TMI Blog1988 (4) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ed laminated sheets out of the duty paid paper falling under T.I. 17 and bought out chemicals falling under T.I. 68. The chemicals -phenol, formaldehyde or melamine along with urea and few other additives are subjected to the process of mixing and heating to the desired temperature under controlled conditions. This results in a product which the respondents describe as resin forming solution. It is not denied that a process of condensation takes place and solution possesses resinuous properties. As seen from the record the respondents have described this resin forming solution before the lower authority as unstable and not having reached full condensation stage. This solution is impregnated as seen from the record in the paper sheets with the top layer being decorative one and these paper sheets together are pressed together under desired conditions of heat and pressure resulting in the formation of decorative .laminated sheets. The lower appellate authority held these laminated sheets as assessable under T.I. 68 as against 15A(2) held by the original authority. The revenue is in appeal before us against this decision of the appellate authority. 3. The learned JDR for the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution are resoles falling under 15A(1) CET, the laminated sheet have to be held to have been manufactured out of materials falling under T.I. 15A(l) as the resole is specifically covered under 15A(1) by virtue of the explanation to the tariff item. He pointed out that IS 2046-1969 covering specification for decorative thermosetting synthetic resin bonded laminated sheets, has described the materials in para 0.4 as the synthetic resin bonded sheets and that in preparing this Standard, considerable assistance has been derived from BS 3794:1964 in respect of specification for decorative laminated plastics sheets and stated that in para 0.5 of this Standard it has been set out as under : The specification applies to sheets in which the only filler is paper and does not cover sheets with a core of any other material, namely, hardboard. Further, he pleaded, the scope of resin is as under : This Standard prescribes the requirements and the methods of sampling and test for aminoplastic faced phenolic laminated sheets having coloured and/or patterned surfaces incorporated during manufacture. The material is intended for interior use. The specification applies to sheets in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are filed with a resin or adhesive. By itself, it is not a laminate, but two or more impregnated sheets may be used to form a laminate. Both laminated and impregnated articles are, however, characterized by the fact that their structures are nonhomogeneous that is solid matter in the form of sheets, whether fibrous or not, is used in conjunction with a liquid (usually viscous) which eventually hardens by any of various means to yield a completely solid object of great strength and rigidity. Since the term laminate is so widely used in the plastics industry for both types of materials, this term is retained herein for the same uses. However, it is to be hoped that more accurate and descriptive nomenclature will eventually evolve." He drew our attention to Glossary of Terms used in the Plastics Industry : Part I, Polymerization and Plastics Materials. Relevant paras for convenience of reference are reproduced below : Plastics - A generic term for an arbitrary group of materials based on synthetic or modified natural polymers which at some stage of manufacture can be formed to shape by flow, aided in many cases by heat and pressure . Synthetic resin - A resin produced synthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 7). He pleaded that the Tribunal in that case has held that item 15A of the Central Excise Tariff is not exactly aligned with the CCCN terminology as a result of the 1977 Finance Bill yet the pattern being broadly the same, assistance can be usefully derived from CCCN and its Explanatory Notes to understand the scope of the said item subject, of course, to the consideration that the express language of that item is kept in view. It was pointed out to him that the Harmonised Commodity Code while it covered artides of plastics, the articles set out in the respective chapters made no mention of the materials falling under another heading and out of which the plastic articles are required to be made out of as in the case of T.I. 15A(2) and under which the articles covered under that heading are to be those as are made out of items falling under T.I. 15A(1). He drew our attention to the book Industrial Technology : page 177. He pointed out that at page 177 of this Book process of lamination is described under the heading Plastic Laminate". In conclusion, he stated, that inasmuch as the goods in question were plastic laminates these should not be consigned to residuary item when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s worded then is applicable in the context of the re-worded entry under T.I. 15A(2) also as the scope of the entry as to what constituted the articles made of plastics has remained the same. He pointed out that the Hon ble Supreme Court has held that only such of the articles can be considered as made of plastics as are wholly made of material falling under 15A(1) and are commercially known as articles of plastic and not also articles as are made with addition of other articles along with materials of 15A(1). He stated that he is aware that under T.I. 15A (2) lay flat tubings not containing any textile material alone are covered and a possible view can be taken that T.I., 15A(2) covered articles made of composite materials also i.e., from materials falling under 15A(1) and some other materials. He pointed out that exclusion of lay flat tubings made with textile material forming one of the constituents can be taken to be only by way of abundant caution but it in no way implied that under 15A (2) articles made out of materials falling under 15A(1) alongwith other articles could be taken to be covered under l5A(2). He stated that commercially goods are known as decorative laminated s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified with reference to raw materials. 4. Learned JDR for the department in reply drew our attention to the wording of T.I. 15A(2) which is reproduced for convenience of reference : Articles of materials described in sub-item (1), the following, namely :- Boards, sheeting, sheets and films, whether lacquered or metallised or laminated or not; lay flat tubing s not containing any textile materials." He pleaded as seen from the entry the product covered thereunder are sheets and boards laminated or not. His plea is that the laminated sheets were specifically covered under this heading. He pointed out that word laminate used in the tariff entry had to be given a meaning and in that context therefore respondents goods would fall under 15A(2). He drew our attention to the process of manufacture of this sheet in the book Polymers and Resins by Brage Golding earlier referred to in para 3 and in Chapter on Fabricating Process of Resin. He reiterated his plea that ISI describe these goods as resin bonded and therefore these should be considered as plastic sheets for the purpose of T.I. 15A(2) and as process of lamination is covered under the scope of Tariff item 15A(2) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into account its physical form and the materials used; (ii) if so, whether based on the trade parlance criterion as pleaded before us these should be considered as plastic sheets. 7. We observe that there is no dispute so far as the process of manufacture of laminated sheets in question is concerned. The raw materials, for the same are paper and what is described by the respondents as resin forming solution and the paper by weight in the product is over 70%. It is also not disputed that the product is in the sheet form so far as the physical form of the goods is concerned and that these are covered under the description sheet as used in the tariff item 15A(2). For the goods to fall under 15A(2) as seen from the wording of the said tariff entry, the requirement is that these should have been made out of materials falling under 15A(1). The revenue have pleaded at length that respondents by using phenol, formaldehyde and other chemicals first manufactured a product which is called resole and then used the said product for forming laminates by using the paper as the filler. In this context we may mention that so far as the assessment of solution described in the present pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 643 but was negatived. In that case material called prepreg P described as paper impregnated with phenol formaldehyde had been assessed under T.I. 17(2) by the original authority but on appeal by the assessee the Collector (Appeals) had upheld the assessment of the same under T.I. 15A(1) and had held that paper was only a filler as now claimed before us by the revenue. The revenue had on appeal against this order of the Collector in that case claimed that the assessment of the goods in that case is under T.I. 17(2), i.e., impregnated paper and pleaded against the paper being treated as a filler for resin. The paper in that case was impregnated with resole or A Stage resin and under desired conditions of heat and pressure the impregnated A stage resin was converted to B Stage and product called Prepreg P was formed. This was used for forming laminated sheets of the type manufactured by the respondents in the present case. We observe that for forming laminates the resole in A Stage resin after impregnation of paper has necessarily to go through B Stage and finally gets cured to C Stage. The Tribunal in that case has held as under : The learned counsel for M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sheets emerge, can it be said that the same paper became a plastic article. If so, by what logic. 10. The laminated sheets as mentioned above are not exclusively made out of phenol formaldehyde resin and in fact the resin content is less than 30% by weight. As mentioned above in the case of Bakelite Hylam, the Revenue pleaded against the paper being treated as a filler and the Tribunal after analysing fact in that case, held that in fact Prepreg P was phenol formaldehyde impregnated paper. Inasmuch as the Tribunal has not held impregnated paper as resin, there appears to be no reason why the layers of the same when laminated should be considered as plastic sheets. 11. We observe that no plea has been made by either side as to what gives the product its character. As we have already stated that there were also no interpretative rules in the Central Excise Tariff at the relevant time. In the facts of the present case we feel it is relevant to examine as to what elements give character to the product. It is seen from the samples produced that the product is a fairly thick and rigid board like sheet with decorative surface. Looking at the item it can be said that while the pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nated Sheets and therefore these can be taken as phenolic product, i.e., products falling under 15A(2). Our attention has also been drawn by the learned JDR for the Department to the books dealing with resins and plastics. In this context our attention has been drawn to the book Polymers and Resins by Brage Holding which has a separate heading for Laminating and Impregnating. It has been highlighted that in these books again the paper is considered only as a filler material for the resin and technically the product should be considered as a plastic sheet. In view of the inclusion of the laminated sheets in the plastic heading in the book dealing with Polymers and Resins and also ISI specifications, the Revenue has convassed that the trade understanding of the product should be taken to be that the laminated sheets are plastic sheets. 12. We observe that no evidence from the trade or those who deal with this product or even from manufacturers has been produced in the proceedings to show that these products are bought and sold as plastic sheets or are considered so by them. We observe that evidence produced by the revenue by way of technical literature and ISI goes only to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which was sought to be made by the learned Departmental Representative was that sub-item (3) of Item 22, which has been reproduced in para 19 above, refers to fabrics impregnated, coated or laminated with (plastic material). In fact his argument was to the effect that if a fabric once came into existence and was thereafter impregnated, coated or laminated with a plastic material, it should be deemed to fall within this sub-item, irrespective of the proportion of the plastic material or the nature of the final product. We do not find it possible to, accept this argument. The wording of sub-item (3), as well as of the main item under which it appears, refers to fabrics . The fabrics may have been impregnated, coated or laminated with plastic material, but they must still be capable of being called fabrics . Impregnation, coating or lamination are all processes which upto a stage would leave the finished product still capable of being called a fabric. But when the proportion of plastic material reaches such a level that the final product does not retain the characteristics of a fabric, it would not, in our view, be proper or correct to treat this final product as an impregnated, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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