strip, of plastics, non-cellular, whether
lacquered or similarly laminated, supported or
similarly combined with other materials or not
of polymers of vinyl chloride:
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3920.11 Rigid plates, sheets, film, foil
and strip 60%
3920.12 Flexible plates, sheets, film
foil and strip 60%"
Tariff Heading 39.22 read thus:
"39.22 Other articles of plastics and articles of
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materials of heading Nos.39.01 to 39.14
3922.10 -Articles of polyurethane foam
75%
3922.90 - Other 30%"
4. It is relevant to mention that the Central Excise
Tariff Act, 1985, itself contains for the interpretation of
the tariff schedules. Rule I states, "The titles of
Sections and Chapters are provided for case of reference
only; for legal purposes, classification shall be determined
according to the terms of the headings and any relative Sec-
tion or Chapter Notes and, provided such headings or Notes
do not otherwise require, according to the provisions
hereinafter contained". Rule 2(a) states that any reference
in a heading to goods shall be taken to include. a reference
to those goods incomplete or unfinished, provided that the
incomplete or unfinished goods have the essential character
of the complete or finished goods. Rule 3 states that when
goods are prima facie classifiable under two or more
headings, classification will be effected thus: the heading
which provides the most specific description shall be
preferred to headings providing a more general description.
Also, when goods cannot be classified by reference to sub-
rules (a) or (b) of Rule 3, they shall be classified under
the heading which occurs last in the numerical order among
those which equally merit consideration. Rule 4 states that
goods which cannot be classified in accordance with Rules 1
to 3 shall be classified under the heading appropriate to
the goods to which they are most akin. Chapter 39 is
entitled "plastics and articles thereof" and Note 11 therein
states that Heading No.39.22 applies, inter alia, to "(k)
Transmission, conveyer or elevator belts, endless, or
cut-to-length and joined end to end, or fitted with
fasteners."
5. Subsequent to 10th February 1987 Tariff Heading 39.22
became Tariff Heading 39.26; it read:
"39.26 Other articles of plastics and articles
of other materials of heading Nos.39.01 to
39.14
3926. 10- of polyurethane foam
60% plus Rs.40 per
Kilogram
3926.90 Other 30%"
6. Note 11 (K) omitted. Reference was made by Mr. V.
Laxmi Kumaran, learned counsel for the appellants, to the
Customs cooperation Council publication of the Explanatory
Notes to the Harmonized Commodity Description and Coding
Systems which is adopted in the Tariff Schedule. The
explanatory Note with reference to Tariff Heading 39.26 of
the Harmonised Coding System states that it covered "ar-
ticles, not elsewhere specified or included, of
plastics...... or of other materials of headings 39.01 to
39.14" and included "(7) Transmission, conveyor or elevator
belts, endless, or cut to length and joined end to end, or
fitted with fasteners."
7. The Tribunal observed from copies of the customer’s
orders placed before it by the appellants that the length of
the belt-
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ing in rolls varied from 100 meters to 400 metres, the width
varied from 600 millimetres to 1200 millimetres and the
thickness varied between 7 mm and 9.5 mm. Considering the
length, width and thickness of the belting, the Tribunal
concluded that it fell within the term "strip", as meaning a
long narrow piece according to the Concise Oxford
Dictionary. The name given to the product by the appellants
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was "belt/belting". Customers placed orders under this
name. But, according to the Tribunal, the belt/belting was
covered by the general dictionary meaning of "strip". The
Tribunal found that the belting was not exclusively an
article of plastics and it noted that in the case of Geep
Flash Industries Lid. (ibid) this Court had observed that
articles of plastics did not mean articles made from plastic
and other materials.
8. The Dictionary of Mechanical Engineering, Third
Edition, published by Butterworths defines belt, thus :
"belt (belting: driving band) An endless band
of leather or other flexible material for
transmitting power from one shaft to another
by running over flat, convex or grooved rim
pulleys. Belts may be flat, vee-shaped or
ribbed to fit on to appropriately shaped
pulleys. But velocities may be as high as 800
m/s (15000 ft. min), See also anti static
belting; open belt, etc."
9. Mr. V. Laxmi Kumaran laid stress on the Rules for the
interpretation of the Tariff Schedule hereinabove referred
to and urged that, by reason thereof, classification had to
be determined "according to the terms of the headings and
any relative Section or Chapter Notes." Emphasis was laid
upon Chapter Note 11 which specifically stated that Tariff
Heading 39.22 applied to conveyor belts. In regard to the
Tariff as it obtained after 10th February, 1987, Mr. V.
Laxmi Kumaran relied upon the Explanatory Note to Tariff
Heading 39.26, in identical terms in the Harmonised Coding
System which was the basis of the present Tariff Schedule.
It expressly stated that Tariff Heading 39.26 included con-
veyor belts. Mr. Laxmi Kumaran submitted that, in these
circumstances, the conveyor belts manufactured by the
appellants could only be classified under Tariff Entry
39.22.90 and 39.26.90 for the respective periods.
10. Mr. V. Gauri Shankar Murthy, learned counsel for the
Excise authorities, submitted that the belting manufactured
by the appellants was properly classifiable under Tariff
Heading 59.08, which relates to impregnated, coated, covered
or laminated textile fabrics and textile articles of a kind
suitable for industrial use. In this behalf he sought to
draw our attention to the description of the manufacturing
process given by the appellants in the first appeal in their
memorandum of appeal. He submitted that it was permissible
for the Excise authorities to take this stand because in the
show cause notice issued to the appellants in the first
appeal " it had been stated that it was issued without
prejudice to the stay order granted by the Madras High Court
in the writ petition filed by the appellant in the first
appeal.
11. It appears that is show cause notice dated 2nd September
1986 had been issued by the Excise authorities to the ap-
pellant in the first appeal proposing to classify its
belting under Tariff Heading 59.08. The show cause notice
was impugned in the writ petition filed in the Madras High
Court. The Madras High Court granted stay
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of further proceedings in pursuance of the notice.
Thereupon the show cause notice dated 11/12th June 1987 was
issued, without prejudice to the stay order aforementioned,
seeking to classify the belting under Tariff Entries
39.20.11 or 39.20.12. When the writ petition reached
hearing, however, learned counsel for the Excise authorities
stated on instructions that they would classifying the
belting under Tariff entries 39.20.11 or 39.20.12, a revised
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show cause notice in that behalf would be issued and further
action on the show cause notice dated 2nd September, 1986,
which was impugned in the writ petition, had become
unnecessary. The High Court recorded the statement and
dismissed the writ petition as unnecessary. Having regard
to the statement made on behalf of the Excise authorities
before the Madras High Court that they would seek to
classify the belting of the appellant in the first appeal
under Tariff Entries 39.20.11 or 39.20.12 and not under
59.08, on which statement the High Court acted and dismissed
the writ petition as unnecessary, it is not open to the
Excise authorities to urge that the belting is classifiable
under Tariff Heading 59.08.
12. As regards the appellant in the second appeal, the
excise authorities at all times sought to assess its belting
under Tariff Entries 39.20.11 or 39.20.12 and never under
Tariff Heading 59.08. It is impermissible for the Excise
authorities to urge for the first time before this Court
that the belting of the appellant in the second appeal must
be classified under Tariff Heading 59.08.
13. We have, therefore, declined to permit learned counsel
for the Excise authorities to advance any argument relative
to Tariff Heading 59.08.
14. Learned counsel for the Excise authorities then
submitted that he had nothing to add to what had been stated
by the Tribunal in the order under appeal.
15. The Tribunal’s reliance upon the judgment of this Court
in the case of Geep Flashlight Industries Ltd. , in our
opinion, misplaced. The court was there concerned with the
interpretation of tariff item read by itself. It had not to
be read in the light of terms of headings or relative Sec-
tion or Chapter Notes. This Court held that plastic torches
were not articles made of plastic. Articles made of plastic
meant articles made wholly of the commodity commercially
known as plastic and not articles made from plastic and
other materials. In the instant case the Tariff Schedule
contains rules for its interpretation which require that
"for legal purposes classification shall be determined
according to the terms of the headings and any relative Sec-
tion or Chapter Notes......... The Notes relative to Chapter
39 state that Heading 39.22 for the earlier period applies
to conveyor belts. For the earlier period Tariff Heading
39.26 must, therefore, be read as applicable to the
appellants conveyor belts. For the later period, the
Explanatory Note to Tariff Heading 39.26 in the Harmonised
Coding System, which is identical to Tariff Heading 39.26 of
the Tariff Schedule, must be taken to be a guide, for the
Tariff Schedule is based upon the Harmonised Coding System.
That apart, we are unable to uphold the Tribunal’s finding
that the belting made by the appellants is a "strip". An
article which is over 100 metres but only upto 1200
millimeters in width cannot be described as a "strip".
Tariff Entries 39.20.11 and 39.20.12 cannot, there-
393
fore, be made applicable to the belting made by the
appellants. For the later period, Tariff Heading 39.26 must
be read as applicable to it.
16. The appeals, therefore, succeed. The judgment and
order under appeal is set aside. The respondents are
directed to classify the appellants’ conveyor beltS under
Tariff Heading 39.22.90 for the period December 1986 to 9th
February 1987 and under Tariff Heading 39.26.90 for the pe-
riod 10th February 1987 to June 1987.
17. The respondents shall pay to the appellants the costs
of the appeals.
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