1992 (1) TMI 102 - SC - Central Excise

Whether the tubular shaped arc chamber housings manufactured by the appellants from glass fabrics which they purchased from manufacturers was exigible to duty under Tariff Item No. 22F(4) or under residuary Item No. 68 of the Central Excise Tariff Act? Held that - the entry of articles of plastic' was construed to mean as article made wholly of commodity commonly known as plastic to avoid any artificial reading. The word wholly' was read in the entry to render it workable. Thus glass fabric manufactured out of mineral fibre is exigible to duty under Item No. 4 but arc chamber housing manufactured from glass fabric cannot be placed at par with glass fabric and cannot be considered as other manufacture' of glass fibre or yarn. This appeal succeeds and is allowed. The orders of Tribunal, Collector and Assistant Collector are set aside. The arc chamber housing manufactured out of glass fabric are held to be exigible to duty during the relevant period under Item No. 68.

Summary

Issues:
Interpretation of Tariff Item No. 22F(4) under the Central Excise Tariff Act - Whether tubular shaped arc chamber housings manufactured from glass fabrics are exigible to duty under Tariff Item No. 22F(4) or under residuary Item No. 68.

Detailed Analysis:

Issue 1: Interpretation of Tariff Item No. 22F(4)
The central issue in this appeal was the interpretation of Tariff Item No. 22F(4) of the Central Excise Tariff Act. The question at hand was whether the arc chamber housings manufactured by the appellants from glass fabrics, which were purchased from manufacturers, should be subjected to duty under Tariff Item No. 22F(4) or under the residuary Item No. 68. The dispute did not concern the manner of manufacture of the arc chamber housing or the source of the glass fabric used in the process, but rather focused on the classification of the final product under the relevant tariff item.

Issue 2: Construction of Tariff Item No. 22F(4)
The Assistant Collector initially held that the goods were covered under Tariff Item 22F(4) as the percentage of mineral fiber yarn was predominant in weight. On appeal, it was argued that the expression "manufactured therefrom" in Tariff Item No. 22F(4) should encompass not only the initial manufacture of mineral fiber and yarn but also subsequent manufacturing stages where mineral fiber or yarn was utilized. The Tribunal affirmed this view, emphasizing that the goods should be manufactured from mineral fiber and yarn to fall under Tariff Item No. 22F(4). It was concluded that even though glass fabric was an intermediate stage in the manufacturing process, the arc chamber housing did not cease to be a product of glass fiber or yarn simply because the fiber or yarn was first woven into fabric. However, a subsequent five-Judge Bench of the CEGAT disagreed with this interpretation, stating that the entry applied only to products directly involving mineral fiber and yarn, not products where these materials were merely used.

Issue 3: Interpretation of the Entry in Tariff Item No. 22F(4)
The entry in Tariff Item No. 22F(4) was analyzed in detail, with the court emphasizing that both the descriptive and explanatory parts of the entry should be considered together to determine its full scope. The court highlighted that the entry was added in 1980 and was intended to clarify the term "manufacture therefrom" to include products where mineral fiber or yarn predominated in weight. It was asserted that the entry did not extend to goods manufactured from a commodity where mineral fiber or yarn had been predominantly used. The court rejected the argument that the entry was intended to evade duty payment by widening its scope, stating that any other construction would alter the principal clause and go against the entry's scheme and construction principles.

Conclusion:
In conclusion, the court allowed the appeal, setting aside the orders of the Tribunal, Collector, and Assistant Collector. The court held that the arc chamber housings manufactured from glass fabric were exigible to duty under Item No. 68, not under Tariff Item No. 22F(4). The appellant was awarded costs in the matter.