1986 (10) TMI 165 - AT - Central Excise

Glass fabrics - Discs cut out of processed glass fabrics retaining identity as glass fabrics

Summary

Issues:
Classification of resin impregnated/coated glass fabric discs under Item 22-F of the Central Excises & Salt Act, 1944; Interpretation of Notification No. 87/76-C.E. dated 16-3-1976 regarding exemption eligibility; Whether resin impregnation alters the identity of glass fabrics; Commercial parlance recognition of resin-coated glass fabric discs.

Analysis:
The case involved the classification of resin impregnated/coated glass fabric discs under Item 22-F of the Central Excises & Salt Act, 1944, and the interpretation of Notification No. 87/76-C.E. dated 16-3-1976 regarding exemption eligibility. The Assistant Collector initially held the discs liable for duty as they were not eligible for the exemption under the notification. However, the Appellate Collector set aside this order, stating that the fabric continues to be fabric even when cut into discs, thus entitling the discs to the same exemption as the fabrics. The Central Government issued a review notice questioning this decision, primarily arguing that impregnation altered the identity of the glass fabrics, making them ineligible for the exemption.

Both parties agreed that the resin-coated glass fabric discs were classifiable under Item 22-F and that the resin content was less than 33%. Under Notification No. 87/76, full exemption was granted to glass fabrics. The Assistant Collector held that the exemption did not extend to processed glass fabrics, including the cut discs. However, the Appellate Collector disagreed, emphasizing that the fabric's exemption status continued even when cut into discs. The Government's review notice focused on two main reasons: impregnation altering the goods' identity and the discs not being recognized as glass fabrics in commercial parlance.

Regarding the commercial parlance argument, the Tribunal noted that no substantial supporting evidence was provided to establish that the discs were not known as glass fabrics in the market. The Tribunal highlighted that the Appellate Collector had previously upheld the contention that the cut discs retained the identity of glass fabrics. The review notice's assertion lacked supporting material, leading the Tribunal to reject this ground.

On the issue of impregnation altering the identity of the goods, the Tribunal emphasized that the processed glass fabrics, even after cutting into discs, retained their classification as glass fabrics. Citing a relevant precedent, the Tribunal concluded that the mere cutting of the fabrics into discs did not change their essential nature as glass fabrics. Therefore, the Tribunal found the Government's grounds for setting aside the Appellate Collector's order unacceptable.

Ultimately, the Tribunal dismissed the appeal and discharged the Government's review notice, affirming the classification of resin-coated glass fabric discs under Item 22-F and their eligibility for exemption under Notification No. 87/76.