Judgment:
1. These two appeals are filed by the importers of Millipore (India) Ltd., who had imported certain items which were in prescribed lengths in one case and running length in another, but were claimed by the appellants to be classifiable under Customs Tariff Heading 84.21 as they were specifically designed filter elements though made up of plastics. The Proper Officer of Customs who was required to assess the Bill of Entry ordered a 'provisional assessment' since he had certain reservations about the valuation of the product and ordered payment of duty under Customs Tariff heading 39.20 vide his provisional assessment approved on the Bill of Entry. The appellants, importers, executed the requisite bond for provisional assessment. The appellants were dissatisfied with the provisional assessment order classifying the goods under 39.20 and preferred a refund application under Section 27 of the Customs Act, 1962 by claiming note 10 to Chapter 39 prescribes that plate sheets, films, foils and strips of plastics etc., would only be included under 39.20 and relying on Chapter XVI notes and Chapter 84 notes, they claimed the subject goods which were specifically designed filter made of a meshwork of cellulose acetate or nitrate and with a defined pore size, dependent on the extent of cross-linking, e.g., Millipore filters. Small pore sizes that filter bacteria are used for sterilizing solutions for e.g. cell culture. of nucleopore filter and would be classified under 84.21 of Customs Tariff.
2. The Asst. Collector rejected the refund applications for determining the duties at the rates prescribed under 84.21 holding the classification under 39.20 to be correct and also in one case held the application for refund to be barred by limitation under Section 27 of the Customs Act, 1962.
3. The Collector (Appeals) passed a common order in the two refund applications, thus rejected by AC. He did not give any finding as regards the bar of time limitation. He rejected the plea of the appellants as regards the classification under 84.21 and confirmed the classification under 39.20 and the appellants are in appeal before us against this common order of the Commissioner (Appeals).
4. We have heard Ld. Consultant Shri A. Vijayaraghavan for the appellants who submits that the assessments are admittedly provisional and if the assessments are provisional, the classification cannot be confirmed separately. A provisional assessment is provisional for all purposes of assessment i.e. classification, valuation and the total quantity to be determined and he relied on the Larger Bench decision in the case of CCE v. PMT Machine Tools wherein the Bench relying on the Supreme Court judgment came to a finding and held that once the assessment is provisional, it is provisional for all purposes under Rule 9B of CE Rules, 1944. In this view of the matter, the Learned Consultant submits that present confirmation of classification is bad in law. He also led us through the submissions of importers as regards the interpretation of the section notes and the chapter notes in the HSN and fairly concedes that HSN notes are good guide to arrive at the classification of the product but in the present case, he submits, notes have been not understood and are being mis-interpreted by the lower authorities and requested for classification of the goods under 84.21 on a correct interpretation of the notes. He also relied upon the decision of this bench in the case of CC Madras v. Titanium Equipments & Anode Mfg. Co. , wherein the Tribunal had held that filter elements to be classifiable under 84.21 relying on the HSN notes and on the same analogy, he submits that their product should be classified as arrived at by the Tribunal.
5. Shri S. Arumugam, Ld. DR for the department reiterates the findings of the Commissioner (Appeals) and submits that it was the appellants who filed refund application and therefore they should not have any grievance against the classification which has been arrived at by the Commissioner (Appeals). He submits that question of provisional assessment should have been taken up by the appellants at the time of decision of their appeal before the lower authorities and since they have not taken up and have participated in the proceedings, they cannot now turn around and claim the benefit of Larger Bench decision in the case of Central Excise Rules.
6. As regards the decision in the case of CC v. Titanium Equipments & Anode Mfg. Co. (supra), he submits that the item in that case under import were different from the items in the present case. In the present case, the items are admittedly made up of plastics material and in the form sheets in running length in one case and therefore they being a part ready for use, are being correctly classified under 39.20.
7. We have carefully considered the rival submissions and after considering the matter find (a) when the assessments are provisional even under the Customs Act, the findings of the Larger Bench decision in the case of CCE v. PMT Machine Tolls would be applicable. The proviso being pan materia and also this decision is based on the Apex Court decision on the subject of provisional assessment, therefore we can safely come to the conclusion that refund application filed before the Asst. Collector were premature and should not have been considered by the AC, since he was duty bound to find out whether the assessments are provisional or otherwise. If he has found that in one case the refund is barred by limitation when the assessments are even provisional today, then we cannot hold that the decision arrived at are based on incorrect appreciation of facts and the status of the assessments and such decisions of the lower authorities are required to be set aside on this ground itself.
(b) When assessments are provisional, we would not like to give a finding on the classification arrived at by the lower authorities since at the time of finalisation of assessment the appellants will have an opportunity to contest the classification including the valuation and quantity which are components of assessment.
Therefore, we would refrain from giving any finding and keep the issue of classification open for the appellants to urge before the appropriate authority at the time of finalisation of the assessment in these imports. We also find that there is no contrary decision of Larger Bench on this issue has been shown to us.
8. In view of our findings, we set aside the order of the lower authorities with directions that the question of classification is left open to the department; to adduce such evidence on their part and of the appellants to produce such material as they may have to support their respective claims at the time of finalisation of the Bill of Entry which are provisionally assessed.