TMI Blog1989 (9) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... al No. E/2962/88-C - Meghdoot Laminart Pvt. Ltd. (hereinafter referred to as Meghdoot ), the product was, earlier, classified under T.I. 68. When Central Excise Tariff Act, 1985 came into force w.e.f. 28-2-1986, the appellant applied for classification under sub-heading 3920.31 of Chapter 39 which was approved on 18-8-1986. Subsequently, by filing another classification list, the appellant sought revision of the classification w.e.f. 1-3-1986 under another heading 48.18 sub-heading 4818.90 of Chapter 48. The appellant also filed a refund claim on 16-9-1986 for the excess amount of duty paid on clearances effective from 1-3-1986 onwards. A show-cause notice was issued to the appellant and on adjudication, the Assistant Collector held that the product was correctly classifiable under sub-heading 3920.31 and rejected the prayer for revision of classification and also rejected the claim for refund. The appellant went in appeal which was rejected by the Collector of appeals. This order has given rise to the present appeal. The Revenue has also preferred Appeal No. E/3522/88-C against the impugned order passed by the Collector (Appeals) seeking to restore the order-in-original by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector (Appeals) by his order dated 4-4-1988, allowed the appeal and ordered classification under sub-heading 3920.31. The appellant has preferred this appeal against the said order. 7. In Appeal No. E/267/89-C, the appellant Milton Laminates Pvt. Ltd. (Milton in short) also manufacture the same product which was also classified under sub-heading 3920.31 and they had also filed a revised classification list under sub-heading 4818.90. Show cause notice was issued and on adjudication, their prayer for reclassification was rejected by the Assistant Collector. In the meantime, the Gujarat Laminate Manufacturers Association, Ahmedabad filed a writ petition in the High Court of Gujarat challenging the aforesaid order-in-original and also orders passed in other similar matters by the Assistant Collector of Central Excise, N.G. Division, Ahmedabad. High Court observed that the order-in-original was defective and a non-speaking one for the reasons that no clear findings were recorded by the authorities as to why the product cannot be called an article of paper and why it could be classified under Chapter 39 as articles of plastics. So the matter was remanded back to the Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meantime, the Gujarat Laminate Manufacturers Association, Ahmedabad had preferred S.C.A. No. 4405/1987 in the High Court of Gujarat wherein the impugned order dated 7-8-1987 was also challenged. The High Court was pleased to set aside the order-in-original dated 5-3-1987 and also the order-in-appeal dated 7-8-1987. So, the appellant withdrew the appeal pending before the CEGAT and vide order No. 189/88-C dated 7-3-1988, CEGAT dismissed the appeal as withdrawn. Thereafter, when the appeal of the appellant, against the order of the Assistant Collector, whereby he had dismissed the refund claim, came for hearing before the Collector (Appeals), the Collector (Appeals), by an order dated 12-10-1988, issued on 6-1-1989, dismissed the appeal stating that as the prayer for reclassification had not been accepted by the Assistant Collector and also by the Collector (Appeals) and as the appellants were preferring the appeal before the Appellate Tribunal, the said order of Collector (Appeals) (whereby the Collector (Appeals) had rejected the appeal against the order of the Assistant Collector regarding reclassification) had become final and so this appeal (regarding refund claim) had also bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken up and that they waive right of show cause notice for the purpose. On adjudication, the Assistant Collector classified the product under sub-heading 3920.31 and rejected the protest letter vide order No. 92/1988. The appellant went in appeal and the Collector (Appeals) rejected the appeal. So, the appellant has preferred this appeal seeking classification under sub-heading 4818.90 and other consequential reliefs. 17. All the manufacturers, concerned in this group of appeals, are manufacturing paper-based decorative laminated sheets. In all cases, the process of manufacture is such that it requires chemicals, namely, phenol and formaldehyde, melamine and methanol, and other important raw-material required is paper. First, the mixture of the above chemicals is prepared which is put into tray also known as tub and the paper is passed through it. This is the method of applying the mixture on the paper. The paper on which the mixture is so applied, is, thereafter, passed through a drying chamber and as a result thereof impregnated paper comes into existence. Thereafter, the paper is cut into sizes. Such sized pieces are taken into flat dyes in required bunches and is pressed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Amit Polymers and Composites Ltd., Hyderabad v. C.C.E., Hyderabad - 1989 (20) ECR 454 (CEGAT) wherein similar issue had arisen and after detailed analysis, the Tribunal has held that the product (decorative laminated sheets) is classifiable under sub-heading 4818.90. He pointed out that in that case also, the product was identical and process of manufacture was the same and reliance was placed upon Jeep Flashlight Industries Ltd. (supra). He pointed out that in that case also, the adjudicating authority had classified the product under Heading 3920.31 and the Collector (Appeals) had ordered classification under Heading 4811.39 and that product had 30 to 40% resin and the rest was paper as is the case in the present appeals. So, Shri Dave submitted that this being the issue decided against the Revenue, the present appeals should be allowed. He submitted that the product, in question, in the present appeals also should be classified under sub-heading 4818.90, till 28-2-1988 and after that date, consequent upon the amendment in the tariff entries, the product should be classified under sub-heading 4823.90. 20. Shri Dave also referred to Orders No. 52-54/89-C in Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter of M/s. Amit Polymers (supra) in their appeal before the Collector (Appeals), but the Collector (Appeals) could not have placed any reliance upon it because in that order there is no discussion of facts and no reasoning is advanced for coming to the conclusion that the classification should be under heading 4811. It would suggest that there was non-application of mind and so, no arguments can be based upon that order. 25. In Appeal No. E/3311/88-C (Label), in Order-in-Appeal, the Collector has reproduced, at length, discussion in the Order-in-Original. In para 7.5 of the impugned order, the Collector has held it will be observed that none of the processes, mentioned above, are involved in the manufacture of the subject goods. According to the D.R., this finding is totally erroneous because as far as the product is concerned, all the three requirements of Chapter Note 1 of Chapter 39 of CET are satisfied because after polymerisation and under external influence, heat and pressure and by moulding the product emerges into shape which is retained on removal of the external influence. So, according to him, the observation in the impugned order of the Collector that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the discussion in the Order-in-Original. Reliance placed upon Orders-in-Appeal passed by the Collectors of Central Excise (Appeals), Madras and Bombay is not proper. 29. In Appeal No. E/234/89-C (Shree), the impugned order is correct one and it has been rightly held to be a product of polymerisation. 30. In Appeal No. E/332/89-C 471/89-C (Decent) - Same arguments as in the case of Appeal No. 276/89-C (Milton) are applicable. 31. Ld. D.R. also made following submissions with regard to all appeals: Decision in Amit Polymers case [1989 (39) E.L.T. 674] is not proper because it is based upon order-in-appeal which was perfunctory and non-speaking and it should have been set aside and Order-in-Original should have been restored. He submitted that in para 3 of the said Order, wherein, the process of manufacture of the appellant s goods has been described as under : They have further stated that in the finished product 30-40 per cent is represented by resin and the rest is by paper, by weight and thickness which is not correct. He also contended that in para 9, finding that admittedly, paper constitutes 60-70 per cent of the finished product by weight as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under T.I. 68 in Melamine Fibre Board Ltd. case (supra) was not proper and so no reliance can be placed upon that judgment. He cited Bakelite Hylam Ltd., Hyderabad v. C.C.E., Hyderabad in 1985 (22) E.L.T. 879 (Trib.) and contended that in the said judgment, the Tribunal has observed that Jeep Flashlight Case (supra) is not binding in cases similar to those in appeals because, therein, also and here also, facts are different; (on perusal of the said judgment, we note that argument advanced by D.R. is not correct because therein both the parties took different stand regarding application of the said decision and what the Tribunal held was as under : While the former has urged that the ratio of the Hon ble Supreme Court does not apply to the present goods, the latter urges that it does. We, however, think the present dispute can be resolved without going into this debate, so submissions made by the D.R. are not factually correct. 32. Ld. D.R. then referred to Chetna Poly Coats Pvt. Ltd. v. C.C.E. reported in 1988 (37) E.L.T. 253 and submitted that in the said judgment, the Tribunal has held that the product in question, in that appeal, namely, Electrical Insulation Tapes, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) was not proper and that the order is per incurium". He further submitted that reliance placed upon order in this case in Amit Polymers case (supra) was not proper and so decision in Amit Polymers case (supra) was not proper and it does not help the appellants. Now, we have carefully perused this order in C.C.E. v. Metro Wood (supra) and we find that the Bench speaking through Sh. D.C. Mandal, Member (Technical) has elaborately discussed different tariff items, different decisions, scheme of the new Central Excise Tariff introduced in 1985 and interpretative rules. It is also discussed therein meaning of the word insulator and various technical books have been referred to. So, we are unable to accept the contention of the D.R. that the order would be improper as being devoid of discussion of any relevant issue. An order can be termed per incurium if any provision of law or binding judicial pronouncement has been overlooked or not followed. The Ld. D.R. has not been able to cite any such provision of law or judicial pronouncement, which has been not followed in the said order. So, we are unable to appreciate how the said order can be termed per incurium . So, contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The importer applied for refund and subsequently, when the matter came up in Appeal and it was submitted by the appellant importer that the material was an insulating material formed by paper sheets, impregnated with synthetic resin, polymers under pressure and temperature to form insoluble and infusible mass and it was contended that the synthetic resin was used only to cement the super imposed paper sheet, the Tribunal has held as under" To us, it appears that seldom would an article be made only of plastic or synthetic resins, a minor part like Screw or bolt or some fittings may be made of material which is (not) synthetic resins or plastic. In the circumstances of the case, paper has a very minor role to play in the goods imported. The plastic is laminated over paper. The essential character of the imported goods is that of synthetic resins or plastics. Viewed thus, it would appear that a Tariff Item 15A of the Central Excise Tariff was rightly applied to the goods in question. (iii) Bakelite Hylam Ltd., Hyderabad Others v. C.C.E., Hyderabad Others - 1986 (24) E.L.T. 643 (Trib.) In this case the issue was of classification of Prepeg P , C G . In this case, thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent individual impregnated kraft papers to bind together permanently into thick industrial sheets. The sheets are held in place by the press plates till they are fully cured and the resin is permanently set in an irreversible process. This process of laminating sheets together to form thicker sheets is used to produce both decorative plastic laminates as well as sheets for industrial and other utility purposes. 38. In para 43, some technical literature has been referred to and therein there is a paragraph as under : It seems that the book recognises that lamination process is a process of moulding. In PLASTIC MOULDING TECHNIQUE (by D.A. Dearle) there is this sentence at page 93. The process of molding laminated phenolic sheets, rods, and tubes is a study in itself, differing from compound molding both in technique and in the types of presses used. In our study of the phenolics we learned that the molding compound consisted chiefly of a binder and a filler, the binder being a phenolic resin and the filler consisting of wood flour or some other such product. The same is true of the laminates, except that the filler is either a paper or cloth, not a flour. 39. So, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in other cases. He submitted that this is imperative in any judicial system and this Tribunal should also follow this principle otherwise efficacy of system will be jeopardised. He, further, submitted that in ITI case (supra), product was different and process is not known and weight of paper was not considered. All facts are also not known and moreover it was customs case; so, it can have no application to the present appeals. 43. Ld. Advocate referred to order in Appeal No. E/3311/88 (Label) and referred to page 8 wherein the Collector (Appeals) has discussed survey report issued by Therepatics Chemical Research Corporation in favour of M/s. Label Laminates and test certificate from L.D. Eng. College, in the case of M/s. Meghdev Enterprises wherein it is observed that thickness of paper in each layer and also in the finished product is more than 50% of the total thickness and so, the Collector has, further held that the product would be excluded from Chapter 39 and would fall under Chapter 48. The Revenue in Appeals Nos. E/3522/88 and E/3521/88 have not challenged this finding. According to him, in fact, the Revenue have not challenged this aspect at all in any app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed fact while deciding the appeal petition . 45. L.A., Shri Agarwal (for Milton), submitted that Assistant Collector has listed different materials which are being used in the manufacture of the product at page 9 of the order-in-original. But the last raw-material, namely, ordinary denatured spirit/methanol, ultimately evaporates and so in the final product , the paper is 70% while other raw-materials are 30%. He, further, contended that the Assistant Collector in his order-in-original has nowhere stated that the chemicals are more in weight than the paper. He also drew our attention to the order-in-appeal wherein it is stated (at internal page 2) that it is indicated in the impugned order that the Assistant Collector, the Central Excise Division II, Ahmedabad had filed an affidavit before the Hon ble High Court of Gujarat wherein he had given the details of the raw-materials for the manufacture of the goods . Thereafter, the arguments are listed and process is stated. Thereafter it is stated at page 3 of the said order as under : From the details of the raw-materials used and the process of manufacture, it can be observed that bulk of the raw-material comprises of pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that there is no dispute regarding raw-materials and process, but he submitted that weight of paper in the end-product cannot be determined and that there is error of judgment committed by this Tribunal in Amit Polymers case (supra). He reiterated all the arguments advanced by him earlier. He also submitted that product cannot be folded and so it has the character of plastic sheet and not of paper. He, further, submitted that as per Chapter note 2(f) of Chapter 48 of CET, except wall coverings, all other articles, wherever there is any use of plastics, are covered under Chapter 39 of CET. In this connection, he referred to Explanatory Notes to Chapter 39 of Harmonized Commodity Description and Coding System (HCN). He referred us to note combinations of plastics and materials other than textiles at page 554-555 wherein item (d) reads as under : This chapter also covers the following products whether they have been obtained by a single operation or by a number of successive operations provided that they retain the essential character of articles of plastics . (d) products consisting of glass fibres or sheets of paper, impregnated with plastics and compressed together, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Revenue had also contended in that appeal that the product has essential characteristic of plastic and so classification should be goverened by interpretative rule 3B. Reliance was also sought to be placed upon Chapter Note 1 of Chapter 39 of C.E.T. of 1985. But after discussing all these arguments, the Tribunal negatived all the arguments advanced by the Revenue and held that the product , in question, was classifiable under heading 4818.90. We see no reason to depart from this decision. 54. Still however, we, briefly, meet with the arguments advanced by the Ld. D.R. regarding each appeal and thereafter the general arguments. 55. In Appeal No. E/2962/88C (Meghdoot) in the impugned order, the Collector has held that thickness of plastic layer is more than /2 of the total thickness of the final product . He has based his observation upon record of the adjudication proceedings. Now, on perusal of order-in-original, we do not find such finding recorded by the Assistant Collector. The appellant has also, nowhere, made such statement in reply to show cause notice. So, findings recorded by the Collector (Appeals) are, obviously, without any basis. The Ld. D.R. has not been ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase (supra), the Tribunal has erred in drawing conclusion about the constitution of the product in question by weight and by thickness as it was not possible because after polymerisation, identity of the product would be lost and it would not be possible to do it, is also not acceptable because the Assistant Collector himself has stated break-up of raw-materials and weight of constituent raw-materials can easily be ascertained from it. As far as the question of thickness is concerned, the Tribunal might have based finding upon authorised sample or on any other material. In the appeals also, the Ld. D.R. has not produced any material to show that in fact relative thickness of different raw-materials cannot be ascertained while in appeals of Label and Meghdev, there are certificates issued by proper authorities about thickness of paper being ascertained. So, this contention of Ld. D.R. has also no force. His contention regarding reliance placed upon interpretative Rule 1 by the Tribunal is also not correct and we do not find anything wrong in invoking Rule 1 and we fully endorse the arguments advanced in the said judgment. 60. It is Ld. D.R. s contention that in para 8 of the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who are in appeal before us. 62A. Ld. D.R. cited C.C.E. v. Jai Enterprises (supra) to show that even when the first stage is reached out of the three stages in thermosetting stages, resin results. There in also, it has been held that for manufacture of laminated sheets, phenolic resin has necessarily been taken from A to B stage and then to other stage of polymerisation. He has also cited Bakelite Hylam Ltd., Hyderabad case (supra) to show that even if the first stage of thermosetting is reached, the resin would result and also to support his contention that after A stage, resin is used for impregnating paper and fabrics for laminating. He relied upon Bakelite Hylam Ltd. case -1986 (25) E.L.T. 240, to contend that kraft papers are impregnated by the resin and bound together permanently into a thick industrial sheet and after curing resin is permanently set in irreversible process. Relying upon these, he contended that the final product is a moulded one with resin and it has all characteristics of plastic material. In Amit Polymers case (supra), this argument was advanced by Shri Doiphode, Ld. JDR for the Revenue which can be seen from para six of the said order and it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-heading 3920.31. The Assistant Collector issued a show-cause notice dated 10-2-1987 to show as to why the protest letter should not be rejected. The appellant submitted its reply dated 11-3-1987. The matter was fixed for personal hearing on 12-1-1988 and at that time, the appellant submitted written submissions wherein it was prayed that the show cause notice had been issued only for deciding protest letter but as the issue involved was of revision of classification list, the Assistant Collector was requested to take up the matter of revision of classification also and that the appellant thereby waive the service of another show-cause notice in respect of revised classification list. The Assistant Collector passed a detailed order discussing all the contentions raised by the appellant and also the process of manufacture and raw-materials employed. He also discussed the chemical report. He also discussed scheme of tariff and chapter notes of Chapter 39. In para 5 of the order-in-original, he specifically, stated that the appellant had filed revised classification list No. 3/86-87 classifying their product under sub-heading 4818.90. Thereafter, in three paragraphs, he discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and it is perfectly legal and proper. Moreover, it is also noted that the protest letter was also a forwarding letter whereby the appellant had forwarded the revised classification list and this fact is not in dispute. So, the show cause notice should have been issued for both purposes. But even if it was not issued, it would not affect the order which was in effect classifying the product, in question and rejecting the prayer of the appellant for revising the classification. 69. Regarding Appeal No. E/437/89-C (Viral), it is a settled law that the party can challenge classification either by preferring appeal or by filing refund claim and thereby contesting the classification decided by the Central Excise officials. In the present case, the refund claim is being rejected on the basis that the adjudication authority has decided classification under sub-heading 3920.31 and the same has been approved by the Collector (Appeals). The appellant had, along with the refund claim, filed a revised classification list and that claim for revision was rejected by the Assistant Collector vide his order dated 5-3-1987. So, the appellant preferred an appeal which was rejected by the Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto 28-2-1988 and under sub-heading 4823.90 on and from 1-3-1988. (ii) In Appeal No. E/2962/88-C (Meghdoot), the impugned order is set aside and relief granted as prayed for. (iii) In Appeal No. E/3311/88C (Label), the impugned order is modified in terms of above para (i). (iv) In Appeal No. E/3522/88C (CCE v. Label), the appeal is dismissed. (v) In Appeal No. E/1240/89-C (CCE v. Label), the appeal is dismissed. As per the direction in the impugned order, passed by the Collector (Appeals), the Assistant Collector shall decide the refund claim in light of classification directed in para (i) above. (vi) In Appeal No. E/3257/88C (Meghdev), the appeal is allowed and the impugned order is modified as prayed for as per direction in para (i) above. (vii) In Appeal No. E/3521/88C (CCE v. Meghdev), the appeal is dismissed. (viii) In Appeal No. E/234/89C (Shree), the appeal is allowed, the impugned order is set aside and relief granted as prayed for as per direction in para (i) above (ix) In Appeal No. E/267/89C (Milton), the appeal is allowed and the impugned order is modified in terms of directions in para (i) above. (x) In Appeal No. E/410/89C (CCE v. Milton), the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
