1995 (3) TMI 93 - SC - Central Excise

Whether block boards are to be classified under Heading No. 44.08, sub-heading No. 4408.90 as claimed by the revenue or under Heading No. 44.10, sub-heading No. 4410.90 as claimed by the manufacturers of block boards? Held that - The Tribunal as well as the High Court fell into the error of overlooking the fact that the structure of the Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, override the clear indication of the meaning of an identical expression in the same context in the HSN. In the HSN, block board is included within the meaning of the expression similar laminated wood in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian Tariff of a different intention. Thus the expression similar laminated wood in Heading No. 44.08 as it stood from the beginning must be construed to include within it block boards of all kinds so that the amendment in Chapter Note 5 w.e.f. 19-3-1990 and thereafter w.e.f. 1-3-1992 merely clarified and made explicit that which was implicit in the heading throughout. These amendments were obviously made to end the dispute raised by the manufacturers by an express statement. Any further discussion with reference to the definitions in the ISI Glossary is unnecessary for the reason already indicated. All the appeals of the revenue are allowed while the appeals and SLPs of the manufacturers are dismissed

Summary

Issues Involved:

1. Classification of "block boards" under the Central Excise Tariff Act, 1985.
2. Interpretation of Heading No. 44.08 and Heading No. 44.10.
3. Applicability of amendments to Chapter Note 5 in Chapter 44.
4. Reliance on ISI Glossary vs. Harmonized System of Nomenclature (HSN).

Detailed Analysis:

1. Classification of "block boards" under the Central Excise Tariff Act, 1985:

The primary issue in this case was whether "block boards" should be classified under Heading No. 44.08, sub-heading No. 4408.90 as claimed by the revenue or under Heading No. 44.10, sub-heading No. 4410.90 as claimed by the manufacturers. The judgment addressed the classification for three different periods: from 28-2-1986 to 19-3-1990, from 20-3-1990 to 28-2-1992, and from 1-3-1992 onwards.

2. Interpretation of Heading No. 44.08 and Heading No. 44.10:

Heading No. 44.08 pertains to "Plywood, veneered panels and similar laminated wood," while Heading No. 44.10 pertains to "Articles of wood not elsewhere specified." The revenue argued that "block board" falls under the expression "similar laminated wood" in Heading No. 44.08, sub-heading No. 4408.90. Conversely, the manufacturers contended that "block board" is an "article of wood" and should fall under Heading No. 44.10, sub-heading No. 4410.90.

3. Applicability of amendments to Chapter Note 5 in Chapter 44:

The amendments to Chapter Note 5, effective from 19-3-1990 and 1-3-1992, were crucial in determining the classification. The first amendment clarified that "similar laminated wood" includes block board, laminated board, and batten board. The second amendment expanded the definition to include block boards "glued or otherwise joined together." The court emphasized that these amendments were intended to clarify the existing classification rather than change it.

4. Reliance on ISI Glossary vs. Harmonized System of Nomenclature (HSN):

The manufacturers relied on the ISI Glossary of Terms to argue that block boards do not fall under "similar laminated wood." However, the revenue contended that the Central Excise Tariff is based on the HSN, which includes block boards within the expression "similar laminated wood." The court agreed with the revenue, stating that the HSN should be the guiding framework for classification under the Central Excise Tariff Act, 1985.

Judgment Analysis:

First Period (28-2-1986 to 19-3-1990):

The Tribunal initially held that block boards fall under Heading No. 44.10, sub-heading No. 4410.90. The Supreme Court reversed this decision, stating that block boards should be classified under Heading No. 44.08, sub-heading No. 4408.90, as they fall within the expression "similar laminated wood" according to the HSN.

Second Period (20-3-1990 to 28-2-1992):

For this period, the High Court had relied on the ISI Glossary and held that block boards fall under Heading No. 44.10 unless they are "glued together." The Supreme Court reversed this decision as well, emphasizing that the amendments to Chapter Note 5 were meant to clarify that all block boards fall under Heading No. 44.08, sub-heading No. 4408.90.

Third Period (1-3-1992 onwards):

The High Court had dismissed the manufacturers' writ petitions, holding that block boards fall under Heading No. 44.08, sub-heading No. 4408.90. The Supreme Court affirmed this decision, noting that the explicit wording of the amended Chapter Note 5 made it clear that block boards of all kinds fall within "similar laminated wood."

Conclusion:

The Supreme Court concluded that block boards should be classified under Heading No. 44.08, sub-heading No. 4408.90 for all three periods. The court emphasized that the amendments to Chapter Note 5 were clarificatory and that the HSN should be the guiding framework for classification under the Central Excise Tariff Act, 1985. Consequently, the appeals of the revenue were allowed, and the appeals and SLPs of the manufacturers were dismissed.