1988 (11) TMI 183 - AT - Central Excise

Summary

Issues Involved:
1. Classification of laminated paper or paper board for central excise duty.
2. Applicability of Chapter Notes and Interpretative Rules for classification.
3. Determination of the essential characteristic of the finished product (paper vs. resin).

Issue 1: Classification of Laminated Paper or Paper Board for Central Excise Duty

The primary dispute revolves around the classification of laminated paper or paper board under the Central Excise Tariff Act, 1985. The appellants claimed classification under Heading 4818.90 as "other articles of paper pulp, paper or paper board." The Assistant Collector classified it under Heading 3920.31 as an "article of plastic." The Collector (Appeals) ordered classification under Heading 4811.39 as "laminated paper or paper board."

Issue 2: Applicability of Chapter Notes and Interpretative Rules for Classification

Shri Subramanyam, representing the assessee, argued that their goods should be classified under Heading 4818.90, emphasizing that the finished product emanates from impregnated paper falling under Heading 48.11, not from materials under Headings 39.01 to 39.14. He highlighted Chapter Note 1 of Chapter 39, which specifies that for classification under Heading 39.20, goods should be made exclusively of materials under Headings 39.01 to 39.14. He also referenced Rule 1 of the Rules of Interpretation of the Central Excise Tariff, asserting that since the goods are articles of paper and paper board, they fall under Heading 48.18, and there is no need to apply Interpretative Rules 2(b) or 3.

Shri Doiphode, for the Revenue, argued for classification under Heading 3920.31, stating that the essential characteristic of the finished product is resin, not paper. He referenced Interpretative Rule 3(b), suggesting that classification should be governed by the essential characteristic, i.e., resin. He also cited definitions from "Materials Handbook" to support his argument.

Issue 3: Determination of the Essential Characteristic of the Finished Product (Paper vs. Resin)

The Tribunal examined the manufacturing process, noting that the end-product consists of 30-40% resin and the rest is paper by weight and thickness. The key question was whether the product should be classified under Chapter 39 as an article of plastics or under Chapter 48 as an article of paper. The Tribunal referenced two decisions: the Supreme Court's judgment in Geep Flashlight Industries Limited v. Union of India and Others (1985) and a Tribunal decision in the case of Collector of Central Excise, Ahmedabad v. Melamine Fibre Board Ltd. and Others (1988). Both cases dealt with classification under the First Schedule to the Central Excises and Salt Act, 1944, and concluded that products combined with other materials were not classifiable under Item 15A.

The Tribunal ruled out classification under Chapter 39, citing Chapter Note 1(f) of Chapter 48, which excludes from Chapter 48 those paper-reinforced stratified plastic sheeting where plastics constitute more than half the total thickness. Since plastics in the impugned goods constitute only 30-40%, classification under Chapter 39 was excluded.

The Tribunal then considered the appropriate classification under Chapter 48. While the Collector (Appeals) classified the goods under Heading 4811.39 as laminated paper, the Tribunal found this inappropriate. The final product, a combination of two sheets of impregnated paper used for decorative purposes, was deemed an article of paper falling under Tariff Heading 4818.90.

Conclusion:

The Tribunal concluded that the product in dispute is correctly classifiable under Heading 4818.90. The appeal filed by the assessee was allowed, the impugned order was set aside, and the appeal filed by the Revenue was dismissed. The cross-objection filed by M/s. Amit Polymers & Composites Ltd. was disposed of accordingly.