Holding

The Tribunal’s factual findings that the product is classifiable under Tariff Heading 39 are correct and binding, and the Supreme Court will not interfere.

Summary

Mis. Sharp Industries Ltd. manufactures aluminium foil laminated on one side with polyester film and on the other with polyethylene and sought classification of the product under Tariff Headings 76.07 and 76.12 (aluminium foil "backed"). The Revenue argued that the product should fall under Tariff Headings 39.20.38 and 39.23.90 because plastic constitutes about 70‑80% of the weight. The Commissioner (Appeals) and the Customs, Excise and Gold (Control) Appellate Tribunal, relying on test reports and HSN explanatory notes, held that the product is covered by Heading 39 and dismissed the assessee’s claim. The appellant contended that later Tribunal decisions had adopted a contrary view. The Supreme Court held that the Tribunal’s factual findings are final, that the term “backed” implies coating on only one side, and that the product’s character is that of plastic, thus confirming classification under Heading 39. The Court dismissed the appeal, noting the Department’s negligence in not citing earlier binding precedent.

Issues considered

Whether the product consisting of aluminium foil coated on both sides with polyester and polyethylene should be classified under Tariff Heading 76.07/76.12 or under Tariff Heading 39.20.38/39.23.90.
Whether the Supreme Court can interfere with the factual findings of the Customs, Excise and Gold (Control) Appellate Tribunal.
Whether subsequent Tribunal judgments contrary to an earlier binding decision affect the correctness of the impugned judgment.

Legislation cited

Central Excise Tariff Act, 1985s. Tariff Heading 39.20.38, s. Tariff Heading 39.23.90, s. Tariff Heading 76.07, s. Tariff Heading 76.12
Constitution of Indias. Article 136

Subjects

central excisetariff classificationaluminium foilplastic predominanceTribunal findingsbinding precedentHSN explanatory notesbacked product

Judgment

MIS. SHARP INDUSTRIES LTD. A
v.
COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III

SEPTEMBER 26, 2005

[S.N. VARIAV A AND TARUN CHATTERJEE, JJ.] B

Constitution of India:

Article I 36-Interference under-Central excise tariff-Classification
of product-Concurrent findings of Commissioner (Appeals) and Tribunal, C
based on test reports-Held, findings being based on facts and Tribunal
being final authority an facts, Supreme Court would not interfere

Central Excise Tariff Act, I 985:

Tariff Headings 39.20.38 and 39.23.90-76.07 and 76.12-Aluminium D
foil covered on one side with polyester film and on the other with
polyethylene-Held, Tariff Heading 39 is the specific heading which covers
the product.

Practice and Procedure:

Decision of Tribunal expressing contrary views-Assessee citing the E
decision favouring it and not pointing out to the Tribunal the earlier decision
in its own case holding against the assessee-Held, this conduct has to be
deprecated-The Department has also been negligent in not pointing out
this fact to the Tribunal-Government Litigation.

Precedent: F
Customs, Excise and Gold (Control) Appellate Tribunal-Holding in
impugned decision that aluminium foil classifiable under Tariff Heading 39
and not under 76-But in subsequent cases holding to the contrary-Held,

-
_, /
the subsequent judgments can have no bearing on the impugned judgment,
which is a prior-Jn subsequent cases Revenue was negligent in not citing
the impugned judgment which would have been a binding precedent-
Government litigation.
G

Words and Phrases:
·• 475 H
476 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A "Backed"-Meaning of-Jn the context of Central Excise Tariff Act,
1985.

Assessee a manufacturer of aluminium foil covered on one side with
polyester film and on the other with polyethlene, and pouches made thereof,
claimed the products to be classified under TariffHeading 76.7 and 76.12;
B whereas according to the Revenue, the products were classifiable under Tariff
Headings 39.20.38 and 39.23.90. All the authorities below including the
Commissioner (Appeals) and the Customs, Excise and Gold (Control) Appellate
Tribunal held against the assessee.

In the appeal filed by the assessee before the Supreme Court, it was
C pointed out that subsequent to the impugned judgment, the Tribunal took a
contrary view in a number of cases.

Dismissing the appeals, the Court

HELD: I. The Commissioner (Appeals) and the Tribunal have based their
D decisions upon test reports which show that plastic predominates over the
aluminium foil accounting for 2/3rd of the total weight. Reliance has also
been placed on HSN Explanatory Notes. The findings being based on facts
and the Tribunal being the final authority on facts, this Court would not
interfere. (478-8-Cf
E
J.K. Synthetics Ltd. v. Commissioner of Central Excise, Jaipur, [2003]
11 SCC 349 and Ugam Chand Bhandari v. Commissioner of Central Excise,
Madras (2004( 5 SCC 757, relied on.

2. Tariff Heading 39 is the specific heading which covers the products.
F From the test reports, it is clear that plastic predominates in the product, as
70-80% of the product consists of plasitc. Tariff Entry 76.07 only deals with
aluminium foilis which are backed with paper, paperboard, plastic or similar
other backing material. The term "backed" necessarily means that the
coating can only be on one side. In this case, the product cannot be said to be

-
"backed". It is coated with different materials on both sides. Therefore, on
G merits also the view taken by the lower authorities is the correct view.
[479-8-C, EJ

3. The subsequent Judgments can have no bearing on the correctness
or otherwise of the impugned Judgment which is a prior. The Revenue appears
H to have been negligent in not citing the impugned Judgment, which decided
SHARP INDUSTRIES LTD.'"· COMMR. OF CENTRAL EXCISE, MUMBAI-Ill [VARIA VA, J .] 477

the law correctly, at the time India Foils Ltd's case was being decided by the A
Tribunal. Had it been cited it would have been a binding precedent. The
Department's negligence is further brought out by the fact that the judgment
in India Foils Ltd's case was not carried in Appeal before this Court. As
regards the order dated 7th July, 2005 passed in an another case of the
assessee, wherein it has been held by the Tribunal that the assessee's product B
is classifiable under Tariff Heading 76.07 and not 39.20, was based on R. T.
Packaging Ltd. 's case. The assessee has been dis-honest inasmuch as it did
not point out to the Tribunal had held that in its own case, and for the same
period, the Tribunal that the product was classifiable under Tariff Heading
39.20 This conduct has to be deprecated in no uncertain terms. Besides, the
Department has ag:iin been negligent in not pointing out this fact to the C
Tribunal.

CCE,.Delhi-1/v. R.T. Packaging Ltd., (2002) 51RLT291; Aluminium
Co. v. Commissioner ofCentral Excise, (2001) 133 E{.,.T 759 and Commissioner
of Central Excise, Calcutta v. India Foil Limit~d, (2001) 132 E.L.T 737,
overruled. D
Hindustan Packaging Co. Ltd. v. CCE, Vadodara, (1995) 75 ELT 313
and India Foils Ltd. v. CCE, Calcutta II, (1998) 99 ELT 101, distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5242 of2000.
E
From the Judgment and Order dated 11. 7.2000 of the Customs, Excise
and Gold (Control) Appellate Tribunal, Western Zonal Bench, Bombay in F.O.
No. CI/2483/WZB/2000 in A. No. E/2489 of 1999-Bom.

M.H. Patel, Shri Narain and Sandeep Narain for Mis. S. Narain & Co.
for the Appellant. F
K. Swami and P. Parmeswaran for the Respondent.

The Judgment of the Court was delivered by

S. N. VARIAVA, J. This Appeal is against the Judgment dated I Ith July, G
2000 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (for
short CEGA T).

Briefly stated the facts are as follows:

The Appellants manufacture a product which consists of aluminum foil, H
..

478 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A whose thickness does not exceed 0.2 mm, which is then covered on one side
with a polyester film and on the other side with polyethylene. The Appellants
also manufacture pouches out of the same material. The question for
consideration is as to whether these products are classifiable under Tariff
Heading 76.07 and 76.12, as claimed by the Appellants, or under Tariff Heading
B 39.20.38 and 39.23.90, as claimed by the Respondent. All the authorities below,
including the Tribunal in the impugned Judgment, have held against the
Appellants. The Commissioner (Appeals) and the Tribunal have based their
decisions upon test reports which show that plastic predominates over the
aluminium foil accounting for 2/3rd of the total weight. Reliance has also been
placed on HSN Explanatory Notes. The findings being based on facts and the
C Tribunal being the final authority on facts, this Court cannot interfere. It has
been held in the case of J K. Synthetics Ltd. v. Commissioner of Central
Excise, Jaipur reported in [2003) 11 SCC 349 that the Tribunal is the best
judge of facts and this Court should not interfere. The same ratio has been
laid down by this Court in the case of Ugam Chand Bhandari v. Commissioner
ofCentral Excise, Madras reported in [2004) 5 SCC 757. For this reason itself
D this Appeal requires to be dismissed.
However, as the matter has been argued in great detail and as we find
that subsequent to the impugned Judgment the Tribunal has adopted an
erroneous view, we deem it expedient to also deal with merits and clarify the
E position.

The concerned Tariff Entries read as follows:

"76.07 Aluminium foil (whether or not printed or backed with paper,
paperboard, plastics or similar backing materials) of a thickness
(excluding any backing) not exceeding 0.2 mm.
F
76.12 Aluminium casks, drums, cans, boxes and similar containers
(including rigid or collapsible tubular containers), for any
material (other than compressed or liquefied gas), of a capacity
not exceeding 300L, whether or not lined or heat-insulated, but
not fitted with mechanical or thermal equipment.
G
3920 Other plates, sheets, film, foil and strip, ofplastics, non-cellular,
whether lacquered or metalised or laminated, supported or
similarly combined with other materials or not

xxx xxx
H 39.20.38 - Flexible, laminated
SHARP INDUSTRIES LTD. v. COMM. OF CENTRAL EXCISE, MUMBAI-Ill [VARIAVA, J.] 479

3923 Articles for the conveyance or packing of goods, of plastics; A
stoppers, lids, caps and other Closures, of plastics

39.23.90 - Other"

Tariff Heading 39 is thus the specific heading which covers such products. B
This entry covers plates, sheets, film, foil and strip of plastics, non-cellular,
whether lacquered or metalised or laminated. From the test reports, it is clear
that plastic predominates in the product. 70-80% of the product consists of
plastic. There is no denial of this fact. Tariff Entry 76.07 only deals with
aluminium foils which are backed with paper, paperboard, plastic or similar
other backing material. In this case, the product is not just backed. It is coated C
with other material on both sides. The term "backed" necessarily means that
the coating can only be on one side. An aluminium foil which is covered on
both sides, by different materials, cannot be said to be backed. The aluminum
foil is in such cases sandwiched between other materials. It is clear that there
can never be backing on both sides. Chapter Note (d) of Chapter 76 also D
makes it clear that Tariff Heading 76.07 will not apply to products which
assume the character of articles or products of other headings. In this case,
since plastic predominates the product assumes the character of plastic and
for this reason it could not be classified under Chapter 76. HSN Explanatory
Notes to Chapter 39 also clarify that products consisting of plastic remain
covered by Chapter 39 even though they are separated by a layer of another E
material such as foil, paper etc. provided they retain the essential characteristics
of articles of plastic. The test reports show that the concerned products retain
the characteristics of plastic. Therefore on merits also we find that the view
taken by the lower authorities is the correct view.
F
It was however submitted that subsequent to the impugned Judgment,
in a number of other matters, the Tribunal has taken a contrary view. It was
submitted that in one of the matters, this Court has refused to interfere. In
this behalf, reliance was placed upon the Judgment of the Tribunal in the case
of CCE, Delhi-JI v. R.T Packaging Ltd., reported in (2002) 51 RLT 291,
wherein the Tribunal relying on the Judgments of the Tribunal in the \'.ase of G
Aluminium Co. v. Commissioner of Central Excise reported in (2001) 133 ELT
759 and Commissioner of Central Excise, Calcutta v. India Foil Limited,
reported in (2001) 132 E.L.T. 737 held that such products are classifiable under
Chapter Heading 76.07.60 and not under Chapter Heading 39.20. It was pointed
out that, on 20th February, 2003, this Court dismissed Civil Appeal No. 5148 H
480 SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R.

A of 2002 filed by the Department on the following ground:
"Since the Revenue has accepted the judgment of the Customs, Excise
and Gold (Control) Appellate Tribunal in Commissioner of Central
Excise, Calcutta v. Indian Foil Limited [2001 (132) E.L.T. 737 (Tribunal)
= 2000 (39) RL T 304] and that judgment has been followed in the case
B by Tribunal, the civil appeal is dismissed.

No costs."

Reliance was also placed upon the Judgment of the Tribunal in the case
of C.C.E., Calcutta-! v. India Foils Ltd, (supra).
c These subsequent Judgments can have no bearing on the correctness
or otherwise of the impugned Judgment which is a prior. The Revenue appears
to have been negligent in not citing the impugned Judgment, which decided
the law correctly, at the time India Foils Ltd's case was being decided by the
Tribunal. Had it been cited it would have been a binding precedent. The
D Department's negligence is further brought out by the fact that the Judgment
in India Foils Ltd's case was not carried in Appeal before this Court. However,
merely because the Judgment in India Foils Ltd's case is not carried in Appeal
would not be a ground for setting aside the impugned Judgment, though it
may have been a ground for not interfering with a Judgment which had
followed India Foils Ltd's case.
E
We find on a reading of India Foils Ltd's case that it is based upon
decisions of the Tribunal in the cases of Hindustan Packaging Co. Ltd v.
CCE, Vadodara, reported in (1995) 75 EL T 313 (by a larger Bench of the
Tribunal) and India Foils Ltd v. CCE, Calcutta II reported in (1998) 99 ELT
F 10 I. We, however, find ihat in Hindustan Packaging Co. ltd. 's the question
was whether the product was covered by the Tariff Heading 76.06 or 48.I 1.29.
Chapter Note (!)(viii) of Chapter 48 provided that metal foil backed with paper
or paperboard was not covered by Chapter 48. There is no such note in
Chapter)9. In any event what the Tribunal seems to have missed in Hindustan
Packaging Co. Ltd. 's case is that the Chapter 76 cannot apply to a product
G which is covered on both sides with other products. For Tariff Heading 76.06
to apply the aluminium foil must be backed with paper, paperboard, plastic or
other similar backing material. That would necessarily mean that the aluminum
strip is lined only on one side. Even otherwise a Judgment dealing with a
question whether Tariff Heading 76.06 or Tariff Heading 48.11.29 applied
H would have no bearing when considering a question as to whether or not
SHARP INDUSTRIES LTD. 1-. COMMR. OF CENTRAL EXCISE, MUMBAI-Ill [VARIA VA, Jl 48 J
..,.
Chapter 39 applied. In the case of Indian Foils Limited v. Commissioner of A
Central Excise, Calcutta-fl the question was whether Tariff Heading 76.07 or
TariffHeading 76.12 applied. That case again had no relevance for considering
whether or not Chapter 39 applied.

Thus, the subsequent decisions are clearly erroneous and cannot be the
basis for overruling a correct decision of the Tribunal. B
Reliance was next placed upon an Order dated 7th July, 2005 passed in
the Appellants' case, wherein it has been held by the Tribunal that the
Appellants' product is classifiable under Tariff Heading 76.07 and not 39.20.
This Order is based on R. T. Packinging Ltd 's case. We find that the Appellants
have been dis-honest inasmuch as they did not point out to the Tribunal that c
in their own case, and for the same period, it has already been held by the
Tribunal that the product is classifiable under Tariff Heading 39.20. Instead
of pointing out this, they rely upon R. T. Packinging Ltd. 's case. This conduct
has to be deprecated in no uncertain terms. In any case, this Judgment is only
rendered on 7th July, 2005. Mr. Swami states that the Department is filing an D
Appeal against this Judgment. It must be mentioned that the Department was
represented before the Tribunal. The Department has again been negligent in
not.pointing out to the Tribunal that in the Appellants' own case and for this
very period, it has already been held by the Tribunal that the product is
classifiable under Tariff Heading 39.20.
E
For the above reasons, we see no reason to interfere. The Appeal
stands dismissed. There will be no order as to costs.

RP. Appeal dismissed.