Full Judgment Text
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PETITIONER:
COLLECTOR OF CENTRAL EXCISE, SHILLONG
Vs.
RESPONDENT:
WOOD CRAFT PRODUCTS LTD.
DATE OF JUDGMENT20/03/1995
BENCH:
VERMA, JAGDISH SARAN (J)
BENCH:
VERMA, JAGDISH SARAN (J)
BHARUCHA S.P. (J)
PARIPOORNAN, K.S.(J)
CITATION:
1995 SCC (3) 454 JT 1995 (3) 207
1995 SCALE (2)364
ACT:
HEADNOTE:
JUDGMENT:
J.S. VERMA, J.,
1.The main question for decision in these appeals and the
connected matters is whether "block boards" are to be
classified under Heading No. 44.08, Sub-heading No. 4408.90
as claimed by the revenue or under Heading No. 44.10, Sub-
heading No. 4410.90 as claimed by the manufacturers of block
boards. The controversy relates to three periods, namely,
from 28.2.1986 to 19.3.1990, from 20.3.1990 to 28.2.1992 and
from 1.3.1992 onwards. The division into three periods is
on account of the fact that an amended Chapter Note 5 in
Chapter 44 was introduced w.e.f 19.3.1990 on account of the
controversy which had been raised about the classification
of block boards and, thereafter, we.f 1.3.1992 a second
amend
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ment was made in Chapter Note 5 on account of the surviving
controversy even after the amendment made w.e.f. 19.3.1990.
These appeals and the connected matters relate to these
three periods.
2.For the first period, the Tribunal held in the main
judgment dated 18.10.1989 reported in 1992 (60) E.L.T. 668
that block board does not fall within Heading No. 44.08,
Sub-heading 4408.90 and the more appropriate classification
would be under Heading No. 44.10, Sub-heading No. 4410.90.
This decision being in favour of the manufacturers, the
appeals relating to this period are by the revenue. For the
second period writ petitions filed by the manufacturers in
the Gauhati High Court were allowed by the judgment dated
23.3.1993 reported in 1993 (66) E.L.T. 345 Arunachal
Forests Products Ltd. vs. Union of India. Civil Appeal Nos.
39774020/94 are by the revenue against that decision. For
the third period, the writ petitions filed by the
manufacturers in the Gauhati High Court have failed being
dismissed by the judgment dated 17.3.1993 and the
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manufacturers have challenged that decision.
3.At the outset, the competing headings with reference to
which the question has to be decided may be quoted. They
are as under:-
"44.08 Plywood, veneered panels and
similar laminated wood
4408. 10 Marine plywood and
aircraft plywood 30%
4408.20 Plywood for tea-chests
when cut to size in panels
or shocks and packed
in sets 30%
4408.30 Decorative plywood -
4408.40 Cuttings and trimmings
of plywood of width not
exceeding 5 centimeters Nil
4408.90 Others 30%
44.10 Articles of wood not
elsewhere specified 20%
4410. 10 Flush door 30%
4410.90 Others 12%
-------
With effect from 19.3.1990, amended Chapter Note 5 in
Chapter 44 was introduced which read as follows:-
"5. For the purposes of heading No. 44.08 the
expression ’similar laminated wood’ includes
block board, laminated board and batten board,
in which the core is thick and composed of
blocks, laths or battens of wood glued
together and surfaced with the outer plies and
also panels in which the wooden core is
replaced by other materials such as a layer or
layers of particle board, fibre board, wood
waste glued together, asbestos or cork."
Thereafter with effect from 1.3.1992 a second amendment was
made in Chapter Note 5 after which it read as follows:
"5. For the purposes of heading No. 44.08 the
expression ’similar laminated wood’ includes
block board, laminated board and batten board,
in which the core is thick and composed of
blocks, laths or battens of wood glued or
otherwise joined together and surfaced with
the outer plies
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and also panels in which the wooden core is
replaced by other materials such as a layer or
layers of particle board, fibre board, wood
waste glued together, asbestos or cork. "
4. "Block board" has not been expressly if specified in
any entry. The revenue contends that "block board" is
covered by the expression "similar laminated wood" in the
heading "Plywood, veneered panels and similar laminated
wood" of Heading No. 44.08 and, therefore, falls under the
sub-heading No. 4408.90 "other" which is the residuary Sub-
heading. On the other hand, the manufacturers of block
board contend that it is an "article of wood" and,
therefore, falls under heading "articles of wood not
elsewhere specified" of Heading No. 44. 10, Sub-heading No.
4410.90 "other" which is the residuary entry since it is
not "similar laminated wood". The basis of the rival con-
tentions is that according to the manufacturers such an
indication flows from the ISI Glossary of Terms, while
according to the revenue the structure of the central excise
tariff in the Central Excise Tariff Act, 1985 is the
adoption of a detailed central excise tariff based broadly
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on the system of classification derived from the Interna-
tional Convention called the Brussels’ Convention on the
harmonised Commodity Description and Coding System (Harmo-
nised System of Nomenclature called "HSN") with the
necessary modifications. The revenue contends that the
expression It similar laminated wood" in Heading No. 44.08
expressly includes block board, laminated wood and batten
board, in which the core is thick and composed of blocks,
laths or battens of wood glued or otherwise joined together
and surfaced with the outer plies as clarified by the
amendment in Chapter Note 5 which was always the meaning of
the expression "similar laminated wood" according to HSN.
The revenue, contends that this is how the expression was
always understood in the HSN which is the pattern adopted
while enacting Central Excise Tariff Act, 1985. According
to the revenue, the ISI Glossary of Terms being for a
different purpose is not the appropriate aid to construction
of these, headings in the Central Excise Tariff Act. The
revenue contends that the amendments made in Chapter Note 5
were only with a view to clarify this position and end the
controversy which was raised by the manufacturers relating
to construction of these headings in the Act. On this
basis, the revenue urges that the Tribunal’s decision
relating to the first period from 28.2.1986 to 19.3.1990
reported in 1992 (60) E.L.T. 668 and of the High Court for
the second period from 20.3.1990 to 28.2.1992 reported in
1993 (66) E.L.T. 345 deserve to be reversed maintaining the
decision of the High Court for the third period from
1.3.1992 onwards which is against the manufacturers. It is
obvious that in the event of the revenue succeeding in
respect of the first period, it must follow that the revenue
must succeed for the other two periods also. It is equally
obvious that for the third period from 1.3,1992 onwards, in
view of the clear wording of the amended Chapter Note 5
w.e.f 1.3.1992, the question is beyond controversy since the
expression "glued or otherwise joined together" has been
added in Chapter Note 5 to make it beyond controversy that
block boards of all kinds fall within the expression
"similar laminated wood".
5.It is significant that Heading No. 44.12 of the HSN is the
same as Heading No.44.08of the Indian Tariff and reads
"Plywood, veneered panels and similar lami-
213
nated wood". The explanatory notes on the HSN indicate the
meaning of the expression "similar laminated wood" as un-
der:-
"Similar laminated wood. This group can be
divided into two categories:
Block board, lamin board and batten board, in
which the core is thick and composed of
blocks, laths or battens of wood glued
together and surfaced with the outer plies.
Panels of this kind are very rigid and strong
and can be used without framing or backing."
6. It is clear that if the expression "similar laminated
wood" in the Indian Tariff is understood as it meant under
the HSN on which pattern the Central Excise Tariff Act is
based, then block boards of all kinds would fall within the
expression "similar laminated wood". This is how the
amended Chapter Note reads expressly. The question is
whether it can be so read even for the earlier periods
particularly the first period before amendment of Chapter
Note 5 to expressly include block board in the expression
"similar laminated wood".
7. The ISI Glossary contains the following definitions:-
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"Laminated wood-An assembled product made up
of layers of wood and adhesive in which the
grains of adjacent layers are parallel.
Block board A board having a core made up of
strips of wood, each not exceeding 25 nun in
width, laid separately or glued or otherwise
joined to form a slab which is glued between
two or more outer veneers with the direction
of the grain of the core blocks running at
right angles to that of the adjacent outer
veneers (See Fig.).
8. The Tribunal has taken the view that the block boards
manufactured by these manufactures do not conform to the
definition of "laminated wood" given in the ISI Glossary.
It further held that the block boards are similar to "flush
doors" and, therefore, the more appropriate classification
is under Heading No. 44.10 which specifies the flush doors
as a specific category and other articles of wood not else-
where specified would fall under the residuary sub-heading
No. 4410.90. Reliance was placed on the definitions in the
ISI Glossary.
9. After the amendment made in Chapter Note 5 w.e.f
19.3.1990 for the period from 20.3.19W to 28.2.1992, the
High Court in 1993 (66) E.L.T. 345 placed reliance similarly
on the ISI Glossary to hold that where no artificial means
by way of glue or metal fastener is used to hold the blocks
together and where the blocks of woods are separately laid,
they are "otherwise joined together" to form a slab and,
therefore, such block boards could fall under Heading No.
44.08, sub-heading No. 4408.90 in the light of Chapter Note
5 as amended from 1.3.1992 but in the absence, of the. words
as or otherwise joined" from Chapter Note 5 as introduced
w.e.f 19.3.1990, only block boards in which the core is com-
posed of blocks of woods "glued together" would fall under
Heading No. 44.08, Subheading No. 4408.90 during the second
period between 20.3.1990 to 28.2.1992. In other words, for
the second period the High Court took the view that the only
block boards in which blocks of wood arc put together by
applying adhesive or glue ,in between, could fall under
Heading No. 44.08, Sub-heading No. 4408.90 in view
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of Chapter Note 5 as introduced w.e.f 19.3.1990 prior to its
further amendment w.e.f 1.3.1992. After the further amend-
ment made in Chapter Note 5 w.e.f. 1.3.1992 by enlargement
of the expression "glued together" to "glued or otherwise
joined together", the High Court for the third period
commencing from 1.3.1992 held that all kinds of block boards
whether glued together or joined and kept in place by any
other mode fall under the Heading No. 44.08, Sub-heading No.
4408.90.
10.Having heard learned counsel for the parties, we are
satisfied that the contention of the revenue must be
accepted with the result that the decision of the Tribunal
reported in 1992 (60) E.L.T. 668 for the first period and
that of the High Court reported in 1993 (66) E.L.T, 345 for
the second period must be reversed, while the decision dated
17.3.1993 of the High Court against the manufacturers for
the third period commencing from 1.3.1992 must be affirmed.
11. The Statement of Objects and Reasons of the Central
Excise Tariff Bill, 1985 which led to the enactment of the
Central Excise Tariff Act, 1985 is indicative of the pattern
of the structure of the central excise tariff enacted
therein. It reads as under:
"Central Excise duty is now levied at the
rates specified.in the First Schedule to the
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Central Excises and Salt Act, 1944. The
Central Excises and Salt Act, 1944 originally
provided for only 11 items. The number of
Items has since increased to 137. The levy,
which was selective in nature, to start with,
acquired a comprehensive coverage in 1975,
when the residuary Item 68 was introduced.
Thus, barring a few Items like opium, alcohol,
etc., all other manufactured goods now come
under the scope of this levy.
2.The Technical Study Group on Central
Excise Tariff, which was set up by the
Government in 1984 to conduct a comprehensive
inquiry into the structure of the central
excise tariff has suggested the adoption of a
detailed central excise tariff based broadly
on the system of classification derived from
the international Convention on the Harmonised
Commodity Description and Coding System
(Harmonised system) with such contractions or
modifications thereto as are necessary to fall
within the scope of the levy of central excise
duty. The Group has also suggested that the
new tariff should be provided for by a
separate Act to be called the Central Excise
Tariff Act.
3.The tariff suggested by the Study Group
is based on an internationally accepted
nomenclature, in the formulation of which all
considerations, technical and legal, have been
taken into account. It should, therefore,
reduce disputes on account of tariff
classification. Besides, since the tariff
would be on the lines of the Harmonised
System, it would bring about considerable
alignment between the customs and central
excise tariffs and thus facilitate charging of
additional customs duty on imports equivalent
to excise duty. Accordingly, it is proposed to
specify the Central excise tariff suggested by
the Study Group by a separate tariff Act in-
stead of the present system of the tariff
being governed by the First Schedule to the
Central Excises and Salt Act 1944.
4.The main features of the Bill are as
follows :-
(i)The tariff included in the Schedule to
the Bill has been made more de tailed and
comprehensive, thus obviating the need for
having a residuary tariff Item.
Goods of the same class have been grouped
together to enable parity in treatment
xxx xxx xxx
5. The Bill seeks to achieve the above
objects.
(emphasis supplied)
12.It is significant, as expressly stated, in the Statement
of Objects and Reasons, that the central excise tariffs
are based on the HSN and the internationally accepted
nomenclature was taken into account to "reduce disputes on
account of tariff classification". Accordingly, for
resolving any dispute relating to tariff classification, a
safe guide is the internationally accepted nomenclature
emerging from the HSN. This being the expressly
acknowledged basis of the structure of central excise tariff
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in the Act and the tariff classification made therein, in
case of any doubt the HSN is a safe guide for ascertaining
the true meaning of any expression used in the Act. The ISI
Glossary of Terms has a different purpose and, therefore,,
the specific purpose of tariff classification for which the
internationally accepted nomenclature in HSN has been
adopted, for enacting the Central Excise Tariff Act, 1985,
must be preferred, in case of any difference between the
meaning of the expression given in the HSN and the meaning
of that term given in the Glossary of Terms of the ISI.
13. A comparison of Chapter 44 in the Central Excise Tariff
Act 1985 and the corresponding chapter in the HSN
(Harmonised System of Nomenclature) of the Customs
Cooperation Council (CCC) shows that they are, similar.
Heading No. 44.08 of the Indian Tariff is "Plywood,
veneered panels and similar laminated wood" which is
identical to Heading No. 44.12 of die HSN. For this reason,
the expression "similar laminated wood" in the identical
heading in the Indian tariffs and the HSN should have the
same meaning since the pattern of the Indian tariff of the
classification made therein is based on the HDN. The
explanatory note in the HSN expressly includes block board
in "similar laminated wood". the word used in the expression
is "similar" and not " same which means that the block
board to be included in this heading need not be the same as
laminated wood but similar to it. The ISI Glossary of Terms
defines "laminated wood" and "block board" separately to
indicate that block board is not included in the definition
of "laminated wood" for the purpose of ISI. On the other
hand, HSN in the explanatory note expressly says that block
board is " a similar laminated wood" wherein the core is
thick and composed of bloc", and surfaced with outer plies.
All kinds of block boards answer this description being
comprised of the core composed of blocks which arc joined
together and surfaced with outer plies. This is the basic
requirement according to the explanatory note in the HSN to
make the article "similar laminated wood". The process by
which the core composed of blocks is kept together ’in plate
to form the core between the outer plies is not significant
for classification of the article as block board. The fact
that all kinds of block boards irrespective of the manner in
which the blocks composing the core are kept together in
place are known as block boards, makes this evident It is
clear that any article having a core composed of blocks of
wood kept together in place between outer plies is a block
board and block
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board is included within the expression "similar laminated
wood" for the purpose of bringing it within the heading
"Plywood, veneered panels and similar laminated wood" which
is Heading No. 44.08 in the Indian tariff as it is in
Heading No. 44.12 of the HSN.
14. The mere fact that on account of the dispute raised by
the manufacturers, Chapter Note 5 was amended w.e.f.
19.3.1990 to bring it in line with the corresponding
explanatory note in the HSN and the expression "glued
together" used therein was enlarged by a further amendment
therein w.e.f. 1.3.1992 to read "glued or otherwise joined
together" does not indicate that block board was not
included in the expression "similar laminated wood" in
Heading No. 44.08 as it stood from the beginning. It is
significant that no amendment was made in the Heading and
that the amendment was made only in the explanatory note.
The exercise of amendment of Chapter Note 5 was ex abundante
cautela merely to clarify and make explicit that which was
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implicit earlier in the expression "similar laminated wood"
since the identical heading was lifted from the HSN wherein
an explanatory note existed, including block board in the
expression "similar laminated wood". In our opinion, the
express provision made for "flush doors" in Heading No. 44.
10, Subheading No. 4410.10 is no indication, in the context,
that block board must be classified as an article of wood
not elsewhere specified under Heading No. 44.10, Subheading
No. 4410.90 "others". It merely means that "flush door"
being expressly classified under Heading No. 44.10, Sub-
heading No. 4410. 10, is taken out of the ambit of "similar
laminated wood" in Heading No. 44.08 leaving the rest
included in that expression untouched. AL do not think that
the specification of "flush door" under Heading No.44. 10,
Sub-heading No. 4410. 10 has the effect of also excluding
block board from "similar laminated wood" in Heading No.
44.08, Subheading No. 4408.90.
15. The meaning of the expression "similar laminated wood"
in the heading "Plywood, veneered panels and similar lami-
nated wood" given in the explanatory note to the HSN for
Heading No. 44.12 therein, identical to Heading No. 44.08 in
the Indian tariff is also in accord with the general meaning
of the relevant words used in that expression. The heading
means that it covers ’ plywood" and ",veneered panels"
together with all kinds of "similar laminated wood". In
other words, treating "plywood" or "veneered panels" as
"laminated wood", it covers all kinds of laminated wood
bearing any resemblance with "plywood" or "veneered panels".
The word "similar" is expansive and not restrictive like
"same". Thus, some resemblance with "plywood" or "veneered
panels" is enough provided the article can be treated. as
"laminated wood". The sweep of the heading is, therefore,
wide and resort to the residuary heading No. 44.10 is to be
had only when a liberal construction of the wide heading No.
44.08 cannot accommodate "block board" within it.
16. The significant words are "plywood", "veneered panels"
and "laminated wood" with reference to the meaning of
which, the ambit of Heading No. 44.08 has to be determined.
In the Oxford Encyclopedic English Dictionary, the meanings
given are:
Plywood a strong thin board consisting
217
of two or more layers glued and pressed
together with the direction of the grain
alternating. "
"Blockboard a plywood board with a core of
wooden strips."
"Lamination the manufacture by placing layer
on layer. "
The New Encyclopaedia Britannica, Volume 19, Macropaedia,
under the heading "Forestry and Wood Production", in the
section "Wood Utilization" at pages 420-21 states -
"Veneer. Veneer is a thin layer, or sheet, of
wood that is uniform in thickness....
xxx xxx xxx
"Plywood and laminated constructions. Plywood
and laminated constructions arc glued-wood
products. Although gluing is an old art,
practiced since ancient times the modem
development of various products was made
possible by the improvement of glues
especially by the production of synthetic
resin adhesives.
Plywood is a panel product manufactured by
gluing together one or more veneers to both
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sides of a veneer solid wood, or reconstituted
wood core (...). In the case of solid-wood-
core plywood and reconstituted-wood-core
plywood, an additional intermediate step is
the production of cores, which are made by
lateral gluing of blocks or strips of wood or
by gluing oriented wood chips or flakes with
adhesives.
xxx xxx xxx
"Another important glued product is laminated
wood..."
17. In Vol., 7, Micropaedia, at page 123, it says -
"Lamination, in technology, the process of
building up successive layers of a substance
such as wood or textiles, and bonding them
with resin to form a finished product.
Laminated board, for example, consists of thin
layers of wood bonded together;.........
18.The meaning of the significant words and description of
the wood products as intermediate materials meant for
manufacture of final products clearly indicate that
"laminated wood" means a wood product prepared by placing
layer on layer and "block board" is a plywood board with a
core of wood. Any plywood board with a core of wood in
which there are layers, one above the other is, therefore,
laminated wood similar to plywood or, veneered panels. It
is "similar laminated wood" included in the heading
"Plywood, veneered panels and similar laminated wood".
Similarity with, and not identity with plywood or veneered
panels is required. In Nat Steel Equipment Private Ltd. vs.
Collector of Central Excise, 1988 (34) E.L.T. 8 (S.C.),
while considering the meaning of the word "similar" in a
tariff item, in similar context, it was stated thus:
"........ The expression "similar" is a
significant expression. It does not mean
identical but it means corresponding to or
resembling to in many respects; like; or
having a general likeness. statute does not
contemplate that goods classed under the
words of ’similar description shall be in all
respects the same. If it did these words would
be unnecessary. These were intended to
embrace goods but not identical with those
goods....."
(at page 10)
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This test is satisfied. Thus, the meaning given to the
expression "similar laminated wood" in the HSN is not any
special meaning thereof but the general meaning as un-
derstood internationally in the field of "Forestry and Wood
Production".
19.We are of the view that the Tribunal as well as the High
Court fell into the error of overlooking the fact that the
structure of the central excise tariff is based on the
internationally accepted nomenclature found in the HSN and,
therefore, any dispute relating to tariff classification
must, as far as possible, be resolved with reference to the
nomenclature indicated by the HSN unless there be an express
different intention indicated by the Central Excise Tariff
Act, 1985 itself The definition of a term in the ISI
Glossary, which has a different purpose, cannot, in case of
a conflict, override the clear indication of the meaning of
an identical expression in the same context in the HSN. In
the HSN, block board is included within the meaning of the
expression "similar laminated wood" in the same context of
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classification of block board. Since the Central Excise
Tariff Act, 1985 is enacted on the basis and pattern of the
HSN, the same expression used in the Act must, as far as
practicable, be construed to have the meaning which is
expressly given to it in the HSN when there is no indication
in the Indian tariff of a different intention.
20.In our opinion, the expression "similar laminated wood"
in Heading No. 44.08 as it stood from the beginning must be
construed to include within it block board of all kinds so
that the amendment in Chapter Note 5 w e.f 19.3.1990 and
w.e.f 1.3.1992 merely clarified and explicit that which was
implicit in the heading throughout. These amendments were
obviously made to end the dispute raised by the
manufacturers by an express statement. Any further
discussion with reference to the definitions in the ISI
Glossary is unnecessary for the reason already indicated.
21. The result is that the decision of the Tribunal
reported in 1992 (60) E.L.T. 668 and that of the High Court
in 1993 (66) E.L.T. 345 arc reversed, while the decision of
the High Court dated 17.3.1993 for the third period
commencing from 1.3.1992 is affirmed even though for dif-
ferent reasons given herein.
22. Consequently, all the appeals of the revenue are
allowed while the appeals and SLPs of the manufacturers arc
dismissed. No costs.
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