Holding

The appellant's conveyor belting must be classified under Tariff Heading 39.22.90 for the period Dec 1986‑9 Feb 1987 and under Tariff Heading 39.26.90 for the period 10 Feb 1987‑June 1987.

Summary

Fenner (India) Ltd. manufactured PVC‑impregnated conveyor belting of lengths 100‑400 m, widths 600‑1200 mm and thickness 7‑9.5 mm. The Central Excise authorities classified the belting under Tariff Heading 39.20 (plates, sheets, film, foil and strip) as a "strip", while the appellants argued that it should fall under Heading 39.22 for the period 28 Feb 1986‑9 Feb 1987 and under Heading 39.26 thereafter, both of which expressly include conveyor belts. The Tribunal relied on dictionary meanings and the Geep Flashlight case to uphold the "strip" classification. The Supreme Court held that classification must follow the tariff headings and Chapter Note 11, which designate Heading 39.22 for conveyor belts in the earlier period and the Explanatory Note to Heading 39.26 for the later period, rejecting the "strip" label as inappropriate. It also barred the Excise authorities from shifting to Heading 59.08 after earlier statements. Consequently, the Court ordered the belting to be classified under 39.22.90 for Dec 1986‑9 Feb 1987 and under 39.26.90 for 10 Feb 1987‑June 1987, and allowed the appeal.

Issues considered

The correct Central Excise tariff heading for PVC‑impregnated conveyor belting (whether 39.20 "strip" or 39.22/39.26 "conveyor belt").
Interpretation of the Central Excise Tariff Act, 1985 rules and Chapter Note 11 in determining classification.
The relevance of the Explanatory Note to the Harmonised Coding System for post‑amendment headings.
Whether the Excise authorities may alter their classification argument to Heading 59.08 after earlier positions.
The weight of dictionary meanings versus statutory heading notes in tariff classification.

Legislation cited

Central Excise Tariff Act, 1985s. Rule 1, s. Rule 2(a), s. Rule 3, s. Rule 4

Subjects

central excisetariff classificationconveyor beltheading 39.20heading 39.22heading 39.26harmonised coding systemstripexcise duty

Judgment

FENNER (INDIA) LTD. A
v.
COLLECTOR OF CENTRAL EXCISE, MADURAI

MARCH 28, 1995

[A.M. AHMADI, CJ., S.P. BHARUCHA AND B
K.S. PARIPOORNAN, JJ.]

, Central Excise Tariff Ac4 1985-Tariff Schedflle- lnterpretation-Chap-
ter Notei-£xplanatory Note of identical Heading in Harmonised Coding Sys-
te~levance of

Central Excise Tariff Ac4 1985-Tariff Schedule-Headings 39.20 and
C.

39.2~/assijication of conveyor belting.

The appellants manufactured PVC Impregnated cotton conveyor
belting and PVC Impregnated Dame resistant colllery conveyor belting. The D
length of the belting manufactured by the appellants varied from 100
metres to 400 metres, the width varied from 600 mllllmetres to 1200
milll!"etres and the thickness from 7 millimetres to 9.5 millimetres.

From 28.2J986 to 9.2.1987 'other plates, sheets, Olm, foll and E
strip ....... ' were classlfted under tariff Heading 39.20. 'Other. articles of
plastics and articles or materials or heading Nos. 39.01 to 39.14' were
classified under Heading No ..39.22. Note ll(K) In Chapter 39 stated that
heading_ No. 39.22 applied to 'transmission, conveyor or elevatOr belts ......".

After 10.2.1987, Tariff Heading 39.22 became Tariff Heading 39.26 F
and Note ll(k) was omitted. However, Explanatory Note to Heading 39.26
In the Harmonised Coding System covered' articles, not elsewhere
specified or Included, of plastic...... or of other materials of headings 39.01
to 39.14' and Included 'transmission, conveyor or elevator belts .......".

The excise authorities contended that the products ~f the appellants - G
were classifiable under Heading 39.20 whereas the appellants contended.
that the products were classifiable, prior to 10.2.1987, under Heading
39.22, and under Heading 39.26 on and after 10.2.1987. The Customs,
Excise and Gold (Control) Appellate Tribunal held that the products were
'strip' and therefore, classifiable under Heading 39.20 relying upon the H
1
2 SUPREME COURT REPORTS (1995) 3 S.C.R.

A meaning of "strip" as given in concise Oxford Dictionary.
Hence, the present appeal.

Allowing the appeal, this Court

HELD : 1. In the instant case the Tariff Schedule contains rules for
B
its interpretation which require that "for legal purposes classification shall
be d•termined according to the terms of the headings and any relative
Section or Chapter Notes .... ". The Notes relative to Chapter 39 ~tate that
Heading 39.22 for the period 28.2.1986 to 9.2.1987 applies to conveyor belts.
For this period Tariff Heading 39.22 must, therefore, be read as applicable
C to the appellant's conveyor belts. For the period starting from 10.2.1987,
the Explanatory Note to Tariff Heading 39.26 in the Harmonised Coding
System, which is identifical 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. [7·F·G]
D Geep Flashlight Industries Ltd. v. Union of India and Ors., (1985-22E)
L.T. 3, distinguished.

Dictionary of Mechanical Engineering, 3rd Ed,referred to.

E 2. An article which is over 100 metres but only upto UOO millimetres
in width cannot be described as a "strip". Tariff Entries 39.20.11 and
39.20.12 cannot, therefore, be made applicable to the belting made by the
<1ppellants. [7-H]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4600 of
F 1989.

With r

(C.A. No. 4421 of 1989)

G From the Judgment and Order dated 14.9.89 of the Customs, Excise
and Gold (Control) Appellate Tribunal, New Delhi in Order No. 526 of
1989-C).

Lakshmi Kumaran, V. Balachandran, R. N. Banerjee, R.N. Karan-
jawala, P.K Muilick and Bhaskar Pradhan for Mrs. M. Karanjawala for the
H Appellants.
'
FENNERLTD.v. C.C.E.[BHARUCHA,J.] 3

M. Gouri Shankar Murthy, P. Narsimhan and V. K. Verma for the A
Respondents.

The Judgment of the Court was delivered by

BHARUCHA, J. These appeals impugn the order dated 14th Septem-
ber, 1989, passed by the Customs, Excise and Gold (Control) Appellate B
Tribunal dismissing the appeals filed before it by the two appellants. Each
of the two appellants manufactures PVC impregna~ed cotton conveyor
belting and PVC impregnated flame resistant colliery conveyor belting. The
appellants contended before the tribunal that their products were classifi-
able under Tariff Entry 3922.90, whereas it was the case of the Excise
authorities that they were classifiable under Tariff Entries 3920.11 or C
3920.12, depending upon whether they were rigid or flexible strips. The
Tribunal upheld the contentions of the Excise authorities basing itself, in
the main, upon the dictionary meaning of 'strip" and upon the judgment of
this Court in Geep Flashlight Industries Ltd. v. Union of India and Ors.,
1985-22 E.L.T. 3.
D
We are concerned in these appeals for the period December 1986 to
June 1987.

With effect from 28th February 1986 and upto 9th February 1987,
Tariff Heading 39.20 (so far as is relevant) read thus :
E
39.20 Other plates, sheets, film, foil and strip, of plastics, non-cel-
lular, whether lacquered or metallised or laminated, sup-
ported or similarly combined with other materials or not

- Of Polymer of vinyl chloride :
F
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 :
G
39.22 Other articles of plastics and articles of materials of heading
Nos. 39.01 to 39.14

3922.10 - Articles of polyurethane foam 75%

3922.90 - Other 30% H
4 SUPREME COURT REPORTS [1995] 3 S.C.R.

A It is relevant to mention that the Central Excise Tariff Act, 1985,
itself contains rules for the interpretation of the tariff schedule. Rule 1
states, "The titles of Sections and Chapters are provided for ease of
reference only : for legal purposes, classification shall be determined
according to the terms of the headings and any relative Section or Chapter
B 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
unfmished goods have the essential character of the complete or finished
goods. Rule 3 states that when goods are prima facie classifiable under two
C 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
D 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, conveyor or
elevator belts, endless, or cut-to- length and joined end to end, or fitted
E with fasteners."

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
F heading Nos. 39.01 to 39.14

3926.10 - Of Polytirethane foam 60% plus
Rs. 40 per Kilogram

3926.90 - Other 30%
G
Note ll(K) was omitted, Reference was made by Mrs. V. Laxmi
Kumaran, learned counsel for the appellants, to the Customs Cooperation
Council publication of the Explanatory Notes to the Harmonized Com-
modity Description and Coding System which is adopted in the Tariff
H Schedule. The Explanatory Note with reference to Tariff Heading 39.26 of
FENNER LID. v. C.C.E. [BHARUCHA, J.] 5
· the Harmonised Coding System states that it covered "articles, not else- A
where 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
1
fasteners. '

The Tribunal observed from copies of the customers' orders placed B
before it by the appellants that the length of the belting in rolls varied from
100 metres to 400 metres, the width varied from 600 millimetres to 1200
millimetres and the thickness varied between 7mm and 9.5mm. 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 C
the Concise Oxford Dictionary. The name given to t.be product by the
appellants was "belt/beltiµg". Customers placed orders under this name.
But, according to the Tribunal, the beli/belting was covered by the general
dictionary meaning of "strip". The Tribunal found that the belting was not
exclusively an article of plastic and it noted that ·in the case of Geep n
Flashlight Industries Ltd. (ibid) this Court had observed that articles of
plastic did not mean articles made from plastic and other materials.

The Dictionary of Mechanical Engineering, Third Edition, published
by Butterworths defines belt, thus :
E
"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; link belting; open belt, etc."
F
(

Mr. V. Laxmi Kumaran laid stress on the Rules for the interpreta-
tion 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 G
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 H
6 SUPREME COURT REPORTS [1995] 3 S.C.R.

A stated that Tariff Heading 39.26 included conveyor 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.

B 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 impreg-
nated, 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
C appellants in the first appeal in their memorandum of appeal. He sub-
mitted that it was permissible for the Excise authorities to take this stand
because in the show cau•e 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
D in the first appeal.

It appears that a show cause notice dated 2nd September 1986 had
been issued by the Excise authorities to the appellant in the first appeal
proposing to classify its belting under Tariff Heading 59.08. The show cause
E notice was impugned in the writ petition filed in the Madras High Court.
The Madras High Court granted stay of further proceedings in pursuance
of the notice. Thereupon the show cause notice dated ll/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
F authorities stated on instructions that they would classify the belting under
)
Tariff entries 39.20.11 or 39.20.12, a revised 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
G 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
H not open to the Excise authorities to urge that the belting is classifiable
FENNER LTD. v. C.C.E. [BHARUCHA, J.] 7
., under Tariff Heading 59.08. A
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
B
belting of the appellant in the second appeal must be classified under Tariff
Heading 59.08.
; "
We have, therefore. declined to permit learned counsel for the Excise
authorities to advance any argument relative to Tariff Heading 59.08.
c
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.

The Tribunal's reliance upon the judgment of this Court in the case D
J ~,
of Geep Flashlight Industries Ltd. was, in our opinion, misplaced. The court
was there concerned with the interpretation of a tariff item read by itself.
It had not to be read. in the light of terms of headings or relative Section
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
E
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 classifica-
tion shall be determined according to the terms of the headings and any
' relative Section or Chapter Notes .......". The Notes relative to Chapter 39
state that Heading 39.22 for the earlier period applies to conveyor belts. F
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 Sys-
tem, which is identical to Tariff Heading 39.26 of the Tariff Schedule, must
a
be taken to be guide, for the Tariff Schedule is based upon the Har- G
J. monised 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 millimetres in width
cannot be described as a "strip". Tariff Entries 39.20.11 and 39.20.12
cannot, therefore, be made applicable to the belting made by the appel- H
8 SUPREME COURT REPORTS (1995] 3 S.C.R.

A !ants. For the later period, Tariff Heading 39.26 must be read as applicable
to it.

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
B 1986 to 9th February 1987 and under Tariff Heading 39.26.90 for the period
10th February 1987 to June 1987.

The respondents shall pay to the appellants the costs of the appeals.

B.K.M. Appeals allowed.