Classification of floor covering of jute laminated with plastic.

PJ/CASE LAW/2015-16/2934

Case:-COMMISSIONER OF CUS. & C. EX., U.P. VERSUS S.P.L. SIDDHARTHA LTD.

Citation:- 2015 (325) E.L.T. 458 (S.C.)

Brief Facts:-In this appeal the questions that arise for consideration are formulated as under:-
“Whether the floor covering with plastic laminated on both side manufactured and cleared by M/s. SPL Siddhartha Limited [for the period from 31-5-2000 to 17-1-2005] should be classified under sub-heading 3918.90 of the Central Excise Tariff Act, 1985 and accordingly, charged to the Central Excise duty @ 16% ad valorem along with appropriate interest or not?
Whether the floor covering with plastic laminated on single sides manufactured and cleared by M/s. SPL Siddhartha Limited [for the period from 26-9-2002 to 28-2-2003] should be classified under tariff Heading 59.03 of the Central Excise Tariff Act, 1985 and accordingly, charged to the Central Excise duty @ 16% ad valorem along with appropriate interest or not?”
The background facts are that the respondent-assessee is engaged in the manufacture of two types of plastic laminated jute fabrics, viz., (i) laminated with plastic on both sides (ii) laminated with plastic only on one side.

Appelants Contention:-The Department wants these products to be classified under Chapter Heading 3918.90.

Respondents Contention:-The assessee claims that these are covered by Chapter Heading 59.The respective competing entries reads as under :-

“39.18	Floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles; wall or ceiling coverings of plastics, as defined in Note 9 to this Chapter
3918.10	-	Of polymers of vinyl chloride
3918.90	-	Of other plastics
59.03	Textile fabrics, impregnated, coated, covered or laminated with plastics, other than those of Heading No. 59.02
5903.10	-	With polyvinyl chloride
5903.20	-	With polyurethane
5903.90	-	Other
59.04	Linoleum, whether or not cut to shape; floor coverings consisting of a coating or covering applied on a textile backing, whether or not cut to shape
5904.10	- -	Linoleum Other
5904.91	-	With a base consisting of needleloom felt or non-wovens
5904.92	-	With other textile base”

The manufacturing process of these products is described in the show cause notice itself about which there is no dispute. As per this, the assessee procured jute fabrics, bitumen, polyethylene chips and master batch from various sources. In the first part of manufacturing process, the jute fabric is unrolled and brought with the help of a series of rollers to a plastic extrusion machine. The plastic material chips, etc., are fed into the extrusion machine and a coat of molten plastic gets fixed on one side of the fabric. The one-side laminated fabric is again loaded on a roller. The roller is transferred to the other section of the factory where two such layers of jute fabric, having plastic lamination on one surface are joined together by hot, molten, bitumen. The bitumen coat is applied on the exposed jute surface so that, in the final product, the two layers of jute fabric do not remain exposed anymore and the plastic laminations are now the visible surface on both the sides of the floor covering. The thick plastic coat is visible to the naked eye while the jute surfaces are not visible.
However, it is submitted by the learned counsel for the assessee that Exemption Notification No. 6/2000-C.E., dated 1-3-2000 at Serial No. 169 provides exemption to the product in question by specifying that it shall attract nil duty.

Reasoning Of Judgement:-The court may record here that the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as ‘CESTAT’) has accepted the claim of the assessee herein and they feel that it is rightly so. On the face of it, by going through the aforesaid manufacturing process, it is clear that the products are dominantly jute products and they cannot be treated as products of plastic. Therefore, there is no question of their coverage under Chapter Heading 39. On the other hand, they find that the Entry which is more proximate to get the aforesaid product covered appears to be 59.04 which, inter alia, covers the product that is floor coverings consisting of a coating or covering applied on a textile backing. As already pointed out above, the product which is floor covering is made of jute and plastic coating is applied thereupon.
They may point out that in the amendment made to the sub-headings in Entry 59.04 in the year 2005,the product in question is described with more clarity inasmuch as Entry 5904.90.10 is described as ‘Floor coverings with jute base”. As pointed out above, there is no dispute that in the instant case, the product is a floor covering with jute as its base.
They are of the opinion that the order of the CESTAT does not call for any interference. This appeal is, accordingly, dismissed.
After having determined the classification as aforesaid, they note that in the Tariff Entry, 16% duty is prescribed. However, it is submitted by the learned counsel for the assessee that Exemption Notification No. 6/2000-C.E., dated 1-3-2000 at Serial No. 169 provides exemption to the product in question by specifying that it shall attract nil duty.
In view of the above, the appeal filed by the revenue department is dismissed as being devoid of merits.

Decision:-Appeal dismissed.

Comment:- The gist of the case is that Floor covering with plastic lamination on one or both sides are dominantly classifiable as jute product and not the product of plastic because it is made of jute and plastic coating is applied thereupon.Therefore, no question arises of its coverage under Chapter heading 39, And accordingly the assessee had correctly classified this under Tariff Item 5904 90 10 where 16% duty is prescribed but they are exempted under Serial No. 169 of Notification No. 6/2000-C.E. and thereby attract Nil rate of duty.Consequently, the appeal filed by the revenue department was dismissed.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2934

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