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Mahilaratnam Women's Monthly V/S Commissioner of Customs, Tuticorin

    Appeal No. C/234/2009 [Arising out of Order-in-Appeal No. 52/2009 dt. 30.04.2009 passed by the Commissioner of Customs and Central Excise (Appeals), Tiruchirappalli] and Final Order No. 42167/2017

    Decided On, 26 September 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
    By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
    By, MEMBER

    For Petitioner: R. Srinivasan, Consultant And For Respondents: K. Veerabhadra Reddy, JC (AR)



Judgment Text


1. The facts of the case are that appellants are importers of News Print. They had filed two Bills of Entry dt. 10.04.2007 and 14.05.2007 for import of Glazed News Print. The goods were subjected to test whereby it emerged that the commodity was news print with surface roughness of 1.9/1.8 and 1.7/1.6 respectively. It appeared to the department that the imported consignments did not satisfy the condition of Chapter Note 4 for Chapter 48, whereby the Parker Print Surface roughness should exceed 2.5 microns. Hence, they cannot be considered as news print and concessional rate of duty under Notification No. 21/2002-Cus. cannot be extended to the appellant. Proceedings were initiated by issue o

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f show cause notice dt. 03.09.2007, which culminated in the original authority, inter alia, denying concessional rate of duty to the imported goods, confirming differential demand of Rs. 3,69,640/- along with interest thereon. In appeal, Commissioner (Appeals) vide impugned order dt. 30.04.2009 upheld the order of original authority. Hence this appeal.

2. Today, when the matter came up for hearing, Ld. Consultant Shri R. Srinivasan made oral and written submissions, which can be broadly summarized as follows:

"(i) The imported glazed newsprint has been denied exemption on the ground that the goods have not satisfied the condition that it should be more than 2.5 microns in roughness. The Appellant refers to HSN explanatory notes to CTH 4801 where it has been specifically mentioned that:

"The newsprint of this heading may be subjected to processes mentioned in Note 3 to this Chapter. Newsprint otherwise processed is, however, excluded"
(ii) Therefore, newsprint subjected to the processes as per Note 3 to Chapter 48 will continue to be under CTH 4801 as per Note 3:

3. Subject to the provisions of note 7, headings 48.01 to 48.05 include paper and paperboard which have been subjected to calendaring, super-calendering, glazing or similar finishing, false water-marking or surface sizing, and also paper, paper-board, cellulose wadding and webs of cellulose fibres, coloured or marbled throughout the mass by any method. Except where heading 48.03 otherwise requires, these headings do not apply to paper, paperboard, cellulose wadding or webs of cellulose fibres which have been otherwise processed.
(iii) As the imported goods have been subjected to the process of glazing as provided in Note 3 ibid, the roughness gets reduced and cannot be more than 2.5 microns. The specification with regard to surface roughness provided in Note 4 shall apply only to ordinary or standard newsprint and cannot be extended to glazed newsprint. (iv) Therefore, on harmonious reading of Note 3 and Note 4 to Chapter 48 along with HSN explanatory notes it can be concluded that Newsprint which have undergone the process as per Note 3 would continue to be covered under CTH 4801.

(v) The concessional rate under S. No. 154 of Notification No. 21/2002-Cus. is available to newsprint of specified size falling under Chapter 48. The exemption is not restricted to goods falling under Tariff item 4801 00 90 alone. In other words, the exemption is also available to glazed newsprint falling under Tariff item 4801 0010 also.

(vi) It is a settled principle of law that Rules of Interpretation, Section Note and Chapter Notes are not applicable when an exemption notification is interpreted.

(vii) The Hon'ble Finance Minister in his Budget speech of 1998-99 specifically made reference to reduction in duty structure of Standard Newsprint and also said that he proposes to rationalize the duty structure by subjecting Glazed Newsprint to the same rate of duty."

3. On the other hand, Ld. D.R. Shri K. Veerabhadra Reddy submitted that the Supreme Court in the case of CC Bombay v. Business Forms Ltd : 2002 (142) ELT 18 (SC) has laid down that Explanatory Notes to HSN is not only of persuasive value but entitles to the greater consideration in classifying the goods under Central Excise & Customs Tariff.

4.1 Heard both sides. There is no dispute that the goods imported fall under Chapter 48.

4.2 The samples tested conformed to all specifications of news print except for the surface roughness. The imported items being Glazed News Print, it cannot be expected to have surface of Parker Print Surface roughness of more than 2.50 microns. By glazing the ordinary news print, its roughness gets reduced and therefore the specifications given with regard to standard news print cannot be applied to them of glazed newsprint.

4.3 The Ld. Counsel has adverted to the Budget speech of the Finance Minister of the Year 1998-99 proposing reduction in duty structure of standard news print and also proposal to rationalize duty therein by subjecting glazed newsprint to the same rate of duty. The relevant portion of the Budget speech is reproduced below:

"Para 129. Mr. Speaker Sir, my Government values the right to information. With a view to further strengthen this right. I propose to reduce customs duty of standard Newsprint from 10 to 5%. I also propose to rationalise the duty structure by subjecting Glazed Newsprint to the same rate of duty. Furthermore, I also intend to exempt newsprint from the applicability of 8% across the board special additional duty.

Para 130. I also propose to reduce the duty on light weight coated paper weighing up to 51 grams per square metre for printing magazines to a total of 5%."

Evidently, this was the intention of the Budget which was proposed to the Hon'ble Parliament and therefore it would also be same intention with which the legislature has approved the proposed duty changes as also exemption in the said notification No. 21/2002. There has to be synergy and synchronization between the intention of the legislature and the uniform tax structure that was intended to be extended to all news print including glazed newsprint.

4.4 This being so, much as the Chapter Notes are entitled to consideration in deciding the matter of classification of particular goods, nonetheless, when it comes to extending effective rate of duty, the intention of the legislature will certainly have to be given paramount importance and supremacy over even Chapter notes. Further, there is no dispute that the imported goods have been used as Glazed paper for the cover of the magazine published by them. We have already discussed supra why glazed newsprint may not have the surface roughness of 2.50 microns. Nonetheless, the actual test results have yielded parker print results quite close to that required.

5. Viewed in the totality of these facts, we find in favour of the appellant and hold that the imported goods are eligible for the benefit of exemption under said entry Sl. No. 154 of Notification No. 21/2002-Cus.. Impugned order is therefore set aside and appeal is allowed with consequential relief, if any, as per law
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