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TMI Blog1986 (3) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... espectively. These are intended for making laminated sheets, tubes etc. 3. For the sake of easy reference relevant particulars in regard to these appeals are listed as under : S. No. Appeal No. Description of goods Classification as held by original authority Classification as upheld by Appellate Collector under CET at relevant time Classification as claim in proceedings before Govt. of India (1) (2) (3) (4) (5) (6) 1. ED/293/78-C M/s. Bakelite Hylam v. CCE Hyderabad Prepreg C impregnated cotton fabrics 19-III 19-III 15(A)(1) 2. ED/388/79-D CCE : Hyderabad Vs. M/s. Bakelite Prepreg P Paper impregnated phenol formaldehyde 17(2) 15(A)(1) 17(2) 3. ED/403/79-D CCE : Hyderabad Vs. M/s. Bakelite Prepreg C impregnated cotton fabric 19-III 15(A)(1) 19-III 4. ED/1114/81-D CCE : Hyderabad Vs. M/s. Bakelite Prepreg G epoxy resin treated with glass fabric 22B 15(A)(1) 22B In the three appeals allowed by the Appellate Collector, Central Excise an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other materials of plastics. He has further observed that Tariff Item 19-III does not make any distinction between thermosetting and thermo-plastics. The Appellate orders under which appeals of M/s. Bakelite Hylam were allowed were taken up for review by the Government of India under Section 36(2) of the Central Excises and Salt Act as it then existed and in the Review Show Cause Notice, issued by the Government of India, reliance has been placed on the following definition of synthetic resin as given in the Condensed Chemical Dictionary : Ninth Edition Revised by Gessner G. Hawley : A man-made high polymer resulting from chemical reaction between two or more substances usually with heat or catalyst. Keeping this definition in view among other reasons given in the Show Cause Notice, the Government of India have opined that the orders of the Appellate Collector are not proper and legal. 5. The Government of India in the review notices while calling upon the party to show cause have also required it to state as to why the order of the Appellate Collector be not set aside and the order of the original authority passed by the Assistant Collector be restored or any other order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he will show how these decisions support his contention for assessment of goods otherwise than as held by the Bench of the Tribunal in Formica case or as sought to be assessed by the Revenue. 9. The learned advocate, Shri Gagrat stated that for the goods to fall under Item 19-III CET, the following three criteria should be satisfied : (i) cotton fabrics after impregnation should continue to have characteristics of cotton fabrics ; (ii) product should be known in the trade as cotton fabrics and should be so used ; and (iii) the cotton fabrics should be such as are impregnated with cellulose derivatives or artificial plastic materials. 10. Regarding the first criterion he has not furnished any specific material to show as to how impregnated cotton fabrics do not have the characteristics of the cotton fabrics. Samples were earlier called for by the Bench and these have been produced after due certification thereof by the Central Excise authorities as being representative of the goods under dispute. These have been admitted in evidence and there is no objection from either side in this regard. We find from the samples produced that the impregnated cotton fabrics are flexible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplying the ratio of these judgments to the goods under reference, these should be assessed under Item 68. His plea is that the goods in this case are for a specified use for making laminations and are known as Prepreg C , a recognised nomenclature in technical literature and also that these are not known in the trade as cotton fabrics. 12. He has further pleaded that in the case of Formica referred to supra, the Bench first discussed the issue relating to paper and then applied the rationale of the same in the case of impregnated cotton fabrics. This, according to him, was not a correct approach inasmuch as the wording of the Tariff items 17 and 19 are totally different. He highlighted the fact that in Item 17 there is no mention about the impregnating materials or solution while in Item 19 impregnating materials have been specified. He has further stated that the Bench in case of Formica judgment did not take note of the earlier judgments in the context of paper coated with polyester film (judgments at Serial Nos. 2 and 3 of the annexed Chart refer) and has pleaded that after the delivery of the Formica judgment, different Benches of the Tribunal have taken a consistent view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems of tariff also. He drew our attention to the decision in the case of Indian Tools Manufacturers, Bombay v. Collector of Central Excise, Poona: 1984 (18) E.L.T. 527 and the Hon ble Supreme Court judgments given on the Special Leave Petition (Civil) 6254 of 1983 in the case of Geep Flash Light Industries Limited, Allahabad v. Union of India, 1985 (22) E.L.T. 3 (S.C) and in the case of Indo-international Industries v. Commissioner of Sales Tax : 1981 E.L.T. 325 (SC). The advocate of M/s. Bakelite Hylam after the hearing submitted a recent judgment of the Hon ble Supreme Court in the case of Macneill and Barry Limited : 1986 (23) E.L.T. 5 (SC). 13. The next leg of argument of Shri Gagrat is that the Prepreg C even if it is held to be a cotton fabric would still not fall under 19-III, CET inasmuch as the goods have neither been coated with cellulose derivatives nor with artificial plastic materials as the impregnation has been done with phenol formaldehyde resin. According to him the resin and plastic materials aretwo different categories of goods and these are considered so in chemical technology. For this he relied upon the judgment of the Hon ble High Court of Bombay in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and should take into account various scientific advances made in this field. The fabrics may be for industrial use and so long as the people in particular trade treat these goods as fabrics, the same should be assessed under Tariff Item 19. He has pleaded that the goods dealt with in the case of Multiple Fabrics: 1984 (16) E.L.T. 301 were quite different from those in the instant case. In that case the PVC resin was the predominant constituent being 56.3% and similarly in the case of International Conveyors cited by the appellants : 1983 E.L.T. 1216, PVC resin constituted 60% of the material of the goods and, therefore, the reliance of M/s. Bakelite Hylam on these judgments was misplaced. (ii) Shri Lakshmikumaran further stated that the way the entry 19-III, CET was worded, the term plastic material used therein would encompass phenol formaldehyde also. He stated that no doubt resin and plastic as understood in chemical technology are two separate items but plastics is a generic term whereas the term resin represents the species. Term plastics, according to him, as set out in various books on plastics also covers resin. He cited the definitions of plastics etc., as given in AST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in support of this contention. It is necessary to examine the scope of Item No. 19, CET in the context in which the issues have been raised. The Item 19, CET as it existed at the relevant time reads as under : Cotton Fabrics -means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chaddars, bed-sheets, bed-spreads, counter-panes, table-cloths, embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or other artificial plastic materials, if (i) in such fabrics contain more than 40 per cent by weight of cotton and 50 per cent or more by weight of non-cellulosic fibres or yarn or both: Provided ................ I. ............... II. .............. III. Cotton fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials." The first requirement, therefore, for a fabric to be covered by Item 19 CET is the content of the cotton by weight in it. The learned Counsel for the Revenue has clearly mentioned that cotton predominates by weight in the instant case and there is no contrad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abric coated with phenol formaldehyde can be considered to have been impregnated with artificial plastic resins. M/s. Bakelite Hylam in this regard have placed reliance on the judgment of the Hon ble Bombay High Court in the case of Industrial Plastic Corporation Private Limited wherein the Deputy Chief Chemist of the Department has admitted that phenol formaldehyde is not artificial plastic but resin and the Court had held it so. In short, what has been pleaded is that plastic and resin are two separate categories of goods and these should be given meanings as understood technically for the purpose of interpreting Item No. 19-III. We would like to observe that unlike in the case of most of the Tariff items, the wording of Item 15A, CET covering artificial plastic materials and resins, is a peculiar one and the items described under this entry are by their technical nomenclature. 19. Adverting to the case law cited by the appellants, it is relevant to examine as to the context in which the particular judgments have been given. We find that the decisions quoted by the appellants in support of plea was given when a distinction was sought to be drawn between resin and plastic in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic material included in sub-item (1), the Hon ble High Court, in para 46 of the judgment, pointed out that the Explanation was only for the purpose of sub-item (2), and that it would be wholly improper to decide the scope of sub-item (1) by applying that Explanation. It is seen from this that even as between two sub-items of the same Tariff Item, the Hon ble High Court was not prepared to apply the Explanation relating to one sub-item to the interpretation of the other sub-item. Much less can it be contended that the scope of other Tariff items such as 19 or 22B could be interpreted by applying the meaning given in one sub-item of Item 15A. Therefore the interpretation given in the context of Item 15A CET in the judgment cited will not be relevant for interpreting Item 19-III,. CET. 20. We find that according to common understanding term artificial plastic embraces within its amplitude the resin also. The plastic is a generic name and as pointed out by the learned Counsel for the Revenue, ASTM, has defined plastics as under : Materials that contain as an essential ingredient organic substances of high molecular weight which are solid in the finished state but are shaped by fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants has stated that all the material facts and the relevant case law has not been taken note of by the Hon ble Bench who decided the issue in the case of Formica. The case law cited by him is in the context of paper . According to these decisions polythene coated paper, varnished paper, presspahn paper, etc., and chemically-treated paper have been held to be not paper for the purposes of Item 17(2), CET for the reason that; these were not known in the trade as paper and were intended for a specific end-use. It has been pleaded that based on the end-use and trade criteria the goods were not held to be paper, although these were described as presspahn paper and stencil paper etc.. (emphasis supplied). We find that the goods described in all those cases were finished products with a distinct character of their own and intended for meeting a specific need of the consumer. These are also dealt with in the trade depending upon the end-use for which these were intended. In this respect we observe that the rationale adopted in the cases cited is not applicable in the instant case. In the instant case goods are a semi-finished product. What has been done is that the fabric has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopting the same rationale the paper, Prepreg P , has been impregnated with phenol formaldehyde and the same should be treated as impregnated paper falling under tariff entry 17(2), CET. He has stated that the decision taken in the case of Formica referred to supra calls for no change. We find that Tariff Item 17, CET as it existed at relevant time read as follows : Paper and paper board, all sorts (including paste-board, millboard, strawboard, cardboard and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power- (i) Uncoated and coated printing and writing paper (other than poster paper). (ii) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing). Not elsewhere specified." The entry 17(2), CET covers paper, which has been subjected to various treatments such as impregnation, coating etc. It is not denned that the product Prepreg P is the result of impregnation of paper with phenol formaldehyde. In this entry we observe that the material with which the impregnation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us is glass fabric impregnated with phenol formaldehyde known as Prepreg G . In this case also both the sides have stated that the arguments adduced in the case of fabrics will equally apply in this case. On behalf of the Revenue the learned Counsel, Shri Lakshmikumaran, has pleaded that in the case of Formica the Bench of the CEGAT has ruled out the assessment for this under Item 22B and has held that the choice for purposes of assessment is between Items 68 and 22F, CET. He has stated with respect that this position was not acceptable. Our attention has been drawn by him to the wording of Item 22B, CET which Item read as under at the relevant time : . Textile fabrics impregnated or coated with preparations of cellulose derivatives or other artificial plastic materials not elsewhere specified. His plea is that glass facrics are not specified anywhere in the Tariff and since Item 22B covers impregnated textile fabrics n.o.s. these should fall under this Item. He has pleaded that Item 22F covers mineral fibres and yarn and manufactures therefrom. The glass fabrics which are impregnated are not specifically covered under this description and these therefore should fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (s) Hyderabad Date 30-7-1985 PRESENT : Sh. J.R. Gagrat, Advocate for the appellants. Sh. V. Lakshmikumaran, SDR for the respondent ORDER (Pronounced on resumption after lunch) We are refusing the application to rely on the 4 affidavits as additional evidence. We have already made it clear that we have no objection to either side relying on quotations from authoritative works of reference in support of its stand, even if these were not referred to earlier. ______ Statement of CEGAT Decisions on composite products of Paper and other Materials cited at the hearing on 20-7-1985 before Special Bench `D of CEGAT by Sh. J.R. Gagrat S. No. Name of party Reference date of deision Description of goods Decision 1. Golden Paper Udyog (P) vs. CCE, Delhi 1983 E.L.T. 1123 (CEGAT) 23-5-1983 Bitumenised duty paid kraft paper Classifiable under T.I. 17(2) but not liable to duty again after bitumenisation 2. Collector of Customs Bombay vs. Yash Udyog 1984 (3) ETR 16 24-6-1983 Press pahn paper coated with polyester film Classifiable under T.I. 68 of CET for levy of additional dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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