1990(03)LCX0091

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

Shri G. Sankaran, Senior Vice-President and Ms. Jyoti Balasundaram, Member (J)

WOOD POLYMERS LTD.

Versus

 COLLECTOR OF CENTRAL EXCISE

Order Nos. 173 & 174/90-C, dated 6-3-1990 in E/Appeals No. 3303 and 3439/89-C

CASES CITED

AMIT POLYMERS & COMPOSITES LTD. v. COLLECTOR -

1989 (39) ELT 674 (TRI.)                                                                                         [PARAS 12, 20]

MEGHDOOT LAMINAT PVT. LTD. v. COLLECTOR -

ORDER NOS. 552 TO 572/89 DATED 29-9-1989                                                            [PARA 13]

COLLECTOR v. METRO WOOD ENGG. WORKS - 1989 (43) ELT 660 (TRI.)            [PARA 14]

HATIM DIELECTRICS (P) LTD. v. COLLECTOR - 1985 (19) ELT 621 (TRI.)            [PARA 15]

Advocated By : Shri B.N. Rangwani, Advocate for the Appellants.

Shri A.S. Sunder Rajan, JDR for the Respondent.

[Order per : Jyoti Balasundaram, Member (J)]. - Both these appeals involve common issues and are hence being disposed of by a common order.

2. E/A No. 3303/89-C has been preferred against the order of the Collector of Central Excise dated 31-7-1989, classifying the products of the appellant under heading 3920.21 of the Schedule to the Central Excise Tariff Act, 1985.

3. The appellants manufacture the following products :-

(1) Paper based decorative laminated sheets/boards.

(2) Cotton fabric based laminates.

(3) Paper based insulators - electrical grade.

4. The process of manufacture in the case of paper based decorative laminated sheets/boards is as under :-

Several sheets of duty paid kraft paper are passed through resin bath and are impregnated with a chemical solution which the department has classified as resin solution (phenol-formaldehyde solution) and classified under Chapter 39 of the Schedule, here-in-after referred to as the said schedule, to the Central Excise Tariff Act, 1985 (5 of 1986) to obtain resin impregnated paper. These impregnated kraft paper sheets are used as core paper. Similarly, decorative/printed/design paper which is also duty paid is impregnated with a chemical solution which, the department has classified as melamine resin solution under Chapter 39 of the said schedule. Likewise, tissue paper is also impregnated with melamine resin solution. Depending upon the thickness of paper based laminated decorative sheets to be manufactured, required number of impregnated sheets of kraft paper, one sheet of impregnated decorative/printed/design paper and one sheet of impregnated tissue paper are laminated/compressed together in one operation in a hydraulic press applying pressure and heat but without addition of any other ingredient to make a laminated sheet and during the process in hydraulic press the resin passes through the cores of paper and acts as a binder between the said paper sheets. The said product is sold for purpose of surfacing of furniture etc. In the finished product, about 30 per cent is represented by resin and the remaining about 70 per cent is by paper by weight as well as by thickness. Therefore, the paper thickness is also predominant in each layer and also in the finished product. The top paper i.e. decorative/design/printed paper gives the decorative aspect of the finished product as well as the thickness. Thereafter depending upon the requirements of the customers, the reverse sides of the paper based laminated decorative sheets/boards are sanded so as to give a rough surface which is required for applying glue/adhesive so as to facilitate permanent adhesion on the surface of furniture etc.

5. In the case of cotton fabric based laminates, the process adopted is similar to that adopted in the case of paper based laminated decorative sheets/boards except that no decorative/printed/design paper and tissue paper are used. The resin content by weight and thickness is more than 50 per cent of the total weight and thickness of the finished products and cotton fabrics are completely embedded in plastics and such impregnation with plastics can be seen with the naked eye. (Note 2(a)(3) under Chapter 59 of the said Schedule).

6. The paper based insulator electrical grade is also manufactured in the same way as cotton fabric based laminates described herein-before except that because of heavy coating of resin, it has perfect insulating properties and are used as insulators.

7. On 30th May 1986, the Asstt. Collector approved the classification of paper based laminated decorative sheets/boards under sub-heading 4811.90 of the Schedule as it existed at the relevant time, classification of cotton fabric based laminates under sub-heading 5901.00 and classification of paper based insulators under sub-heading 8546.00. Subsequently he issued a show cause notice on 26th August 1986 and thereafter classified all the 3 products under sub-heading 3920.21, the description of which at the relevant time read as follows :-

8. The order of the Assistant Collector being confirmed by the Collector of Central Excise, the assessees have filed this appeal to the Tribunal.

9. E/A No. 3439/89-C has been filed against the order of the Collector of Central Excise dated 31-7-1989 classifying the appellants’ products namely (a) decorative plastic laminated sheets (paper based), (b) cotton fabrics based laminates, and (c) paper based insulators electrical grade under sub-heading 3920.37.

10. The Asstt. Collector classified items (a) & (b) under sub-heading 3920.37 and approved the classification of item (c) under sub-heading 8546.00. The Collector Central Excise, in the appeal filed by the assessees against the classification of items (a) & (b), classified all 3 items under sub-heading 3920.37.

11. We have heard Shri B.N. Rangwani, learned consultant for the appellants and Shri A.S. Sunder Rajan, learned SDR for the respondent.

12. The issue of classification of paper based laminated sheets/boards came up for consideration in the case of Amit Polymers & Composites Ltd., Hyderabad v. CCE, Hyderabad [1989 (39) ELT 674 (Tri.) = (1989 (20) ECR 454)] and this Tribunal had held that the products are classifiable under Chapter 48 and not under Chapter 39. The Tribunal held as follows :-

“For the purpose of classification of the goods under Heading 39.20 (articles of plastics) the same should be made of plastics. Plastic sheets, plates, film, foil and strip, which are lacqured or metallised or laminated, supported or similarly combined with other materials are also covered under this heading. The impugned goods are paper impregnated with plastic, in which paper constitutes the core and resin acts as binding agent. Admittedly, paper constitutes 60 to 70% of the finished product by weight as well as thickness and balance 30 to 40% is resin. The question to be decided is whether it should be classified under Chapter 39 as an article of plastics or under Chapter 48. There are two decisions, which have been cited before us by Shri Subramanyam, viz. judgment of Supreme Court in Geep Flashlight Industries Limited v. Union of India and Others, reported in 1985 (22) ELT-3 (S.C.) = 1986 (6) ECR-430 (S.C.) and a decision of this Tribunal, reported in 1988 (36) ELT-139 (Tribunal), in the case of Collector of Central Excise, Ahmedabad v. Melamine Fibre Board Ltd. & Others. Both these cases have dealt with classification under the first Schedule to the Central Excises and Salt Act, 1944. The question of classification of plastic torches for the purpose of Central Excise duty was considered by the Supreme Court in the first mentioned case. The Hon’ble Supreme Court held in that case that ”Articles of Plastics" did not mean articles made from plastics alongwith other materials. Accordingly, it was held by the Supreme Court that Plastic torches were classifiable under Item-68 of the Central Excise Tariff and not under Item 15A(2) ibid. In the case of Melamine Fibre Board Ltd. and Others (Supra), the issue before this Tribunal was classification of laminated paper in which paper content was 70% and resin 30% of the finished product by weight. The paper formed core of the sheet and plastic was a binding Agent. It was held by the Tribunal that the goods were correctly classifiable under Tariff Item-68 and not Item 15A ibid. It has been argued before us by the learned S.D.R. for the Revenue that a product combined with other materials was not classifiable under erstwhile Tariff Item 15A and hence the aforesaid two decisions are not applicable to the facts of the present case as, under the new Tariff under the Central Excise Tariff Act, 1985, specified articles of plastics combined with other materials are classifiable under Heading 39.20. This argument should fail in view of the Chapter Note 1(f) of Chapter 48 of the new Tariff. According to this Chapter Note, paper reinforced stratified plastic sheeting, or one layer of paper or paper-board coated or covered with a layer of plastic is excluded from Chapter 48 if plastics constitute more than half the total thickness. In the case before us, plastics constitute 30 to 40% only, i.e. less than half of the finished product by thickness (as well as by weight). Classification of the product under Chapter 39 is thus ruled out.

As Chapter 39 is thus excluded, the product being composed of two materials, viz. paper and resin, the correct classification should be under Chapter 48 which covers papers, paper board and articles thereof, etc. Collector (Appeals) has classified the goods under Heading 4811.39 as laminated paper, whereas the assessee has claimed classification under Heading 4818.90 as other articles of paper. The question to be considered now is which of these two headings is more appropriate for classification of the product in dispute before us. The product as described by the Collector (Appeals) in the process of manufacture, which has been quoted in paragraph 3 of this order, is laminated sheets made of impregnated paper. These laminated sheets are made of two sheets of impregnated paper. One of them is the core paper and the other, which is top paper, is the design paper. These two sheets of impregnated paper are laminated in hydraulic process applying pressure and heat. The intermediate product in the manufacture of the final product is the “impregnated paper” falling under Heading 48.11 and not the final product. Final product which is in dispute before us, is the combination of two sheets of impregnated paper by hydraulic pressure and heat. The end product is used for decorative purposes. The impugned order, vide extract quoted in paragraph 3 above, shows that the end-product is sold for the purpose of surfacing of furniture etc. The learned S.D.R. has argued that it is not used as paper. In the case of State of U.P. v. Kores India Ltd., reported in 1977 (1) S.C.R. Page 837 (S.C.), Supreme Court has defined “Paper” in the following terms, viz. the word ‘paper’ understood as meaning a substance which is used for bearing, writing or printing, or for packing, or for drawing on, or for decorating, or covering the wall. The top impregnated paper performs the decorating function in the final product. The final product is an article made of two sheets of impregnated paper. It is thus an article of paper falling under Tariff Heading “4818-90-Other”.

13. This view has been followed by the Tribunal in the case of. M/s. Meghdoot Laminat Pvt. Ltd. & Others v. CCE, Ahmedabad (Order Nos. 552 to 572/89 dated 29-9-1989). The process of manufacture is the same in this case also. Respectfully following the ratio of the above decisions, we hold that this product should be classified under Heading 4818.90 till 28-2-1988 and under Heading 4823.90 on and after 1-3-1988.

14. The issue of classification of industrial laminates having insulation properties has been settled by the decision of this Tribunal in the case of CCE, Ahmedabad v. Metro Wood Engg. Works [1989 (43) ELT 660 (Tri.) = 1989 (22) ECR 369]. The Tribunal, held that they are classifiable under Heading 8546.00 of the CET Act 1985 as “Electrical Insulators of any material”. The ratio of that decision applies on all fours to the paper based insulators electrical grade which is one of the products whose classification is in dispute in these appeals.

Applying the ratio of the case supra, we hold that the paper based insulators electrical grade are correctly classifiable under Heading 8546.00.

15. Regarding the classification of cotton fabric based laminates in E/A 3439/89-C the Department has classified them under Heading 3920.37 which reads as follows :-

In E/A 3303/89-C, cotton fabric based laminates have been classified under Heading 3920.21.

In the manufacture of cotton fabric based laminated boards, individual layers of cotton fabrics are impregnated with a resin solution whereby individual layers of cotton fabrics are completely embedded in the resin solution or entirely coated or covered on both sides with resin solution. Therefore depending upon the required thickness, a number of individual layers of impregnated cotton fabrics are compressed/laminated together under heat & pressure without addition of any ingredients & the resultant product is cotton fabric based laminated boards. At no stage in the entire process does a plastic sheet emerge and consequently, the question of laminating the sheet of plastics does not arise. Hence the question of classifying cotton fabric based laminated boards under sub-heading 3920.21 or 3920.37 does not arise in view of the decision of this Tribunal in the case of Hatim Dielectrics (P) Ltd. v. CCE, Calcutta [1985(19) ELT 621 (Tri.) = 1984 ECR 2433] in which it was held that “from the process it is clear that glass fabric is treated with epoxy resin. Plastic sheet, as it is generally known, does not seem to emerge as such in that process. Unless plastic sheet emerges, the question of placing the goods under Item No. 15A(2) (rigid plastic sheets) would not, in our view, arise.”

16. Accordingly, we hold that cotton fabric based laminated decorative boards are classifiable under sub-heading 3922.90 upto 28-2-1988 and sub-heading 3926.90 on and after 1-3-1988 as:-

17. In the result the classification of the products in dispute in these appeals is as follows:

(a) Paper based decorative laminated sheets/boards - Heading 4818.90 till 28-2-1988 and Heading 4823.90 on and after 1-3-1988.

(b) Paper based insulators - Heading 8546.00.

(c) Cotton fabric based laminates - Heading 3922.90 till 28-2-1988 and Heading 3926.90 on and after 1-3-1988.

18. The appellants claim that they are eligible for the benefit of exemption under Notifications 63/82 dated 28-2-1982 and 49/87 dated 1-3-1987 in respect of paper based decorative laminated sheets/boards which we have held to be classifiable under Heading 4818.90 till 28-2-1988 and under Heading 4823.90 on and after 1-3-1988. Similarly the appellants claim eligibility for the benefit of Notifications 132/86 dated 1-3-1986 and 53/88 dated 1-3-1988 in respect of Cotton fabric based laminates. The question of eligibility to the benefit of any exemption notification was not raised before the lower authorities and has been raised for the first time in these appeals. We remanded the matters to the Assistant Collector of Central Excise to examine whether the two above mentioned products are covered by the above mentioned notifications, in the light of their classification as held by us.

19. The appeals are allowed in the above terms.

20. Before parting, we would like to express our unhappiness with the Collector of Customs & Central Excise (Appeals) Bombay who has passed the impugned order in this case brushing aside the decision of this Tribunal in the case of Amit Polymers & Composites Ltd., Hyderabad v. CCE, Hyderabad [1989 (20) ECR 435] by saying that the case has been decided without having been apprised of the correct process of manufacture. It was open to the Department to have taken up the matter in appeal, if it was aggrieved by the decision in the Amit Polymers case. Till the Tribunal’s order is reversed, the Collector was bound by that decision and could not have ignored it. The Collector has also based his decision on classification, not on the basis of the process of manufacture in the appellants’ factory but on the basis of a visit to an unknown factory, not disclosed to the appellants. He has relied upon materials & evidence obtained behind the back of the appellants which they had no opportunity to rebut or controvert. We are constrained to express our unhappiness at such conduct.

Equivalent 1990 (47) ELT 595 (Tribunal)