1986 (3) TMI 187 - AT - Central Excise

Summary

Issues Involved:
1. Classification of impregnated cotton fabric (Prepreg 'C')
2. Classification of impregnated paper (Prepreg 'P')
3. Classification of impregnated glass fabric (Prepreg 'G')

Detailed Analysis:

1. Classification of Impregnated Cotton Fabric (Prepreg 'C')
The primary issue was whether Prepreg 'C', which is cotton fabric impregnated with phenol formaldehyde, should be classified under Item 19-III or Item 68 of the Central Excise Tariff (CET). The Tribunal noted that for a fabric to be covered by Item 19 CET, it must contain more than 40% by weight of cotton. The Tribunal found that the impregnated cotton fabrics were flexible and retained their fabric characteristics, thus falling within the scope of Item 19-III CET, which includes "fabrics impregnated, coated or laminated with preparations of cellulose derivatives or other artificial plastic materials." The Tribunal rejected the argument that phenol formaldehyde is not a plastic material, holding that the term "plastic" as understood in trade and technical books includes resins like phenol formaldehyde.

2. Classification of Impregnated Paper (Prepreg 'P')
The Tribunal examined whether Prepreg 'P', paper impregnated with phenol formaldehyde, should be classified under Item 17(2) CET. Item 17(2) CET covers "paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing." The Tribunal found that the impregnated paper fell within this category as it had been impregnated with phenol formaldehyde. The Tribunal dismissed the argument that Prepreg 'P' is not known as paper in the industry, holding that it is an intermediate product prepared for use in lamination and thus falls under Item 17(2) CET.

3. Classification of Impregnated Glass Fabric (Prepreg 'G')
The Tribunal considered whether Prepreg 'G', glass fabric impregnated with phenol formaldehyde, should be classified under Item 22B or Item 22F CET. Item 22B CET covers "textile fabrics impregnated or coated with preparations of cellulose derivatives or other artificial plastic materials not elsewhere specified," while Item 22F CET covers "mineral fibres and yarn and manufactures therefrom." The Tribunal held that since glass fabrics are a manufacture of mineral fibres, they fall under Item 22F CET. The Tribunal noted that Item 22F CET is more specific and that glass fabrics are exempted from duty under Notification No. 87/76 as amended, indicating the framers' intent to classify glass fabrics under Item 22F CET.

Conclusion:
The Tribunal rejected the appeal of M/s. Bakelite Hylam Limited and allowed the appeals of the Department. The classifications were determined as follows:
- Prepreg 'C' (impregnated cotton fabric) is classified under Item 19-III CET.
- Prepreg 'P' (impregnated paper) is classified under Item 17(2) CET.
- Prepreg 'G' (impregnated glass fabric) is classified under Item 22F CET.