1998 (7) TMI 92 - SC - Central Excise

Classification of Prepeg-G - Held that - In view the decision of this Court in Mahindra Engineering and Chemical Products Ltd. (1992 (1) TMI 102 - SUPREME COURT OF INDIA) it must be held that Prepeg-G manufactured from glass fabrics would not fall in Item 22-F/22-F(4) as found by the Tribunal and that Prepeg-G was assessable to excise duty during the relevant period under residuary Item 68 of the Tariff. The impugned judgment of the Tribunal in so far as it held that Prepeg-G fell under Item 22-F/22-F(4) of the Tariff cannot be upheld and has to be set aside. In the result, the appeals are partly allowed and the impugned judgments of the Tribunal to the extent they hold that Prepeg-G manufactured by the appellant was assessable to excise duty at the relevant time under Item 22-F/22-F(4) of the Tariff are set aside and it is held that Prepeg-G was assessable to duty under residuary Item 68 of the Tariff.

Issues Involved:
1. Classification of 'Prepeg-F' under Item 19(III) of the Central Excise Tariff.
2. Classification of 'Prepeg-P' under Item 17(2) of the Central Excise Tariff.
3. Classification of 'Prepeg-G' under Item 22-F(4) of the Central Excise Tariff.

Detailed Analysis:

1. Classification of 'Prepeg-F' under Item 19(III) of the Central Excise Tariff
The appellant argued that 'Prepeg-F', an impregnated cotton fabric, should not be classified under Item 19(III) of the Tariff, which pertains to cotton fabrics impregnated with cellulose derivatives or other artificial plastic materials. The Tribunal rejected this contention, stating that the impregnated materials did not alter the fabric's characteristics to the extent that it ceased to be a cotton fabric. The Tribunal also held that phenol formaldehyde resin used for impregnation falls under "artificial plastic materials." The appellant invoked the 'common parlance test' but the Court dismissed this argument, referencing previous judgments that defined terms within the enactment should be construed as per their statutory definitions. The Court found no merit in the appellant's contention and upheld the Tribunal's classification of 'Prepeg-F' under Item 19(III).

2. Classification of 'Prepeg-P' under Item 17(2) of the Central Excise Tariff
The appellant contended that 'Prepeg-P', a resin-impregnated paper, should not be classified under Item 17(2) of the Tariff, which includes paper and paperboard subjected to treatments like coating and impregnating. The Tribunal held that Item 17(2) explicitly covers impregnated paper. The appellant's reliance on an earlier Trade Advice was countered by subsequent clarifications from the Central Board of Excise and Customs, which classified resin-impregnated paper under Item 17(2). The Court dismissed the appellant's argument distinguishing impregnated paper from 'Prepeg-P', affirming the Tribunal's classification under Item 17(2).

3. Classification of 'Prepeg-G' under Item 22-F(4) of the Central Excise Tariff
The Tribunal classified 'Prepeg-G', a resin-impregnated glass fabric, under Item 22-F(4) of the Tariff, which pertains to mineral fibres and yarn and other manufactures therefrom. The appellant argued that 'Prepeg-G' is not a product manufactured from mineral fibres or yarn but rather from glass fabrics. The Court referenced the decision in Mahindra Engineering and Chemical Products Ltd., which held that products manufactured from glass fabrics do not fall under Item 22-F(4). Consequently, the Court set aside the Tribunal's classification of 'Prepeg-G' under Item 22-F(4) and held that it should be assessed under the residuary Item 68 of the Tariff.

Conclusion:
The appeals were partly allowed. The Tribunal's judgments were upheld for 'Prepeg-F' and 'Prepeg-P', classifying them under Items 19(III) and 17(2) respectively. However, the Tribunal's classification of 'Prepeg-G' under Item 22-F(4) was set aside, and 'Prepeg-G' was held assessable under residuary Item 68 of the Tariff. No costs were ordered.

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