Full Judgment Text
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CASE NO.:
Appeal (civil) 527 of 2002
PETITIONER:
Kemrock Industries & Exports Ltd.
RESPONDENT:
Commissioner of Central Excise, Vadodara
DATE OF JUDGMENT: 29/03/2007
BENCH:
S.H. KAPADIA & B. SUDERSHAN REDDY
JUDGMENT:
JUDGMENT
KAPADIA, J.
Civil Appeal No. 527 of 2002
1. This is a statutory appeal filed by the assessee against the final Order
no. 185/2001-D dated 11.9.2001 passed by Customs, Excise and Gold (Control)
Appellate Tribunal, New Delhi ("CEGAT") in appeal no. E/1994-R/97 Mum. The
matter pertains to the issue of classification of Glass Fibres impregnated
with resins/plastics.
2. Assessee-company is the manufacturer of Glass Fibre Reinforced Plastics.
They seek classification of the said item under Heading 70.14 of the
Schedule to the Central Excise Tariff Act, 1985. According to the Revenue,
the said item is classifiable under Heading 39.20 of Central Excise Tariff
Act, 1985.
3. To resolve the above controversy, we quote hereinbelow the above two
headings.
"Heading Sub- Description of goods Rate No.
heading of No. duty
39.20 Other plates, sheets,film, foil and
strip, of plastics, non-cellular,
whether lacquered or metallised
or laminated, supported or similarly
combined with other materials or not
--Of polymers of vinyl chloride
3920.11 --Rigid, plain 30%
3920.12 --Flexible, plain 30%
3920.13 --Rigid, lacquered 30%
3920.14 --Flexible, lacquered 30%
3920.15 --Rigid, metallised 30%
3920.16 --Flexible, metallised 30%
3920.17 --Rigid, laminated 30%
3920.18 --Flexible, laminated 30%
3920.19 --Other 30%
--Of regenerated cellulose:
3920.21 --Film, plain 30%
3920.22 --Film, lacquered 30%
3920.23 --Film, metallised 30%
3920.24 --Film, laminated 30%
3920.25 --Sheet, plain 30%
3920.26 --Sheet, lacquered 30%
3920.27 --Sheet, metallised 30%
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3920.28 --Sheet, laminated 30%
3920.29 --Other 30%
--Of other plastics:
3920.31 --Rigid, plain 30%
3920.32 --Flexible, plain 30%
3920.33 --Rigid, lacquered 30%
3920.34 --Flexible, lacquered 30%
3920.35 --Rigid, metallised 30%
3920.36 --Flexible, metallised 30%
3920.37 --Rigid, laminated 30%
3920.38 --Flexible, laminated 30%
3920.39 --Other 30%
Xxxxxxxxxxxxxx
70.14 7014.00 Glass fibres (including glass wool and glass
filaments) and articles thereof (for example, yarn,
woven fabrics) whether or not impregnated, coated,
covered or laminated with plastics or varnish."
4. We do not find any merit in this civil appeal for the following reasons.
5. The process of manufacturing articles in question of Glass Fibre
Reinforced Plastics is indicated in the Tribunal’s Order in para 2.1. In
short, the assessee makes use of Fibre Glass Mat of suitable specification
and thereafter impregnates the said Mat with a suitable resin, catalyst,
pigment and accelerator. On impregnation/injection, the pigment spreads
throughout the mat. This impregnation gives stiffness to the mat. The glass
fibre mat is used as a raw material to manufacture roofing sheets, panels,
doors etc. It is this stiffness which provides value addition to the fibre
glass mat in the sense that the strength of the mat gained by impregnation
makes the mat strong enough to be used in partitions, roofs etc. But for
that stiffness, the fibre glass mat would not be in a position to be used
as a roofing sheet. Further, the ‘glass fibre mat’ is not an Article of
glass ware per se under heading 70.14 of CETA. According to the assessee,
even after impregnation the essential character of the product remaining a
fibre glass mat and, therefore, it is classifiable as a glass fibre under
Heading 70.14 of Central Excise Tariff Act, 1985. We do not find merit in
the said contention.
6. As stated above, Chapter 39 deals with ‘plastics and articles thereof’.
As stated above, under Heading 39.20 sheets of plastics, laminated
supported or combined with other materials stand covered as plastics and
articles thereof. On the other hand, Heading 70.14 falls under Chapter 70,
which refers to ‘glass and glassware’. It is not in dispute that the item
in question is a composite item. However, as found by the Department, in
the above process, the glass fibre mat when impregnated with plastic gains
certain amount of stiffness which helps manufacturers of roofs and
partitions. In the present case, since the article in question is a
composite article, the test of essentiality shall apply. This test of
essentiality refers to "essential character". The test states that, if the
manufactured goods has the essential character, mainly of stiffness,
required for the manufacturer of roofs, partitions etc. then one has to
treat the item in question as an article of plastic. In the present case,
Rule 3(b) of the Rules for the Interpretation of tariff entries would
apply. The said Rule require that composite goods, mixtures and goods put
up in sets have to be classified on the classification of that material or
component which gives to the product their essential character. In the
present case, if we keep in mind the manufacture of roofs, partitions etc.,
then the stiffness is the main attribute of such a product. The glass fibre
mat when impregnated gives stiffness which helps in the manufactures of
roofs, partitions etc., e.g., in the context of an insulation paper which
is a composite of plastic and paper, the item will fall under Heading
39.01/06 of the previous Customs Tariff Act since plastic gives higher
degree of insulation quality. Rule 3(b) requires classification based on
the material which gives it the essential characteristics. This is the test
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of essentiality. The effect of the tariff schedule is to classify the
products under different heads according to the character of the product.
In interpreting a tariff entry, Rules for the Interpretation are helpful,
particularly in cases of composite goods.
7. For the aforesaid reasons, we do not find any infirmity in the impugned
judgment dated 11.9.2001 of the CEGAT and accordingly this civil appeal
filed by the assessee is dismissed with no order as to costs.
Civil Appeal No. 3321 of 1998
Commnr. Of Central Excise v. M/s S.S.B. Industries Ltd.
8. In view of our judgment in Civil Appeal No. 527 of 2002 (supra), this
civil appeal stands allowed with no order as to costs.