1995(07)LCX0080
IN THE CEGAT, SPECIAL BENCH `C’, NEW DELHI
Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)
VIRAL LAMINATES (PVT.) LTD.
Versus
COLLECTOR OF C. EX., AHMEDABAD
Order No. 197-202/95-C, dated 18-7-1995 in Appeal Nos. E/546/93-C and 5 others
Cases Quoted
Hindustan Bobbin Ltd. v. Collector — 1987 (032) ELT 616 [Paras 3, 24]
Collector v. Union Carbide — 1989 (040) ELT 424 [Paras 3, 24]
Travancore Rayons Ltd. — 1978(01)LCX0013 Eq 1982 (010) ELT 0516 (GOI) [Para 3]
Collector v. Premier Tyres — 1985 (020) ELT 124 [Paras 3, 24]
Moti Laminates Pvt. Ltd. v. Collector — 1995(02)LCX0071 Eq 1995 (076) ELT 0241 (SC) [Paras 5, 24]
Collector v. Jay Enterprises — 1987 (029) ELT 288 [Para 5]
Collector v. Essel Packaging — 1990 (048) ELT 463 [Paras 5, 27]
Meghdoot Laminates Pvt. Ltd. v. Collector — 1989(09)LCX0007 Eq 1990 (049) ELT 0075 (Tribunal) [Paras 6,16]
Prestige Engg. India Ltd. v. Collector — 1994(09)LCX0110 Eq 1994 (073) ELT 0497 (SC) [Paras 8, 22]
Amit Polymers & Composites Ltd. v. Collector —
1988(11)LCX0053 Eq 1989 (039) ELT 0674 (Tribunal) [Paras 8, 10, 13, 16A, 22]
Collector v. Melamine Fibre Board Ltd. — 1988 (036) ELT 139 [Para 15]
Collector v. Waldeker Laminates — 1990 (047) ELT 610 [Para 16A]
Wood Polymers Ltd. v. Collector — 1990 (047) ELT 595 [Paras 6, 16A, 27]
Uttam Laminates v. Collector — 1991 (052) ELT 276 [Para 16A]
Indian Plastics & Chemicals Pvt. Ltd. v. UOI — 1980(10)LCX0009 Eq 1981 (008) ELT 0108 (Del.) [Para 23]
Epochemik Industries v. Collector — 1985 (021) ELT 452 [Para 24]
Ceat Tyres of India Ltd. v. UOI — 1987(06)LCX0082 Eq 1987 (030) ELT 0857 (Bom.) [Para 24]
Devi Dayal Electronics & Wires Ltd. v. UOI — 1980(10)LCX0003 Eq 1982 (010) ELT 0033 (Del.) [Para 25]
Shakti Insulated Wires Pvt. Ltd. v. UOI — 1987(07)LCX0092 Eq 1987 (031) ELT 0623 (Bom.) [Para 25]
Cannanore Spg. & Wvg. Mills v. Collector — 1978 (002) ELT (J 375) (SC) [Para 26]
Neelam Prints v. Deputy Superintendent — 1982(07)LCX0010 Eq 1982 (010) ELT 0895 (P & H) [Para 26]
Advocated By : S/Shri S.I. Nanavati, Asim Pandyar, J.S. Agarwal, B.N. Rangwani and Devan Parikh, Advocates, for the Appellants.
S/Shri Sharad Bhansali, SDR and J.P. Singh, JDR, for the Respondents.
[Order per : Jyoti Balasundaram, Member (J)]. - The common issues for determination in all these appeals which are heard together and disposed of by this single order, are the eligibility of `Paper based Decorative Laminated Sheets’ falling under sub-heading 4823.90 of the Schedule to the Central Excise Tariff Act, 1985, to the benefit of (1) Notification No. 135/89, dated 12-5-1989 which grants concessional rate of 12% duty to goods falling under sub-heading 4823.90 other than products consisting of sheets of paper or paper board impregnated, coated or covered with plastics, compressed together in one or more operations, and (2) Notification No. 49/87, dated 1-3-1987 which grants total exemption 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 chemical solution which is not a resin and polymerisation takes place only at a later stage when the sheets consisting of one or more layers of such chemically treated papers are subjected to the process of heating and pressure and, therefore, it cannot be said that the paper is coated or laminated with resins. With reference to Note 1 to Chapter 39 of the Tariff which sets out the meaning of `plastics’ for the purpose of the Schedule, he contends that none of the inputs or starting material for the chemical solution are resins or plastics but only A-Stage resin which are not plastics and the Chapter Note does not cover intermediate products. He then submitted that since A-Stage resin gets polymerised, only under heat and pressure at the stage of compression, the appellants’ products are hit by the exclusion clause in the Notification which only excludes sheets which are first impregnated with plastics, and then compressed.
3. The learned Counsel contended that the chemical solutions are not “goods” at all within the meaning of excise law and hence Note 1 to Chapter 39 cannot be made applicable to something which is not `goods’. In support of this proposition, he cites several decisions of the Tribunal and various High Courts among them the following :
1987 (032) ELT 616
1989 (040) ELT 424
1982 (010) ELT 516
1985 (020) ELT 124
The alternative contention of the learned Counsel is that the appellants’ product is impregnated with varnish and not resin or plastics and hence does not fall within the exclusion category in Notification No. 135/89. In these circumstances, he submits that the appellants’ product is eligible for the benefit of the notification.
4. Regarding the applicability of Notification No. 49/87 to the product of the appellants, the learned Counsel submits that the product is a type of converted paper or paper board and hence the benefit of total exemption in terms of the notification is available thereto for the entire period covered by the appeals. In the alternative, he submits that in the event of the Tribunal holding that the product is impregnated with plastics, then the benefit of Notification No. 49/87 would be available at least till 19-3-1990 as it was only with the issue of Notification No. 45/90, dated 20th March, that “products consisting of sheets of paper or paper board impregnated, coated or covered with plastics, 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(02)LCX0071 Eq 1995 (076) ELT 0241 (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 (029) ELT 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 (048) ELT 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 Notification No. 135/89 (as amended by Notification No. 20/94) and submits that it is only with the issue of this amendment that products consisting of sheets of paper or paper board impregnated, coated or covered with plastics, including thermoset resins or mixtures thereof or chemical formulations containing melamine, phenol, urea or formaldehyde solution with or without curing agents or catalysts compressed together in one or more operations or products known commercially as Decorative Laminates were excluded from the benefit of concessional rate of 12% duty under Notification No. 135/89.
6. Shri J.S. Agarwal, learned Advocate appearing on behalf of M/s. Decent Laminates (Pvt.) Ltd., adopts the arguments advanced by the other two counsels and in addition, he cites the decisions of the Tribunal reported in 1990(03)LCX0091 Eq 1990 (047) ELT 0595 (Tribunal) = [1991 (032) ECR 57] and 1989(09)LCX0007 Eq 1990 (049) ELT 0075 (Tribunal)] = [1991 (032) ECR 304].
7. While adopting the arguments of the other Counsels, Sh. S.I. Nanavati, learned Advocate appearing on behalf of M/s. Viral Laminates, emphasises that Notification No. 144/94 seeks to substitute Col. 3 of Sl. No. 6 of Notification No. 135/89 by bringing into the exclusion category thermoset resin and certain chemical formulations and decorative laminates for the first time w.e.f. 22-12-1994 and Notification is not a mere clarification - the natural corollary is that, prior to 22-12-1994, the paper-based decorative laminated sheets are not to be considered as impregnated with plastics; therefore, they will not be excluded from the benefit of Notification No. 135/89 as amended by Notification No. 20/94. The appellants, therefore, pray for setting aside the impugned orders and acceptance of the appeals.
8. In reply to the submissions of the learned Counsels for the appellants, Shri Sharad Bhansali, learned SDR contends that what is relevant for the purpose of Notification No. 135/89 is that the final product must be impregnated with plastics and not that the raw materials for impregnation should be plastics. The expression `plastics’ in the Notification should be assigned the same meaning as in the Tariff and in support of this proposition, he cites the decision of the Hon’ble Supreme Court in the case of Prestige Engg. reported in 1994 (073) ELT 497. According to Note 1 to Chapter 39, thermosetting must take place either at the stage of polymerisation 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 that both the solutions are resin solutions. Further since all the appellants accept that their process of manufacture is the same as that followed by M/s. Amit Polymers whose appeal has been decided by the Tribunal as reported in 1988(11)LCX0053 Eq 1989 (039) ELT 0674 (Tribunal) = 1989 (020) ECR 454, the finding of the Tribunal on the process of manufacture namely that paper is passed through resin bath and impregnated with resin, is to be made applicable to the product of the appellants in these appeals.
9. He refers to the finding of the Collector (Appeals) on the various sta- ges of resins as defined in the Condensed Chemical Directionary, 10th Edition by Gessner Hawley and contends that A-stage resins (resole) factually gets con- verted into C-Stage resins i.e., fully cross linked phenol formaldehyde type re- sin on heating. Thus the chemical formulations used by the appellants finally emerged in the form of C-Stage resin which is a high polymer in the final product.
10 The learned DR contends that the case laws cited by the learned Counsels on the excisability of chemical solution used for impregnation is not relevant for the purpose of determining the eligibility of the final product to the benefit of Notification No. 135/89, as the key test for determining such eligibility is whether the final product for which the benefit is being claimed, is impregnated with plastics. Regarding the claim of M/s. Sundek India Ltd. and M/s. Deco Mica (P) Ltd. of impregnation of the paper with varnish, the learned DR submits that, having accepted that the process of manufacture is identical to the one used by M/s. Amit Polymers wherein it is established that the papers are impregnated with resin, the appellants cannot subsequently change their stand in order to get over the exclusion clause in Notification No. 135/89. The further difficulty is that in the absence of classification list filed by either of these two appellants, it is not possible, at this stage, to go into this vital aspect.
11. On the issue of amending Notification No. 144/94, the learned DR submits that the amendment was issued only to put the matter beyond the pale of doubt as thermoset resins or certain chemical formulations are also plastics and even without this amendment, it is possible to decide the issue of eligibility or otherwise of the product of the appellants to the benefit of Notification No. 135/89. 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 1988(11)LCX0053 Eq 1989 (039) ELT 0674 (Tribunal) = 1990 (020) ECR 454 as follows -
“Paper is passed through resin bath and is impregnated with resin (phenol formaldehyde resin) to obtain resin impregnated paper. These are used as core paper. The top papers are the design paper. After design is printed on the paper or bought as printed paper, it is passed through the resin bath and similarly impregnated (melamine formaldehyde resin). These sheets of paper are then laminated in the hydraulic press applying pressure and heat to make a laminated sheet and during the process in hydraulic press, the resin passed through the pores of paper and acts as a binder between the said paper sheets. The end-product is sold for purpose of surfacing of furniture etc. They further stated that in the finished product 30 to 40% is represented by resin and the rest is by paper, by weight and thickness. Therefore, the paper thickness is also predominant in each layer, and also in the finished product. The top paper gives the decorative aspect of the final sheet as well as the thickness.”
14. In the Viral Laminates case, write-up on the process of manufacture was filed by the learned DR on 29th March, 1995 during the course of hearing and was accepted by the learned Counsel for M/s. Viral Laminates. The process is as follows -
“Highly Reactive Melamine Formaldehyde Solution and Highly Reactive Phenol Formaldehyde solution are prepared by mixing (1) Melamine with Formaldehyde and Methanol, and (2) Phenol with formaldehyde in separate pressure vessels at 90oC temperature and in the presence of catalyst. The solutions are immediately used by passing the core kraft and surface base papers and tissue papers through the solution bath. The solution impregnated paper is then passed through the drying chamber at 150oC by air-floating. The dried impregnated paper is then cut slightly oversize in the desired length and width. The dried-impregnated cut paper is then stored in the air-conditioned premises under controlled humidity. The required layers of dried-impreganted-cut-and-stored core, base and tissue paper are stacked together, known as booklet. Each such booklet is placed (sandwitched) between both sides mirror/matt/textured finish stainless steel plates (moulds). A BOPP film sheet is placed as a separator between each set of two booklets to prevent sticking together of the formed sheet. A number of such sandwitched booklets with the moulds and BOPP film separator 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 (036) ELT 139 wherein the rival entries were TI 15A (2) of the CET, as contended by the Revenue and TI 68 as claimed by the assessees. The admitted position is that the chemicals namely Phenol formaldehyde or Melamine and few other additives result in a resin forming solution, process of condensation takes place and the solution possesses resinous properties. In Paragraph 8 of the order, the Tribunal has observed that for forming laminates, resole in A-Stage resin after impregnation of paper has necessarily to go through B-Stage and finally cured to C-Stage. The Tribunal held that while the paper provides the body to the product, the plastic provides the sinews which keeps the sheets rigid. The reasons for negativing the contention of the Revenue that the product “laminated sheet” is a plastic sheet, are contained in Paragraphs 12 and 13 of the order which are reproduced below -
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16. Equally [important] for the purpose of determining whether the disputed item is impregnated with plastics, is the order of the Tribunal in the case of Amit Polymers (supra). The Tribunal has referred to Note 1 to Chapter 39 of the Schedule to the Central Excise Tariff Act which says that the expression plastics means those materials of Headings 39.01 to 39.14 which are or have been capable, either at the moment of polymerisation or at some subsequent stage of being formed under external influence shall heat and pressure if anyone with a solvent or plasticisers) by moulding, casting, rolling or other processes into sheets which are retained on the removal of the external influence and noted that the impugned goods are paper impregnated with plastics in which paper interests the core and resins as the binding agent. Classification under Chapter 39 was ruled out in view of Note 1(f) of Chapter 48 according to which paper reinforced, stratified, plastic sheet or one layer of paper or paper board or covered with a layer of plastics is excluded from Chapter 48 if plastics constitute more than half the total thickness and since the disputed Item contained only 30 to 40% plastics, it remained within the scope of Chapter 48. The Tribunal classified the product under Heading 4818.90 (for the period prior to 1-3-1988) on the ground that it is an article made of two sheets of impregnated paper.
16A. The next decision on classification is in the case of Meghdoot Laminates Pvt. Ltd. and other cases of some of the appellants before us in the present 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 1989(09)LCX0007 Eq 1990 (049) ELT 0075 (Tribunal) = [1991 (032) ECR 0304 (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 (047) ELT 610]; Wood Polymers [1990 (047) ELT 595] and Uttam Laminates v. C.C.E. [1991 (052) ELT 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. 135/89, by putting forth a new plea that the impregnation is not with plastics.
18. Looking at the issue from another angle, the appellants have contended that the chemical formulations used by them for impregnating the paper are highly reactive, unsettled, have limited shelf life cannot be recoated with plastics; that according to the Condensed Chemical Dictionary by Gessner H. Hawley, plastic is different from synthetic resin although both are high polymers; that the Molecular weight of high polymer should not be less than 5000 whereas weight of the two chemicals is below 1500. They further submitted that the chemical solutions fall in the category of A-Stage resin. As set out by Collector (Appeals). Condensed Chemical Dictionary, 10th Edition by Gessner G. Hawley, defines the various stages of resin as follows -
“A-Stage resin (resole; 1-step resin) : It is defined as `an alkaline catalyzed thermosetting phenol - formaldehyde type resin consisting primarily of partially condensed phenol alcohols. At his stage, the product is fully soluble in one or more common solvent (alcohols, ketones) and is fusible at temperatures below 1500C. On further heating and without use of a catalyst or additive, the resin is eventually converted to the insoluble, infusible cross-linked form (C-stage). The A-Stage resin is a constituent of most commercial laminating varnishes and is also used in special moulding powers. See B-Stage resin, C-Stage resin, novolak phenol- formaldehyde resin’ .
B-Stage Resin (Resito) :- It is defined as `A-Thermo-setting phenolformaldehyde type resin, which has been thermally reacted beyond the A-Stage so that the product has only partial solubility in common solvents (alcohols, ketones) and is not fully fusible even at 150-1800C. The B-Stage resin has limited commercial use.
C-Stage Resin (resite) : - it is defined as `The fully cross-linked phenol-formaldehyde type resin which is infusible and insoluble in all solvents."
19. From the foregoing, it is evident that A-Stage resin is eventually converted into C-Stage resins on heating and the chemical formulations used by the appellants finally emerge in the form of C-Stage resins, a high polymer in the final product. Condensation of phenol and formaldehyde results in short-chain segments with a very high degree of cross-linking.
19A. Other themosetting resins e.g. polyesters and melamine resins 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-Stage resins, on hardening, the resins pass through a stage in which they are swollen but not dissolved by a variety of solvents. This is referred to as B-Stage resin when prepared from resoles, B-Stage resin is sometimes known as resole and the C-Stage product is known as a resit. The terms A, B and C stage resins are also sometimes used to describe the analogous states in other thermosetting resins....... Water soluble resoles are used mainly for commercial card paper and other laminates and in decorative laminates. This position is accepted by the appellants. Hence, the product clearly falls in the excluded category of Notification No. 135/89.
20. We are unable to accept the contention of Sh. Devan Parikh that Note 1 to Chapter 39 is not applicable to the chemical formulations used by his clients for impregnating paper - the definition of plastics contained in that note has been made applicable to the expression `plastics’ occurring throughout the tariff. And the solution (A-Stage resins) gets converted to B-Stage resins which is a thermo-setting type resins and ultimately gets converted into C-Stage resins before emergence of the final product.
21. In the light of this factual background, we see no force in the learned Counsel’s contention that Note 1 to Chapter 39 is not attracted as the commercial formulations get converted to Phenol formaldehyde resin and Melamine resin which fall within headings 39.01 to 39.14 (phenol formaldehyde falls under Heading 3909.51 while Melamine resins fall under Heading 3909.20)
22. In view of the judgment of the Hon’ ble Supreme Court in the case of Prestige Engineering reported in [1994 (073) ELT 497], we can assign the same meaning to the expression plastics as contained in Note 1 to Chapter 39 to the expression used in Notification No. 135/89 and on doing so, we come to the unmistakable conclusion that the product of the appellants is impregnated with plastics. The claim of M/s. Deco Mica and M/s. Sundek India Ltd. that the impregnation of the paper is with varnish and not plastics is entirely contrary to the finding of the Tribunal on the manufacturing process in the case of M/s. Amit Polymers which finding has been accepted by all the appellants herein including the abovementioned two appellants. Further, it is a new stand taken before us as even though the learned Counsel states that such a claim was made before 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, 1980(10)LCX0009 Eq 1981 (008) ELT 0108 (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 a solution of resin involatile solvent with solid contents less than 45% was not a resin because an essential step viz., dehydration had not taken place. The Court also relied on the instructions of the Central Board of Excise and Customs that the solutions of artificial or synthetic solvent are excluded from TI 68 if the weight of the solvent exceeded 50% of the weight of the solution.
24. In the case of Hindustan Bobbin - [1987 (032) ELT 616] the Tribunal followed the judgment of the Delhi High Court (supra) to hold that aqueous solution of phenolic form was not classifiable under T.I. 15A(1) CET prior to its amendment w.e.f. 1-3-1982.
The judgment of the Delhi High Court was also followed in the case of Collector of Customs v. Union Carbide reported in [1989 (040) ELT 424] holding that P-3 resin (poly-cyclo Pentadiene) is a solution of resin not classifiable under T.I. 15A.
In the case of Epochemik Industries - [1985 (021) ELT 452], the Tribunal held that diglycidal ether of bisphenol-A is a monomer pre-polymer and an intermediate in the production of epoxy resins, and not a resin polymer to be classified under T.I. 15A as there was no condensation polymerisatioin.
In the case of Ceat Tyres - [1987 (030) ELT 857], the Bombay High Court held that dip solution was not a resin covered by TI 15A as it had no stabilizer, no shelf-life and was not marketable and hence not goods within the meaning of the Central Excises and Salt Act.
In the case of C.C.E., Cochin v. Premier Tyres - [1985 (020) ELT 124], the question before the Tribunal was whether polyethylene glycol and polypropylene glycol were to be classified under Heading 38.01/19(1) or 39.01/06 for the first Schedule to the Customs Tariff Act, 1975. The Tribunal held that they were classifiable as Misc. chemical products under Heading 38.01/19(1) as they were products of chemical synthesis polymers which do not have resinous plastic properties and by virtue of Note 2 to Chapter 39, the product must be an artificial resin in order to be covered by Heading 39.01/06. The Tribunal recognised that resoles can be transformed into resins by further polymerisation (emphasis supplied).
In the case of Moti Laminates v. Collector of Customs Ahmedabad - [1995(02)LCX0071 Eq 1995 (076) ELT 0241 (SC)] = [1995 (007) RLT 1 SC], the Hon’ble Supreme Court was called upon to determine the correctness of the order of the Tribunal 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 (010) ELT 33] and [1987(07)LCX0092 Eq 1987 (031) ELT 0623 (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 Supreme Court in the case of Cannanore Spg. and Wvg. Mills v. C.C., Cochin - [1978 (002) ELT (J 375)] and that of the Punjab & Haryana High Court in the case of Neelam Prints - [1982 (010) ELT 895] do not come to the aid of the appellants as the Courts were concerned with the retrospective operation of certain Notifications. In the light of the above discussion, we hold that the paper based decorative laminated sheets manufactured by the appellants are hit by the exclusion clause under Notification No.135/89 and not eligible to the benefit of concessional rate of duty in terms thereof.
27. The benefit of total exemption from excise duty granted to converted paper and paper board in terms of Notification No. 49/87 is, however, available to the appellants’ product for the period upto 19th March, 1990 after which date, products consisting of sheets of paper or paper board impregnated, coated or covered with plastics compressed together in one or more operations, were excluded therefrom, in view of the orders of the Tribunal in the cases of C.C.E. v. Essel Packaging Ltd. - [1990 (048) ELT 463] and Wood Polymer - 1990(03)LCX0091 Eq 1990 (047) ELT 0595 (Tribunal) = [1991 (032) ECR 57] extending the benefit of Notification No. 63/82, dated 23-2-1982 (the predecessor to Notification No. 49/87) and Notification No. 49/87 to vacuum metallised polyster LDPE coated and fixocally oriented poplypropylene LDPE coated glass in paper and paper based laminated sheets falling under heading 4823.90 treating them as converted type of paper/paper board.
28. In the result, we hold that the paper-based decorative laminated sheets manufactured by the appellants are not eligible to the benefit of concessional rate of duty in terms of Notification No. 135/89 as amended by Notification No. 20/94; but are eligible to the benefit of Notification No. 49/87 upto 19-3-1990.
The appeals are disposed of in the above terms.
Equivalent 1995 (79) ELT 632 (Tribunal)