2011(07)LCX0142

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri M.V. Ravindran, Member (J) and Sahab Singh, Member (T)

Commissioner of Customs (I), Mumbai

Versus

Procter & Gamble Hygine & Healthcare Ltd.

Final Order Nos. A/302-303/2011-WZB/C-I(CSTB), dated 5-7-2011 in Appeal No. C/750/2004-Mum and Cross Objection No. C/CO-648/2004-Mum

Advocated By -

Shri S.S. Katiyar, SDR, for the Appellant.
Shri V. Laksmikumaran, Advocate, for the Respondent.

[Order per : Sahab Singh, Member (T)]. -

When this matter was called out, we find that the assessee has filed a cross-objection numbered as C/CO 648/04-Mum. The Ld. counsel submits that they are supporting the impugned order and there is no portion of the impugned order is aggrieved by the assessee and in view of this, the appeal filed by the Revenue is to be dismissed.


2. This is an appeal filed by the department against the captioned Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai.


3. M/s. Procter & Gamble Hygiene & Health Care Ltd. (respondent in this case) filed Bills of Entry No. 345875 dated 3-4-2003 and 346588 dated 4-4-2003 in respect of imported goods declared as "Wood Pulp Composite Core" and "Wood Pulp Composite for STS" respectively classifying both the items under CTH 4703 29 00. Samples of both the items were drawn and sent to the Chemical Examiner for analysis. It was found by the DYCC office that the goods are "Composite absorbent material composed of cellulosic material (pulp) bonded/treated with polymeric absorbing material and additives with pre-made laminate of non-wovens". The DYCC office was further asked to give the expert comments on the samples tested by them. DYCC office further reported, "the test findings indicate the product to be composed of wood pulp bonded/treated with binder and polymeric absorbing compound and a pre-made laminate is inserted into it with a specific purpose (to give strength). The laminate is made of non-woven polyethylene material. Thus, a composite absorbent material with a specific use, has been made. It (Absorbent Gelling Material) being a super absorbent material has the property to imbide at least 20 times of its own weight of aquous fluid, whereas, wood pulp has a limited absorbing capacity." On the basis of the test report, the department felt that the product in question was more akin to heading under CTH 4818 90 90. The importer waived the show-cause notice and the Asstt. Commissioner adjudicated the case classifying the product under CTH 4818 90 90. The importer filed an appeal before the Commissioner of Customs (Appeals) who vide Order-in-Appeal No. 181/2004 MCH dated 13-5-2004 allowed the appeal of the importer classifying the goods in question under Chapter 47 of the Customs Act.


4. The Ld. SDR appearing on behalf of the Revenue, at the outset, stated that the order passed by the Commissioner of Customs (Appeals) is not proper and the Commissioner (Appeals) has erred in allowing the appeal of the importer and setting aside the order of adjudicating authority. He stated that under Rule 3(a) of the General Rules for the Interpretation to the Schedule to Customs Tariff, the heading which provides the most specific description shall be preferred to heading providing more general description. In the instant case, the adjudicating authority has rightly held that CTH 4818 which reads as "Cellulose wadding or webs of cellulose fibres, of a kind used for sanitary purposes, in rolls of a width not exceeding 36 cm or cut to size or shape" applies more specifically in respect of the item under dispute rather than the description of CTH 4703 which reads as "Chemical wood pulp, soda or sulphate, other than dissolving grades". Therefore, Chapter 48 provides the more specific description of the goods. He further submitted that from the expert opinion received from the DYCC after testing the samples of the imported goods, it is clear that the nature and characteristics of the items declared in the Bill of Entry are not in conformity with the description of the CTH 4703 as claimed by the importer but rather more akin to heading under Chapter 4818 90 90. He relied on the explanatory note to HSN under Chapter Heading 4703 which indicates "pulps are used in the manufacture of absorbent products (such as fluffing and napkins for babies) as well as for papers and paper boards requiring high tearing resistance and tensile bursting strength". From this note, it is evident that wood pulp which has already been subjected to processes so as to enhance its absorbing capacity, need not essentially be classifiable under CTH 4703. The relevant explanatory notes to HSN explains that pulp are used in the manufacture of absorbent products such as napkins and also it has been opined by DYCC that it being a super absorbent material has the property to imbide at least 20 times its own weight of aquous fluid, whereas, the wood pulp has a limited absorbing capacity. Similarly, the certificate issued by UDCT, Matunga, Mumbai also indicates that the product under reference "Airlaid Core" contains cellulose or pulp 68%, synthetic bicom-ponent fibres 11%, AGM powder 17%, latex binder 4%, whereas, Airland STS contains cellulose or pulp 47%, PE powder 27%, latex binder 4%, NWPF 22%. From this report it is clear that the goods under reference is not chemical wood pulp but have been treated with various chemicals, including binder for use in sanitary napkin. Therefore, the goods should not be classifiable under Chapter 47 of the Customs Act. He further explained that the Explanatory Note to Chapter 48 of HSN reads "For the purposes of Headings No. 48.12, 48.18, 48.22 and 48.23 and the explanatory notes, the term "paper pulp" means all the products of Heading 4701 to 4706, that is to say pulp of wood or of other fibrous cellulosic material". This supports the department's contention that the products of chemical wood pulp, like the goods in question can be treated as an article made of paper pulp and should be classifiable under Chapter 4818 of Customs Act. He further disputed that the samples tested by IIT, Roorkee were not drawn from the consignment under dispute. Therefore, this report should not be accepted. He further contended that letter dated 10-9-2003 from IIT, Roorkee submitted by the party to the Commissioner (Appeals) stating that import sample is not creped was also not submitted at the time of adjudication. The said letter is out of context and cannot be relied upon. He, therefore, requested that the order passed by the Commissioner (Appeals) be set aside and the order-in-original be restored.


5. Shri V. Lakshmikumaran, advocate appeared on behalf of the re-spondent. He stated that they have imported Airlaid materials - wood pulp composite core and wood pulp composite for STS. These goods are nothing by wood pulp obtained by sulphate process. The goods have been imported from M/s. BBA (China) Air laid Company Ltd. The manufacturing process-adopted by the exporter is known as 'sulphate process'. He submitted that there is evidence on record before the original authority and the Commissioner (Appeals) that shows that air laid material imported by the respondent is nothing but wood pulp. He especially relied on the following evidences :-

(a) Opinion dated 28-5-03 given by IIT, Roorkee;

(b) Opinion dated 27-3-03 given by the Department of Fibres and Textile Processing Technology, University of Mumbai.


6. He submitted that the contention of the department that goods in question are classifiable under Heading 4818 is not correct. He submitted that the airlaid material imported by them is used by them as principal raw material in the manufacture of sanitary napkin. A perusal of CTH 4818 and HSN explanatory notes to CTH 48 18 clearly shows that CTH 4818 applies only to cover products which are ready to use as such. Air laid material imported by them cannot be used as sanitary napkin. It is used as raw material for the manufacture of excisable goods (sanitary napkins) falling under Heading 48.18 of Central Excise Tariff. Therefore, the department's contention classifying the goods under heading 4818 is not legally correct. He drew our attention to Heading 4803 of the HSN Explanatory Notes which described Cellulose Wadding or webs of Cellulose fibres as under:

"Cellulose wadding consists of a creped web of cellulose fibres of open formation, with a crepe ratio of more than 35% comprising one or more plies, with each ply having a grammage (basis weight) that may reach 20 g/m2 before creping."

A perusal of the above notes given in the HSN Explanatory Notes clearly shows that Cellulose Wadding consists of creped web of cellulose fibres. Similarly, webs of cellulose fibres consist of a creped web of cellulose fibres of closed formation. In the present case, the imported air laid products are not creped web of cellulose fibres. No creping of the fibre was undertaken while manufacturing air laid product by the Chinese Exporter as the imported product would not fall within the definition of 'cullulose fibre' given in the HSN Explanatory Note. He submitted that imported air laid material is wood pulp obtained by sulphate process and hence classifiable under heading 4703 and Commissioner (Appeals) has rightly classified the product under CTH 4703. He requested that the departmental appeal should be rejected.


7. After hearing both sides and going through the appeal papers, we find that the issue involved is regarding classification of the imported goods i.e. wood pulp composite core and wood pulp composite for STS. The Revenue contends that the goods in question are classifiable under Heading 48 of Customs Tariff, whereas, the respondent claimed the classification under Chapter 47 of the Customs Tariff. For the sake of convenience, we refer to HSN Explanatory Note and respective Headings in Explanatory Note in respect of 4703 and 4818 which are reproduced below :-

"47.03 - CHEMICAL WOOD PULP, SODA OR SULPHATE, OTHER THAN DISSOLVING GRADES.

Unbleached: 4703.11 - Coniferous 4703.19 -- Non-coniferous

Semi-bleached or bleached:

4703.21 - Coniferous

4703.29 - Non-Coniferous

Soda or sulphate pulps are produced by boiling the wood, usually in chipped form, in strongly alkaline solutions. For soda pulp the cooking liquor is a solution of sodium hydroxide; for sulphate pulp a modified sodium hydroxide solution is employed. The term "sulphate" came to be applied because sodium sulphate, part of which is converted into sodium sulphide, is used at a stage in the preparation of the cooking liquor. Sulphate pulp is by far the more important.

Pulps from these processes are used in the manufacture of absorbent products (such as fluffing and napkins for babies) as well as for papers and pa-perboards requiring high tearing resistance and tensile and bursting strength."

"48.18 TOILET PAPER AND SIMILAR PAPER, CELLULOSE WADDING OR WEBS OF CELLULOSE FIBRES, OF A KIND USED FOR HOUSEHOLD OR SANITARY PURPOSES, IN ROLLS OF A WIDTH NOT EXCEEDING 36cm, OR CUT TO SIZE OR SHAPE; HANDKERCHIEFS, CLEANSING TISSUES, TOWELS, TABLECLOTHS, SERVIETTES, NAPKINS FOR BABIES, TAMPONS, BED SHEETS AND SIMILAR HOUSEHOLD, SANITARY OR HOSPITAL ARTICLES, ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, OF PAPER PULP, PAPER, CELLULOSE WADDING OR WEBS OF CELLULOSE FIBRES.

This heading covers toilet paper and similar paper, cellulose wadding and webs of cellulose fibres, of a kind used for household or sanitary purposes :

(1) in strips or rolls of a width not exceeding 36 cm;

(2) in rectangular (including square) sheets of which no side exceeds 36 cm in the unfolded state;

(3) cut to shape other than rectangular (including square).

It also covers household, sanitary or hospital articles, as well as articles of apparel and clothing accessories, of paper pulp, paper, cellulose wadding or webs of cellulose fibres.

The goods of this heading are often made from the materials of heading 48.03."

7. The original authority while relying upon the report of DYCC and the certificate issued by UDCT, Matunga, Mumbai has held that the goods in question are not chemical wood pulp but it has been treated with various chemicals including binder for use in sanitary napkin. It was concluded by the original authority that the goods under reference are different from chemical wood pulp and, therefore, not classifiable under CTH 4703. The original authority held that products of chemical wood pulp, like the articles under examination, can be treated as an article made of paper pulp and, therefore, classifiable under CTH 4818 rejecting the contention of the importer that goods under reference are classifiable under CTH 4703. It was further observed by the adjudicating authority that the goods under reference are used in the manufacture of sanitary articles which means that the goods are not in ready to use condition.


5. On going through the HSN Note under Chapter 4703, we find that soda or sulphate pulps are produced by boiling the wood, usually in chipped form, in strongly alkaline solutions. The importer in this case claimed that their goods have been manufactured by sulphate process by the exporter. Therefore, their goods are sulphate pulps. Further, it is mentioned in the HSN note that pulps from this process are used in the manufacture of absorbent products such as fluffing and napkins for babies. Therefore, these goods falling under CTH 4703 are further processed to be used in the manufacture of absorbent products whereas in the Explanatory Note to CTH 4818, we find that this heading covers toilet paper and similar paper, cellulose wadding or webs of cellulose fibres, of a kind used for household or sanitary purposes. The goods falling under CTH 4818 are ready to direct use for household or sanitary purposes without any further manufacturing activity. There is no doubt that the goods imported by the respondent are further processed and subjected to the process by the importer in their factory and the final product sanitary napkins is manufactured by the importer. This fact is not denied by the Revenue. The goods imported, therefore, cannot be treated as finished product in ready to use condition but it can be treated as raw material only for the purpose of further manufacturing of sanitary napkins. In the scheme of classification, Chapter 47 basically covers raw materials whereas Chapter 48 covers the products of Chapter 47. The goods in question being raw material for the products of Chapter 48 will be appropriately classifiable under Chapter 47 only. Therefore, we are of the view that the goods imported by the respondents are classifiable under CTH 4703.


9. Revenue further contents that samples sent to IIT Roorkee were not drawn from consignments under dispute. It is found that Report dated 20-5-2003 from IIT Roorkee find place in Order-in-Original and the adjudicating authority did not raise this objection in the Order-in-Original. Second contention of Revenue is that Report dated 10-9-2003 from IIT Roorkee, which was placed before Commissioner (Appeals) by the respondent, was not before the original authority. We find that the Commissioner (Appeals) has no option but to pass final orders as under law he has no power to remand the matter to original authority.


10 We, therefore, are of the view that the classification of the goods would be under CTH 4703. We, therefore, uphold the order passed by the Commissioner (Appeals) and dismiss the appeal of the department.


11. Appeal is dismissed.


12. Accordingly, cross objection also stands disposed of.

Equivalent 2011 (274) ELT 0284 (Tri. - Mumbai)