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TMI Blog1995 (7) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... tion from duty to converted types of paper and paper board falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 provided they are produced out of base paper or base paper board on which Excise duty or Additional duty leviable has been paid. The benefit of Notification No. 135/89 has been denied on the ground that the product falls within the excluded category as it is impregnated with plastics; the benefit of Notification No. 49/87 has been denied on the ground that the product is not converted type of paper or paper board. 2. Appearing on behalf of M/s. Deco Mica Pvt. Ltd., M/s. Sundek India Limited and M/s. Real Laminates, Shri Devan Parikh, learned Advocate submitted that the paper- based Decorative Laminated sheets which are manufactured by the appellants, are generally used for decorative purposes such as Paper box, etc. and are not manufactured from combinations of paper and plastics but from a combination of paper and chemicals viz., Phenol Formaldehyde Solution and Melamine Formaldehyde solution which is unstable and un-marketable. He submitted that initially coating or impregnation of the paper is done with this unstable and unmarketable chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compressed together in one or more operations were excluded from the purview of Notification No. 49/87. 5. Arguing of behalf of M/s. Milton Laminates, Shri B.N. Rangwani, learned Advocate adopted the arguments advanced by Shri Devan Parikh. In addition, he draws our attention to a recent decision of the Supreme Court in the case of Moti Laminates Pvt. Ltd. v. Collector of C. Excise, Ahmedabad - [1995 (76) E.L.T. 241 (SC) = 1995 (7) R.L.T 1 (SC) and points out that the finding of the Tribunal in the case of Collector of Customs, Ahmedabad v. Jay Enterprises - [1987 (29) E.L.T. 288] that the solution formed by chemical reaction of phenol and formaldehyde etc. was A-Stage resin or resole and, therefore, covered under the description `resole falling under T.I. 15A(1) CET has been over-ruled. The learned Counsel also refers to the decision in the case of Collector of C. Excise v. Essel Packaging Ltd. [1990 (48) E.L.T. 463] in support of his argument that paper-based decorative laminated sheets are a type of converted paper and eligible for exemption under Notification No. 49/87. The learned Counsel also drew our attention to Notification No. 144/94, dated 22-12-1994 which amends No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lymerisation or at some subsequent stage i.e., the materials of Headings 39.01 to 39.14 must be capable of polymerisation and either at the moment of polymerisation or at some subsequent stage, the materials must be capable of being formed under external influence by moulding, casting, rolling or other processes into shapes which are retained on the removal of the external influence. He submits that there is no dispute that the appellants used phenol formaldehyde solution or melamine formaldehyde solution for impregnation of paper in the course of manufacture of their final product. The manufacturing process of only one of the appellants namely, M/s. Viral Laminates is available according to which, highly reactive melamine formaldehyde solution and highly reactive formaldehyde solution are prepared by mixing - (1) melamine with formaldehyde and methanol; (2) phenol with formaldehyde in the presence of catalysts. The solutions are immediately used by passing the core kraft and surface based papers and tissue papers through the solution bath. The solution impregnated paper is then dried, cut and stored and then compressed under heat and pressure. It is clear from the process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submits that the product covered by clause (b) of the amending Notification is also covered by clause (a) thereof and the Notification is only an enlargement of Notification No. 135/89. 12. Lastly, the learned DR submits that the benefit of Notification No. 49/87 is also not available to the appellants as paper-based decorative laminates are not known in commercial parlance as converted type of paper and trade parlance is an extremely essential test as there is no definition in the Tariff of `converted type of paper . He, therefore, prays that the impugned orders may be upheld and the appeals rejected. 13. We have carefully considered the rival submissions and perused the records. At the outset, it is necessary to state that all the appellants admitted that the process of manufacture of their final product viz., Paper-based decorative laminated sheets is the same as in the case of M/s. Amit Polymers wherein the Tribunal has classified the product under Heading 4823.90 after 1-3-1988. The process of manufacture has been described in Paragraph 3 of the order of the Tribunal in the Amit Polyers case reported in 1989 (39) E.L.T. 674 (Tribunal) = 1990 (20) E.C.R. 454 as follows - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator are then placed into the opening (daylight) of a 3000 ton hydraulic press. The booklets are pressed into a single sheet by keeping the same at 80 kg/cm2 pressure at 150oC for 45 minutes. Thereafter the formed sheet is allowed to cool for 20 minutes. The formed sheet upon cooling and attaining room temperature, are removed and passed to the inspection section for detections of defects or blemishes, if any. The BOPP separator film sheet is removed for subsequent re-use (the sheet) after a few operations, is rendered useless and discarded. The inspected sheet is upon passing is forwarded to the sanding section for sanding the smooth bottom surface to rough surface. The bottom sanded sheet is then passed through a cutter and trimmed at edges for the exact size. The trimmed sheet is labelled and marked at the bottom surface and then forwarded to the packing section where each sheet is individually wrapped with printed kraft paper. The sheet is now ready for sale. 15. The classification of such a product came up before the Tribunal in the case of C.C.E., Ahmedabad v. Melamine Fibre Board Ltd. reported in 1988 (36) E.L.T. 139 wherein the rival entries were TI 15A (2) of the CET, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t batch of appeals viz. M/s. Milton Laminates, M/s. Decent Laminates, M/s. Viral Laminates and M/s. Sundek (I) Pvt. Ltd., reported in 1990 (49) E.L.T. 75 (Tribunal) = [1991 (32) E.C.R. 304 (Tribunal)] The Tribunal followed the decision in the case of Amit Polymers regarding classification of the product under Heading 4818.90 till 28-2-1988 and since the relevant Tariff entries were amended w.e.f. 1-3-1988 and Heading 48.23 was incorporated as `other paper, paper board, cellulose wadding and webs of cellulose fibres, cut to size and shape; other articles of paper, paper board, cellulose wadding or webs of cellulose [fibres] the classification of the product was decided under Heading 4823.90 after 1-3-1988. This decided was subsequently followed in the case of C.C.E. v. Weldeker Laminates [1990 (47) E.L.T. 610]; Wood Polymers [1990 (47) E.L.T. 595] and Uttam Laminates v. C.C.E. [1991 (52) E.L.T. 276]. 17. The common thread running through all these judgments is that the product is impregnated with plastics and having accepted the Tribunal decisions on classification the appellant cannot now seek to take different stand for the purpose of claiming the benefit of Notification No. 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esins may benefit from typical plasticizers used for reasons other than plasticization. (Encylopaedia of Chemical Technology by Kirk Othmer). 19B. The high hardness good scratch resistance, freedom from colour and heat resistance of melamine-formaldehyde resins suggest possible use in laminating applications. The use of laminates prepared using only melamine resins as the bonding agent is however, limited to some electrical applications because of the comparatively high cost of the resin compared with that of P!F resins. On the other hand a very large quantity of decorative laminates are produced in which the surface layers are impregnated with melamine resins and the base layers with phenolic resins. These products are well known under such trade names as Formica. (Plastic materials - J.A. Brydson) 19C. Reaction with phenol involves condensation reaction that leads under appropriate conditions to a cross-linked polymer structure and the initial phenol formaldehyde reaction products may be of two types resoles and novolaks. A resole is produced by reacting a phenol with an excess of aldehyde under basic conditions. Resoles are sometimes referred to as one stage resins or A-Stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the lower Appellate Authority, he has not been able to substantiate his contention in the absence of any reference to such claim in the order of the Collector (Appeals) and in the absence of the written submissions filed by these two appellants before the Collector (Appeals) purporting to contain such a claim. Moreover, the classification of the product under Heading 4823.90 has proceeded on the basis that the product is impregnated with plastics and hence, the appellants cannot be allowed to change their stand at this stage. 23. The various cases cited by the learned Counsel on the excisability of resole or intermediate chemical solution, holding them to be not stable and not marketable are not relevant for the purpose of determining the eligibility of the appellants final product to the benefit of the Notification. Let us now deal each one of them. In the case of Indian Plastics and Chemical Limited, 1981 (8) E.L.T. 108 (Del.), the issue was the levy of duty on aqueous solution of phenolic resin under TI 15A as artificial or synthetic resin. The Court held on the basis of the manufacturing process, Chemical Examiner s report and Standard texts that the solution pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal holding that resoles A-Stage resins of phenol formaldehyde and Melamine formaldehyde were classifiable under T.I. 15A and the Court held, applying the test of marketability that the resin at A-Stage chemically known as resoles could not be subjected to duty as they were not excisable goods. 25. The cases cited by Shri Devan Parikh on Varnish namely [1982 (10) E.L.T. 33] and [1987 (31) E.L.T. 623 (Bombay)] are not relevant for the purpose of these appeals as we are not concerned with a product which is impregnated with varnish. 26. An analysis of the case laws reveals that decision holding that resoles or intermediate chemical solutions as not excisable were rendered in the context of marketability, which is not relevant to determine whether the final product of the appellants is eligible to claim the benefit of concessional rate of duty in terms of Notification No. 135/89. The arguments revolving around Notification No. 144/94 are not material for determining the dispute in these cases as there is sufficient material on record to decide the case on the basis of Notification No. 135/89 as it stood prior to its amendment. In this connection, the decision of the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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