1998(08)LCX0154
IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS
S/Shri S.L. Peeran, Member (J) and V.K. Ashtana, Member (T)
TRITON SYNTHETIC FIBRES (P) LTD.
Versus
COMMISSIONER OF C. EX., BANGALORE
Final Order Nos. 1697 to 1699/98, dated 25-8-1998 in Appeal No. E/SB/5369-71/98
Cases Quoted
Collector v. Modern Roofings Ltd. — 1989(08)LCX0014 Eq 1990 (045) ELT 0174 (Tribunal) — Followed [Paras 1, 6]
Bhor Industries Ltd. v. Collector — 1996(05)LCX0131 Eq 1998 (100) ELT 0520 (Tribunal) — Relied on [Paras 2, 8]
CBEC Circular No. 161/72/95-CX, dated 13-12-1995 — Referred [Para 7]
Advocated By : Shri T.R. Sastry, Advocate, for the Appellant.
Shri S. Kannan, JDR, for the Respondent.
[Order per : S.L. Peeran, Member (J)]. - These appeals arise from Order-in-Appeal No. 94/94, dated 20-4-1994 passed by Collector (Appeals), Bangalore upholding the classification of the products, man-made fabrics coated with P.U. foam and cotton fabrics coated with P.U. foam under chapter sub-heading 3921.11 of the C.E.T. Act as against the classification claimed under chapter sub-headings 5903.29 and 5903.19 in the classification list No. 1/92-93 with effect from 1-3-1992 and 2/92-93 and with effect from 1-4-1992 respectively by the appellants. The Assistant Collector also ordered for recovery of the differential duty for the period shown in the show cause notice dated 28-1-1993 and 30-6-1993 duly quantifying the duty at effective rates under Notification No. 54/88, dated 1-3-1988 and other relevant notifications. The lamination of the P.U. foam sheet is on the wrong side (bottom side of the fabrics). Therefore, it was contended that as per Note 2 of Chapter 59, Heading 59.03 applies to all textile fabrics laminated with plastics whatever the weight per sq.meter and whatever the nature of the plastic material and in their products (1) the textile fabric which is predominant and costly is used which comes on top as a material meant for use and (2) the weight of the fabric is more than the weight of the P.U. foam sheet and (3) the use is as a fabric and not as a plastic (PU Foam Sheet). The further contention is that these are textile fabrics laminated with plastic and not plastic laminated with textile fabrics. It was their contention that the primary function of the product is the criteria of classification in terms of the ruling rendered in the case of C.C.E. v. Modern Roofings Ltd. as reported in 1990 (045) ELT 174. It was also contended that the items do not come in Clause-5 of exclusion clause of Note 2(a) to Heading 59.03 which refers to plates, sheets or strips of cellular plastics combined with textile fabric where the fabric is present merely for reinforcing purposes. Clause-5 of Note 2(a) of Heading 59.03 excludes such goods from Chapter 59 and brings within Chapter 39 and the present goods do not fall within that exclusion clause for classification under Chapter 39 as the predominance is not plastics and where the textile fabric is present merely for reinforcing purposes. It their case that the present items viz. plastic form sheets acts as a reinforcing of textile and therefore it falls within Note 2(a) to Heading 5903 which refers to textile fabric impregnated, coated, covered or laminated with plastics whatever the weight per square metre and whatever the nature of the plastic material (compact or circular) being the condition that classification is under 59.03. It is further argued that note to Chapter 39 also excludes from its ambit of articles of Section XI “textile and textile articles”. Therefore appropriate classification is only under Chapter 59 and not under Chapter 39. It is also contended that the chemical examiner by his report cannot suggest classification and he has to merely express his opinion on the test results, which is a well known law. The appellants also relied on large number of certificates issued by users and also notification issued on sales to suggest that it is sold as polyeanated fabrics for the purpose of using it as “uppers” for the manufacture of shoes. They also relied on the classification of similar products under Chapter 59 in respect of other manufacturers.
2. Appellants also relied on Board’s Circular No. 161/72/95-CX, dated 13-12-1995 which refers to the classification of PVC leather cloth or rexine cloth for classification under Chapter 59.03. Reliance was also placed on HSN notes and also the judgment rendered in the case of Bhor Industries Ltd. v. C.C.E. & Customs as reported in 1996(05)LCX0131 Eq 1998 (100) ELT 0520 (Tribunal).
3. They also relied on explanatory notes of HSN under Chapter 59.03 which also clarifies that textile fabrics which have been impregnated, coated, covered or laminated with plastics (e.g. polyvinyl chloride) would be covered under this heading. The HSN also states that such products are classified under this heading whatever their weight per m2 and whatever the nature of the plastic component (compact or cellular), provided
(1) That, in the case of impregnated, coated or covered fabrics, the impregnation, coating or covering can be seen with the naked eye otherwise than by a resulting change in colour.
Textile fabrics in which the impregnation, coating or covering cannot be seen with the naked eye or can be seen only by reason of a resulting change in colour usually fall in Chapters 50 to 55, 58 or 60. Examples of such fabrics are those impregnated with substances designed solely to render them crease-proof, moth-proof, unshrinkable or waterproof (e.g., waterproof gabardines and poplins). Textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapters 50 to 55, 58 or 60.
(2) That the products are not rigid, i.e., they can, without fracturing, be bent manually around a cylinder of a diameter of 7mm, at a temperature between 15oC and 30oC.
(3) That the textile fabric is not completely embedded in, nor coated or covered on both sides with plastics.
Products not meeting the requirements of sub-paragraph (2) or (3) above usually fall in Chapter 39. However, textile fabric coated or covered on both sides with plastics where the coating or covering cannot be seen with the naked eye, or can be seen only by reason of a resulting change in colour, usually falls in Chapters 50 to 55, 58 or 60. Textile fabrics combined with plates, sheets or strip of cellular plastics, where the textile fabric is present merely for reinforcing purposes, are also classified in Chapter 39.
The laminated fabrics of this heading should not be confused with fabrics which are simply assembled in layers by means of a plastic adhesive. These fabrics, which have no plastics showing in cross-section, generally fall in Chapters 50 to 55.
In many of the textile fabrics classified here, the plastic material, usually coloured, forms a surface layer which may be smooth or be embossed to simulate, e.g., the grain of leather (“leather cloth”).
This heading also covers dipped fabrics (other than those of Heading 59.02), impregnated to improve their adhesion to rubber, and textile fabrics which are spattered by spraying with visible particles of themoplastic material and are capable of providing a bond to other fabrics or materials on the application of heat and pressure.
This heading also includes textile fabrics made from yarn, strip or the like, impregnated, coated, covered or sheathed with plastics, of Heading 56.04.
The fabrics of this heading are used for a variety of purposes including furnishing materials, the manufacture of handbags and travel goods, garments, slippers, toys, etc., in book binding, as adhesive tapes, in the manufacture of electrical equipment, etc.
The heading also excludes :
(a) Quilted textile products of Heading 58.11.
(b) Textile fabrics coated or covered with plastics for use as floor coverings (Heading 59.04).
(c) Textile fabrics, impregnated or coated, having the character of wall coverings (Heading 59.05).
(d) Textile fabrics impregnated, coated, covered or laminated with plastics made up as described in Part (II) of the General Explanatory Note to Section XI.
It was stated that in terms of above HSN notes, fabric is not completely embedded in and not covered on both sides of plastics and also it is only covered on one side and the classification has to be only under Chapter 59 and not under Chapter 39 which is inappropriate classification. It was stated that Chapter 3921.11 deals with “other plates, sheets, film, foil and strip, of plastics .... of polyurethanes” which is inappropriate. It is stated that when two headings cover the item ...., then the last heading has to be preferred in terms of Rule 3C of Rules for interpretation of schedule to the tariff.
4. We have heard Shri T.R. Shastry, learned advocate for the appellants and Shri S. Kannan, learned JDR for the Revenue.
5. Learned advocate reiterated the grounds urged above and which have been in the appeal memo. Learned SDR reiterated the findings given by the Collector (Appeals).
6. On careful consideration of the submissions, we are of the considered opinion that the items in issue are covered by tariff sub-headings 5903.29 and 5903.19 of CETA, 1985. Heading 59.03 refers to “textile fabrics impregnated, coated, covered or laminated with plastics, other than those of Heading No. 59.02.” The articles of base fabrics of cotton which are coated or laminated with preparation of low density polyethylene are covered under Chapter 5903.11 and “others” are covered under Heading 5903.19, whereas articles of base fabrics of man-made textile materials-coated or laminated with preparations of low density polyethylene are covered under sub-heading 5903.21 and “others” under 5903.29. We notice from the samples displayed that the functional character of the article in issue is that of fabric as the same is used in the manufacture of “shoe uppers”. The PU foam sheets acts as only cushion to the textile and it is laminated on the bottom side and the textile fabric to give cushioning effect. On examining the samples, we notice that it is textile fabric which is predominant in nature and having functional character of the articles. In terms of the judgment rendered in C.C.E. v. Modern Roofings Ltd., the classification has to be done. With regard to functional character of the article, the Tribunal in Para 13.4 has held that the test commonly applied in such cases is how the product identified by a class or section of people dealing with or using the product. The tribunal has answered, that is a test which is attracted whenever statute does not contain any definition. It was held that it is generally by its functional character, the product is identified. It was further held that it is a matter of common experience that the identity of an article is associated with its primary function. It is observed that it is only logical that it should be so. Further, it has been held that when a consumer buys an article, he buys it because it performs a specific function for him. There is mainly an association in the mind of a consumer between the article and the need it supplies in his life. Therefore, the tribunal concluded that it is the functional character of the article which identifies it in the mind. This judgment is applicable to the facts of this case in so far as to examine the functional character of the article being that of textile and not that of plastics. Chapter Note 2 of Chapter 59 also clarifies that Heading 59.03 applies to textile fabric impregnated, coated, covered or laminated with plastics, whatever the weight per sq.mtr and whatever the nature of the plastic material (compact or cellular). We notice that this chapter excludes plates, sheets or strip of cellular rubber, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes. In the present case, the situation is otherwise in as much as the plastic is acting as a cushion and to reinforce textiles and therefore textile fabric also in the present case is impregnated on the plastics and hence, in terms of Note 2(a) of Chapter 59, the articles clearly fall under 59 and Note 2(a)(5) excludes it for classification under Chapter 39. Even Chapter Note 2K of Chapter 39 excludes articles of Section XI (textile and textile articles), Note 1 of Chapter 39 also states that throughout this schedule, any reference to `plastics’ also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI.
7. Reading of explanatory notes under Chapter 59.03 clearly indicates that the item in question falls under Chapter 59. In terms of Ruling 3C of rules for the interpretation of the schedule, the goods cannot be classified by reference to A or B, then they shall be classified under the heading which occurs loss in the numerical order in such case which merits equivalent consideration. Therefore, even by going by the rules of interpretation, we have to prefer Chapter 59. Further, we notice that the CBEC by its Circular No. 161/72/95-CX, dated 13-12-1995 considered the classification of PVC leather cloth or rexine cloth and the aspect pertaining to the classification coming under Chapter 59.03 was discussed and held that such an article would fall only under Chapter 59. The circular is reproduced herein below :-
Classification — PVC leather cloth or rexine cloth classifiable under 59.03
Circular No. 161/72/95-CX
dated 13-12-1995
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, New Delhi
Subject : CE - Classification of PVC leather cloth or rexine cloth - Clarification regarding
I am directed to say that doubts have been expressed regarding correct classification of PVC leather cloth also known as Rexine Cloth as to whether it will fall under Heading No. 39.21 or 59.03 of the Central Excise Tariff. Attention has been drawn to Section Note 1(d) of Section XI of Central Excise Tariff, Chapter Note 2(a)(5) of Chapter 59 and Chapter Note 2(k) of Chapter 39.
2. The process of manufacture of PVC leather cloth involves coating of a paste of plastic material (PVC) on one side of the base fabric. In this case the plastic is not combined with the textile but is coated on textile fabric to form final product. Textile fabrics does not act as reinforcing material. Such fabrics are used for upholstery and can take sharp bends without cracking.
3. As per Chapter Note 2(a) of Chapter 59 of the Central Excise Tariff, Heading 59.03 applies to Textile fabric, impregnated, coated, covered or laminated with plastics, whatever the weight per sq. mtr. and whatever the nature of plastic materials other than the following :-
(i) ....................
(ii) Products which cannot, without fracturing be bent manually around a cylinder of a diameter of 7 mm at a temperature between 15 degree C and 30 degree C (usually Chapter 39).
(iii) Products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material .... (Chapter 39).
(iv) ...................
(v) Plates, Sheets or strips of Cellular Plastics, combined with textile fabrics where textile material is present merely for reinforcing purpose (Chapter 39).
4. Since these fabrics can take sharp bends without cracking, they cannot be included in Clause (ii) above. The coating is done on one side only and fabric is not completely embedded in plastic material and, therefore, it is not covered by Clause (iii) above. In Rexine Cloth, plastic material is coated on a fabric base. Fabric does not act as a reinforcing material and therefore Rexine Cloth is not covered by Clause (v). Therefore, classification of PVC coated fabric, which is trade parlance, is known as leather cloth (and popularly known as rexine cloth), under Heading 59.03 is not hit by the exclusions under Chapter Note 2(a) of Chapter 59 of the Central Excise Tariff.
5. Section Note 1(d) of Section XI excludes fabrics impregnated, coated or laminated with plastics of Chapter 39 from the purview of Section XI. Similarly Chapter Note 2(k) under Chapter 39 of the CET excludes Textiles and Textile materials from purview of Chapter 39. Both these notes read in conjunction do not provide any basis for rejecting classification of Rexine Cloth either under Chapter 39 or under Textile and Textile Articles.
6. HSN contains expanded meaning of items covered under Heading 39.21. It covers plates, sheets, film, foil and strip of cellular plastics or those which have been reinforced, laminated, supported or similarly combined. Rexine cloth does not meet any of the criterion and does not appear to be covered by Heading 39.21.
7. In contrast, the detailed notes on Page 816 of the HSN Explanatory Notes clearly amplify that leather cloth is covered by Heading 59.03. The relevant extracts are :-
“In many of the textile fabrics classified here, the plastic material usually coloured, forms a surface layer which may be smooth or be embossed to simulate, e.g. the grain of leather (`leather cloth’)”.
“The fabrics of this heading are used for a variety of purposes including furnishing materials, the manufacture of handbags and travel goods, garments, slippers, toys etc. in book binding, as adhesive tapes in the manufacture of electrical equipment etc.”
8. The Board has also taken note of the decision of the Tariff Conference of Commissioners of Customs held at Madras in the year 1990. The Conference had decided that normally the PVC leather cloth is not made of textiles and plastic material in combination and the plastic material is impregnated or coated on the fabric and they are not hit by Chapter Note 2(5) to Chapter 59 and are correctly classifiable under Heading 59.03 of the Customs Tariff Act, 1975.
9. The Board has also taken note of the decision of the Supreme Court in the case of M/s. Fenoplast (P) Ltd., reported in 1994(06)LCX0055 Eq 1994 (072) ELT 0513 (S.C.) wherein the Supreme Court has ordered the classification of coated cotton fabrics (popularly known as rexine cloth) under item 19-III of the erstwhile Central Excise Tariff which corresponds to Heading 59.03 of the new Central Excise Tariff Act, 1985.
10. Therefore, keeping in view the Chapter Notes HSN Notes, the decision of the Conference of Commissioners held at Madras and the judgment of the Supreme Court it is clarified that PVC leather cloth also known as rexine cloth will be appropriately classifiable under Heading No. 59.03 of the Central Excise Tariff Act, 1985.
11. Trade and Field formations may be advised accordingly.
12. All pending disputes/assessments may be finalised in view of the above guidelines.
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| Sd/- (Rajiv Bhatia) Under Secretary to the Government of India |
8. In the case of Bhor Industries, the Tribunal held that PVC leather cloth to be classifiable only under Chapter Heading 59.03 and not under sub-heading 3921.11. We notice that both the circular and this judgment have relevance to the classification of the product in issue. We notice that the articles is also having functional character of use only as show uppers and it is that textile which satisfy the textile fabric. PU form only acts as a cushion on the bottom side. Therefore, in the overall facts and circumstanes of the case, and even taking into consideration the manner in which the item is known in market we have accepted the plea of appellants for classification only under Chapter 59. The article is known as plates, sheets, film, foil and strip, of plastics falling under Chapter 39 and department does not produced any evidence to show that the item is only plates, sheets, film, foil and strip of plastics for classifying under Chapter Heading 39.21 and therefore the classification allowed requires to be rejected.
9. Further, we observe that Chemical Examiner has expressed his opinion on classification which cannot be accepted as the Chemical Examiner is only to state this expert opinion and not to suggest the classification under any particular heading. Therefore, in the overall facts and circumstances of the case, we are of the considered opinion that the items in issue are rightly classifiable only under Chapter Heading 59.03 and in the respective sub-headings as claimed by appellants. In that view of the matter, the impugned order is set aside and the appeals are allowed.
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Equivalent 1999 (106) ELT 557 (Tribunal)