Supreme Court of India
COLLECTOR OF CENTRAL EXCISE, HYDERABADversusBAKELITE HYLAM LTD.
- Citation
- 1997 INSC 241
- Decided
- 10 March 1997
- Disposal
- Case Partly allowed
- Bench
- A M AHMADI
Holding
Laminated sheets are not covered by Entry 15A(2); decorative laminates classify under Entry 3920.31/37 (Chapter 39), while industrial and glass‑epoxy laminates classify as electrical insulators under Entry 8546/7014 (Chapter 85), and cutting/punching does not constitute manufacture.
Summary
The Collector of Central Excise appealed against the classification of three types of laminated sheets—decorative, industrial (paper‑based), and glass‑epoxy—manufactured by Bakelite Hylam Ltd. The issues concerned whether the sheets fell under Entry 15A(2) of the 1944 Excise Act, the residuary Entry 68, or various entries under the 1985 Central Excise Tariff Act, including Entry 3920.31/37 (Chapter 39), Entry 4818.90/4823.90 (Chapter 48), and Entry 8546/7014 (Chapter 85). The Court held that Entry 15A(2) does not cover composite articles containing paper or glass fabric with resin, so the sheets belong to Entry 68 under the old tariff. Decorative laminated sheets are classified under Entry 3920.31/37 in Chapter 39 because their essential character is the rigid, heat‑ and moisture‑resistant nature imparted by the resin, not under Chapter 48. Industrial and glass‑epoxy laminates are electrical insulators and fall under Entry 8546/7014 in Chapter 85; cutting or punching holes does not constitute manufacture. The appeal was partly allowed, confirming the Tribunal's classification for the old tariff and modifying the new‑tariff classification for decorative sheets.
Issues considered
- Whether laminated sheets composed of paper or glass fabric impregnated with resin are covered by Entry 15A(2) of the Central Excises and Salt Act, 1944.
- Whether decorative laminated sheets should be classified under Chapter 39 (Entry 3920.31/37) or Chapter 48 (Entry 4818.90/4823.90) of the Central Excise Tariff Act, 1985.
- Whether industrial paper‑based laminates and glass‑epoxy laminates qualify as electrical insulators and thus fall under Entry 8546/7014 of Chapter 85.
- Whether cutting or punching holes in laminated sheets amounts to ‘manufacture’ under Section 3 of the 1944 Act.
- How the Rules of Interpretation (especially Rule 3(b)) and the Harmonised System of Nomenclature guide the classification.
Legislation cited
Subjects
central excisetariff classificationlaminated sheetsEntry 15A(2)Entry 68Entry 3920.31Entry 4818.90Entry 8546manufacture definitionHSNrules of interpretationelectrical insulators
Judgment
COLLECTOR OF CENTRAL EXCISE, HYDERABAD A
V.
BAKELITE HYLAM LTD.
MARCH 10, 1997
[A.M. AHMADI, CJ. AND SUJATA V. MANOHAR, J.] B
Excise Law:
Central Excises and Salt Act, 1944 :
Entry 15-A(2) or 68-Laminated sheet~lassification of - Held : C
Decorative laminated sheets, Industrial laminated sheets (paper based) and
glass epoxy laminated sheet~lassifiable under Entry 68 and not under
Entry 15-A(2).
Entry 15-A(2)-Scope of-Held: Does not cover composite commodity D
consisting of materials described in Entry 15-A(1) in combination with other
materials such as laminated sheets consisting of paper or glass fa bric as also
resins.
Section 3-"Manufacture"-Scope of-{ndustrial laminated sheets
(paper based) and glass epoxy laminated sheets-Such sheets cut into requi- E
site shape and holes punched in order to fit them as insulators-Held : does
- not amount to manufacture.
Central Excise Tariff Act, 1985 :
Entries 3920.31/3920.37 or 4818.90/4823.9()-{)ecorative laminated F
sheet~lassification of-Held : Classifiable under Entry 3920.31/3920.37
and not under Entry 4818.90/4823.9(}-Generd Rules for Interpretation of
Schedule I, Rules 1, 2(b) and 3 of Chapter 39, Note 1 and Chapter 48, Note
1(/)-Central Excise Tariff Bill, 1985.
G
· Tariff ltems-{nterpretation of-Hannonised System of Nomenclature
and its explanatory notes-Relevancy of-Held : Relevant.
Entry 8546/7014, Ch. 39 and Note 2(n) thereto-Entry 8546/7014 or
Ch.39-lndustrial laminated sheets (paper based) and glass epoxy laminated
sheet~lassification of-Held: Classifiable under Entry 8546/7014 and not H
825
826 SUPREME COURT REPORTS [1997] 2 S.C.R.
'
A under Ch. 3<;:-That such sheets were required to be cut in requisite shape and
punched before being fitted as insulators, immaterial.
Entry 39.20-Scope of-Held : Unlike Entry 15-A(2) of the 1944 Act,
Entry 39.20 of the 1985 Act covered even sheets of plastics combined with
other materials.
B
I-
Refwul-:C:laim of Held : To be processed in accordance with the
decision in Majat/al Industries' case.
Words and Phrases :
C "Manufacture"-Meaning of-ln the context of S.3 of the Central Ex-
cises and Salt Act, 1944.
The respondent manufactured three varieties of laminated sheets :
(1) Decorative laminated sheets;
D
(2) Industrial laminated sheets which were paper based and;
(3) Glass Epoxy laminates sheets.
The classification lists prior .to 28-2-1986 were governed by the First
E Schedule to the Central Excises and Salt Act, 1944 (Old Tariff).
With effect from 28-2-1986 the Central Excise Tariff Act, 1985 came
into force. Hence the classification lists after 28-2- 1986 were governed by
the Central Excise Tariff Act, 1985 (New Tariff). There have been some
changes in the relevant Tariff Entries under the Central Excise tariff Act
-
F of 1985 from 1.3.1988. The description of the material tariff entries, how-
ever, had not been affected by the changes made in the Central Excise
Tariff Act of-1985 with effect from 1.3.1988, except for a change in the
number of the entry.
According to the appellant all the laminated sheets manufacture by
G the respondent were sheets of plastic material falling under Tariff Entry
15-A(2) of the Old Tariff. According to the respondent the laminated
~heets were niade up of composite material consisting of either paper or
glass fabric as also. resins and hence they would fall under the residuary
Entry 68. The Customs, Excise and Gold (Control) Appellate Tribunal
H upheld the claim of the respondent. Hence this appeal.
COLLECTOR OF CENTRAL EXCISE v. BAKELITE HYLAM LTD. 827
On behalf of the appellant it was contended that the laminated A
sheets, which consisted of a combination of paper and synthetic resins, has
to he classified under Entry 3920.31; and that industrial laminates and
glass epoxy laminates could not be considered as electric insulators be·
cause these sheets were required to be cut in the requisite shape and holes
have to be punched in them before they could be fitted as insulators.
B
-
On behalf of the respondent it was contended that since paper
constituted 60 to 80% and resins constituted only 30 to 40% of the product
the relevant entries were 4818.90/4823.90 as is evident from Note l(t) to
Chapter 48 of the Central Tariff Act, 1985.
c
- Allowing the appeal, this Court
HELD : 1.1. Entry 15-A(2) of the First Schedule to: the Central
Excises and Salt Act, 1944 (Old Tarim does not refer to any composite
material or composite article which consists not merely of artificial or
synthetic resins and plastic material but also such material in combination D
with other materials such as paper or glass fabric as in the present case.
(833-B]
Geep Flashlight Industries v. Union of India, (1985) 22 ELT 3 SC and
Wiltech India Ltd. v. CCE, (1986) 84 ELT 5 SC, relied on.
E
1.2. As laminated sheets are not made wholly of material described
in Entry 15-A(l), the Customs, Excise and Gold (Control) Appellate
Tribunal has rightly held that under the Old Tariff, laminated sheets in
question cannot be classified under Tariff Entry 15-A(2). They are to be
classified under the residuary Entry 68. (834-C]
F
2.1. In view of the contents of the Statement of Objects and Reasons
to the Central Excise Tariff Bill, 1985 which later became the Central
Excise Tariff Act, 1985, for correct interpretation of the Item of the 1985
--- Act, the Harmonised System of Nomenclature and its explanatory notes
are relevant. [834-G] G
CCE v. Wood Crlifts Products Ltd., (1995) 3 SCC 452, relied on.
2.2. Note l(t) to Chapter 48 of the Central Tariff Act, 1985 (New
Tariff) is Not applicable in the present case. This note refers to paper-
reinforced stratified plastic sheeting or one layer of paper coated or H
828 SUPREME COURT REPORTS [1997] 2 S.C.R.
A covered with a layer of plastics. The process of manufacture of laminated
sheets in totally different. It requir~s impregnation of paper with resins,
· drying it to produce prepeg and then pressing layers of prepeg under a
--
hydraulic press. Therefore, simply because paper content is higher than
resin content, note 1(1) does not become applicable. [838-D]
B 2.3. Moreover, since decorative laminates are composed of paper
as well as resins, it is possible that they can be classified either under
Chapter 39 (~ew Tarifl) which deals with plastics or under Chapter 48
(New Tarifl) Which deals with paper. In order to decide which is the
I
more appropriate classification it is also necessary to refer to Rules 1,
/C 2(b) and 3 of Interpretation prescribed under the New Tariff Act. Rule
1 does not help to classify the goods in the present case because Note
'1(1) in Chapter 48 is not applicable to these goods. The other relevant
rule of tnterpretation is Rule 3(b). In the present case, the essential
-
character of a decorative laminated sheet is its rigidity or strength and
D its resistance to heat and moisture. These are essentially charac-
teristics, which are imparted by resins. paper does not possess any of
these characteristics. Therefore, applying Rule 3(b) and going by the
essential characteristics of such laminated sheets, these goods are more
appropriately classifiable under Chapter 39. [839-E, 840-F-H]
E 2.4. In view of the Explanatory Note to Chapter 39 in the Har-
monised System of Nomenclature, the decorative laminated sheets
which have a hard and rigid character are, therefore, classifiable under
Chapter 39 and not under Chapter 48. The appropriate entry is
3920.31/3920.37, which deals, inter alia, with sheets of other plastics,
p rigid, laminated. Decorative laminated sheets, therefore, cannot be
classified under Tariff Entry 4818.90/4823.90. [841-A, E, F]
3.1. Industrial laminated sheets, which are paper based, are used
for electrical insulation. Glass epoxy laminates are also used as electri-
cal insulators. The New Tariff Act contains a separate Section XVI
G which deals, inter alia, with electrical equipment and parts thereof.
Chapter 85, which forms part of Section XVI, deals with electrical
machinery and equipment and parts thereof. Entry 8546 deals with
"electrical insulator of any material". There is, therefore, a specific entry
in the New Tariff Act dealing with electrical insulator of any material.
H Under Chapter 39, which deals with plastics and articles thereof, Note
COLLECTOR OF CENTRAL EXCISE v. BAKELITE HYLAM LTD. 829
2(n)- provides that this Chapter does not cover articles of Section XVI. A
Therefore, industrial laminates and glass epoxy laminates which ar used
for electrical insulation will not fall under Chapter 39 but will fall under
Chapter 85 under Entry 8546:00 (Entry 7014 under the New Tariff act prior
to 13.1988). [841-H, 842-A-B]
3.2. The contention of the Central Excise Department that in- B
dustrial laminates and glass epoxy laminates cannot be considered as
electrical insulators because these sheets are required to be cut in the
requisite shape and holes may have to be punched in them before they
could be fitted as insulators, is not sustainable. Mere cutting or punch-
ing holes does not amount to manufacture. These sheets have insulating C
properties and are used as electrical insulators. They cannot be taken
out of the category of electrical insulators only because they have to be
cut to the requisite shape or a few holes may be required to he punched
in them in order that they may fit into the electrical instrument/ap-
pliance in question. [842-C-D]
D
4.1. The heading of entry 39.20 which govern all entries forming
part of 39.20 covers, inter alia, sheets of plastics, whether laminated and
whether supported or similarly combined with other materials or not.
Therefore, unlike Old Tariff entry 15·A(2) even sheets of plastics combined
with other materfals can be classified under entry 39.20. [837-D] E
4.2. Any entitlement to refund will be processed in accordance with
the decision in Mafatlal Industries' case. [843-A]
Mafatlal Industries Ltd. v. Union of India, (1996) 9 SCALE 45,
referred to. F
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 275 of
1991 Etc.
From the Judgment apd Order dated 16.7.90 of the Customs, Excise
and Gold (Control) Appellate Tribunal, New Delhi in A. No. E/1476/86-C G
(in Order No. 728/90-C).
M.S. Usgaonkar, Additional Solicitor General, D.A. Dave, Harish N.
Salve, Dhruv Mehta, Delip Tandon, V.K. Verma, A. Subba Rao, P. Par-
meswaran, Ms. Janki Ramachandran, Ms. Meenakshi Arora, (Devan H
830 SUPREME COURT REPORTS [1997) 2 S.C.R.
A Parikh, Ms. Ruby Ahuja for Ms. M. Karanjawala, V. Lakshmi Kumaran,
V. Sridharan, V. Balachandran, Ravinder Narain, Ms. Amrita Mitra, M.L.
Lahoty, Amit Bansal, Pawan Sharma, Himanshu Shekhar, Rajiv Tyagi,
U.A. Rana, S. Tripathi, C.N. Sree Kumar, Ms. Indu Malhotra, V.J. Francis
and P .I. Jose for the appearing parties.
B The Judgment of the Court was delivered by
MRS. SUJATA V. MANOHAR, J. These appeals, which are at the
instance of the Collector of Central Excise, raise common questions
regarding the classification of laminated sheets. Three varieties of
C laminated sheets are involved in these appeals :
(1) Decorative laminated sheets ;
(2) Industrial laminated sheets which are paper based and;
D (3) .Glass Epoxy laminated sheets.
The manufacturing process of decorative laminated sheets has
been described by the manufactures. Paper is passed through or im-
mersed in a resin bath (phenol formaldehyde resin) so that the paper is
impregnated with resin. This paper is then dried. At this stage the paper
E which is impregnated with resin is known as 'prepreg - p' ('P' stands for
paper). Layers of Prepreg paper are then stacked. The top layer consists
of paper which has a decorative design on it and which is impregnated
with resin. The sheets of papers so stacked are then pressed together
in a hydraulic press applying pressure and heat to make a laminated
F sheet. In the process, the resin passes through the pores of paper and
acts as a binder. The end product is a hard rigid sheet which is impact
resistant and is unaffected by heat or moisture. These decorative
laminated sheets are sold in the market and they are commonly used
for surfacing of furniture.
G In the case of industrial laminates which are paper based; the process
of manufacture is similar except that the paper which is used is electrical
grade kraft paper. These industrial laminates are used as electrical in-
sulators.
r
I
H In the case of glass epoxy laminates instead of paper, glass fabric is
-~
COLLECTOR OF CENTRAL EXCISE v. BAKELITE HYLAM LTD. [MRS. SUJATA V. MANO HAR, J.) 831 .
impregnated with resin and dried (Prepeg-G). Several layers of resin A
impregnated glass fabric-Prepeg-G are pressed together in a hydraulic
• press applying heat and pressure in.order to produce glass epoxy laminated
sheets. These are also used as electrical insulators.
The dispute in these appeals relates to the correct classification of
.these products under the Central Excise Tariff as applicable at the material B
time. The classification lists which are the subject matter of these appeals
- relate to the period 1983 to 1989 (approx.).
The classification lists prior to 28.2.1986 are governed by the First
"' Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred c
to as the 'Old Tariff).
With effect from 28.2.1986 the Central Excise Tariff Act, 1985
came into force. Hence the classification lists after 28.2.1986 are
governed by the Central Excise Tariff Act, 1985 (hereinafter referred to
D
as the 'New Tariff). There have been some changes in the relevant
Tariff Entries under the Central Excise Tariff Act of 1985 from 1.3.1988.
The description of the material tariff entries for our purposes, however,
has not been affected by the changes made in the Central Excise Tariff
Act of 1985 with effect from 1.3.1988, except for a change in the number
of the entry. E
- OLD TARIFF:
Under the Old Tariff, the two competing entries in the First Schedule
are Entry 15A(2) and Entry 68. Entry 15A(2) at the material time was as
F
follows :
"15A : Artificial or Synthetic resins and plastic materials; and other
materials and articles specified below :
(1) Condensation, polycondensation and polyaddition G
products...... .
(2) Articles of materials described in sub-item. (1), the fol-
lowing, namely :-
Boards, sheeting, sheets and films, whether lacquered or H
832 SUPREME COURT REPORTS [1997] 2 S.C.R.
A metallised or laminated or not; lay flat tubings not containing
any textile materials."
.
Entry 68 which is a residuary entry, is as follows :
Item No. Description of goods Rate of Duty
B 68. All other goods, not elsewhere specified, Twelve percent
but excluding - ad Valorem
(a) alcohol, all sorts, including alcoholic
liquors for human consumption;
c (b) opium, Indian hemp and other
narcotic drugs and narcotics; and
(c) dutiable goods as defined in section
2(c) of the Medical and Toilet
Preparations (Excise Duties) Act,
1955 (16 of 1955).
D
(d) Explanation : For the purpose of
this item, goods which are referred
to in any preceding item in this
Schedule for the purpose of
excluding such goods from the
E description of goods in that item
(whether such exclusion is by means
of an Explanation to such item or by
words of exclusion in the
--
description itself or in any other
F manner) shall be deemed to be
goods not specified in that item."
According to the Excise Authorities, all these laminated sheets which are
-
manufactured by the respondents are sheets of plastic material falling
under Tariff Entry 15A(2) of the Old Tariff. The manufacturers, on the
G other hand, contend that the laminated sheets cannot be considered as
sheets of plastic material. The sheets are made up of composite material
consisting of either paper or glass fabric as also resins. Hence these sheets
are not covered by Entry 15A(2). They would fall under the residuary Entry
68. The claim of the manufactures has been upheld by CEGAT. Hence
H these appeals have come before us.
.. _.(
COLLECTOR OF CENTRAL EXCISE'· BAKELITE HYLAM LTD. [MRS. SUJATA V. MANO HAR, l.J 833
Entry 15A(2) deals with articles of materials which are described in A
sub-item (1). The material which is decribed in sub-item (1) falls under the
category of artificial or synthetic resins and plastic materials. The different
products and processes by which they are derived are described in sub-
entry (1). Sub-entry (2) describes Articles of this material in different forms
such as boards, sheeting, sheets, films, whether lacquered or metallised or
laminated or not and lay flat tubings. This entry does not refer to any B
composite material or composite article which consists not merely of
artificial or synthetic resins and plastic materials but also such material in
combination with other materials such as paper or glass fabric in the
present case.
- In the case of Geep Flashlight Industries Ltd. v. Union of India, (1985)
22 ELT 3 SC, this Court considered Tariff Entry 15A(2) as it stood at the
relevant time. The entry was as follows :
C
"15A(2):
Articles made of plastics, all sorts, ,including tubes, rods, sheets, D
foils, sticks, other rectangular or profile shape whether laminated
or not and whether rigid or flexible including lay flat tubings and
polyvinyl choloride sheets ...... "
This Court said that a mere reference to Tariff Item No. 15A(2) would E
show that articles described there are plastic material in different shapes
and forms and not articles made from such plastic material. There is a
noticeable difference between plastic material in different shapes and
forms such as tubes, rods, sheets etc. and articles made from such plastic
materials such as a plastic torch. This Court further held that articles made
of plastic "refer to articles made wholly of commodity commercially known F
as plastics and not articles made from plastics along with other material."
The interpretation, which this Court put on Entry 15A(2) in the
above case will apply equally to Entry 15A(2) set out earlier which was
thus modified subsequently and with which we are concerned. The basic G
wording of Entry 15A(2), namely, "articles of material described in sub-
item (1), the following" is similar to the original wording "articles made of
plastic all sorts". The description which follows : boards, sheetings, sheets,
films etc. in Entry 15A(2) as applicable here, also refers to plastic material
in different shapes and forms. This entry does not deal with a composite
commodity which may consist of plastics or materials described in sub-item H
834 SUPREME COURT REPORTS [1997] 2 S.C.R.
A (1) of entry 15A, combined with other material. Therefore, the ratio of this
Court's decision in the case of Geep Flashlight Industries Ltd. (supra)
applies directly to Entry 15A(2) as applicable here. A composite material
such as we have to consider, will not be covered by Entry 15A(2).
In the case of Wiltech India Ltd. v. C. C.E., (1996) 84 ELT P .5 SC,
B this. Court held that a razor made of plastic with an iron rod would fall
under tariff item 68. Razors which are not wholly made of plastic would
not qualify for exemption under Notification No. 182/82-CE. -.
As laminated Sheets are not made wholly of material described in
Entry 15A(l), the CEGAT has rightly held that under the Old Tariff,
C laminated sheets in question cannot be classified under Tariff Entry
15A(2). They are to be classified under the residuary Entry 68.
NEW TARIFF:
-
D After the coming into force of the Central Excise Tariff Act of 1985,
however, the tariff entries have undergone substantial change.
According to the Central Excise Authorities, decorative laminates
fall under tariff entry 3920.31/3920.37 of the New Tariff. (N.B. the second
number is the new number of the relevant tariff entry by reason of the
E amendments made in the New Tariff with effect from 1.3.1988). The
manufacturers/respondents claim that decorative laminates are classifiable
under tariff entry 4818.90/4823.90 (the latter being the new number of the
tariff entry with effect from 1.3.1988. The claim of the manufacturers has
been upheld by CEGAT. This is challenged before us by the Excise
-
Authorities.
F
For the correct interpretation of the New Tariff some relevant factors
have to borne in niind. The Statement of Objects and Reasons accompany-
ing the Central Excise Tariff Bill, 1985 which later became the Central
Excise Tariff Act, 1985, inter alia, states : "The Technical Study Group on
G Central Excise Tariff which was set up 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
H to fall within the scope of the levy of Central Excise duty. The Group has
COLLECTOR OF CENTRAL EXC!SEv. BAKELITE HYLAM LTD. [MRS. SUJATA V. MANO HAR, J.) 835
also suggested that the New Tariff should be provided for by a separate A
Act to be called the Central Excise Tariff Act."
Hence for the interpretation of the New Tariff harmonised system of
nomenclature ai1d its explanatory notes are relevant. In the case of Collec-
tor of Central Excise, Shillong v. Wood Crafts Products Ltd. [1995] 3 SCC
452, this Court, while considering the Central Excise Tariff Act of 1985, B
has held that looking to the Statement of Objects and Reasons the Central
excise Tariff under the 1985 Act is based on the Harmonised System of
Nomenclature (HSN) and the internationally accepted nomenclature has
been adopted to reduce disputes on account of tariff classification. Accord-
ingly, for resolving any dispute relating to tariff classification, the Jnterna- C
tionally accepted nomenclature emerging from the HSN is a safe guide,
this being the expressly acknowledged basis of the structure of the Central
Excise tariff in the 1985 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. D
In addition the New Tariff Act has specifically laid down Rules of
Interpretation which govern the interpretation of various entries in it. Each
chapter in the New Tariff Act further contains its own Notes which are
relevant for the interpretation of entries forming part of that chapter.
E
Tariff Entry 3920.31 is in chapter 39. Chapter 39 deals with "Plastics
and Articles thereof''. Note 1 to Chapter 39 is as follows :
"Note 1: Throughout this Schedule, the expression plastics means
those materials of heading Nos. 39.01 to 39.14 which are or have F
been capable, either at the moment of polymerisation or at some
subsequent stage, of being formed under external influence (usual-
ly heat and pressure, if necessary with a solvent or plasticiser) by
moulding, casting, extruding, rolling or other process into shapes
which are retained on the removal of the external influence.
G
Throughout this Schedule, any reference to 'plastic' also in-
cludes vulcanised fibre. The expression, however, does not apply
to materials regarded as textile materials of Sec. XI."
Note 2(n) is as follows : H
836 SUPREME COURT REPORTS (1997] 2 S.C.R.
A "Note 2: This chapter does not cover :
(a) ······································································
B (n)· Articles of Sec. XVI (machines and mechanical or electrical
appliances)
C Therefore, articles falling under Section XVI (chapters 84 and 85) will not
fall under chapter 39.
Entry 39 .20 is as follows :
Heading Sub-heading Description of Rate of
D No. No. duty
39.20 OTHER PLATES, SHEETS,
FILM, FOIL AND STRIP,
OF PLASTICS, NON-
CELLULAR, WHETHER
LACQUERED OR
E
METALLISED OR
L A M I N A T E D
SUPPORTED
'
OR
SIMILARLY COMBINED
WITH OTHER
F MATERIALS OR NOT
--- of polymers of vinyl chloride :
3920.11 --- Rigid plates, sheets, film, foil (60%)
and strip
G 3920.12 --- Flexible plates, sheets, film, (60%)
foil and strip
'·•···················· ········································
...................... ········································
H
--- of regenerated Cellulose :
(
COLLECTOR OF CENTRAL EXCISE'· BAKELITE HYLAM LTD. [MRS. SUJATA V. MANOHAR, J.] 837
I .
3920.21 --- Film, if thickness not (60%) A
exceeding 0.25 millimetre
3920.22 --- Sheet (60%)
····················· ········································
····················· ........................................ B
..................... ........................................
Of other plastics :
3920.31 Rigid plates, sheets, film, foil (60%)
and strip
3920.32 Flexible plates, sheets film, foil (60%)
c
and strip
····································
The heading of entry 39.20 which govern all entries forming part of D
39.20 covers, inter alia, sheets of plastics, whether laminated and whether
supported or similarly combined with other materials or not. Therefore,
unlike Old Tariff entry 15A(2) even sheets of plastics combined with other
material can be classified under entry 39.20. Polymers of vinyl chloride are
classified under entry 3920.11 to 3920.19. Regenerated Cellulose falls
under entries 3920.21 to 3920.29. Other plastics fall under entry 3920.31 to E
3920.39. Sheets of other plastics fall under entry 3920.31. According to the
Central Excise Authorities, decorative laminated sheets which consist of a
combination of paper and synthetic resins should be classified under entry
3920.31 since the final product which is in the form of laminated sheets,
has all the essential characteristics of a plastic rather than of paper. F
The manufacturers, however, contend that paper which is a com-
ponent of a decorative laminated sheet constitutes 60% to 70% of the
product while resins _constitute 30% to 40% of the product. Hence
looking to the predominance of paper as also the decorative quality G
given by it to the sheets, decorative laminated sheets should be classified
under Chapter 48 of the New Tariff which deals _with "Paper and
Paperboard, Articles of Paper Pulp, of Paper or of Paperboard". The
relevant entries, according to the manufactures, are 4818.90/4823.90
Note l(f) to Chapter 48 is as follows : H
838 SUPREME COURT REPORTS (1997] 2 S.C.R.
A 'Note (1) This Chapter does not cover :
(a) ............,....... .
B
(t) : Paper reinforced stratified plastic sheeting, or one layer of
paper or paperboard coated or covered with a layer of plastics,
the latter constituting more than half the total thickness, or articles
of such materials, other than wall coverings of heading No. 48. 14
(Chapter 39)."
c
The manufacturers have placed emphasis on this note. this note,
however, will not have any application in the present case. In the first
place the note refers to paper-reinforced stratified plastic sheeting or
one layer of paper coated or covered with a layer of plastics. The
D process of manufacture of laminated sheets which is described earlier
is totally different. It requires impregnation of paper with resins, drying it
to produce prepeg and then pressing layers of prepeg under a hydraulic
press. Therefore, simply because paper content is higher than resin con-
tent, note l(t) does not become applicable.
E
Entry 4818 is as follows :
Heading Sub-head Description .of Rate of
No. ing No. duty
4818 OTHER ARTICLES OF PAPER
F
PULP, PAPER, PAPER-BOARD,
CELLULOSE WADDING OR
WEBS OF CELLULOSE FIBRES.
--- Cartons, boxes, containers and
cases (including flattened or folded
G
boxes) and flattened or folded
cartons), whether in assembled or
unassembled condition :
4818.11 Intended for packing of match Nil
sticks
H
COLLECTOR OF CENTRAL EXCl Sh BAKELITE HYLAM LTD. [MRS. SUJATA V. MANO HAR, J. J 839
4818.12 Printed cartons, boxes, containers 35% A
and cases, made wholly out of
paper or paper-board of heading
No. or sub-heading No. 48.04,
4805.11, 4805.19, 4807.91 4807.19 or
4811.10, as the case may be. "B
4818.13 Other printed cartons, 3% boxes 35%
and cases
4818.19 Other Nil
4818.20 Toilet tissues, handkerchiefs and 12%
cleansing tissues of paper c
4818.90 Other 12%
[underlining ours]
The manufacturers contend that decorative laminates should be
classified as other articles of paper under entry 4818.90 looking to the D
predominance of paper in the contents of decorative laminated sheets.
Now, since decorative laminates are composed of paper as well as
resins, it is possible that they can be classified either under Chapter 39
which deals with plastics or under Chapter 48 which deals with paper. In E
order to decide which is the more appropriate classification it is also
necessary to refer to the Rules of Interpretation prescribed under the New
Tariff Act. Rules 1, 2(b) and 3 are as follows :
"1. The titles of Section and Chapters are provided for ease of
reference only; for legal purposes, classification shall be detennined F
according to the the tenns of the headings and any relative Section
or Chapter Notes and, provided such headings or Notes do not
otherwise require, according to the provisions hereinafter con-
tained. ·
2(a) ........................................ .. .G
(b) Any reference in a heading to a material or substance shall be
taken to include a reference to mixtures or combinations of that
material .or substance with other materials or substances, reference
to goods of a given material or substance shall be taken to include H
)-··
840 SUPREME COURT REPORTS [1997) 2 S.C.R.
A a reference to goods consisting wholly or partly of such material
or substance. The classification of goods consisting of more than
one material or substance shall be according to the principles con-
tained in rule 3.
3. When by application of sub-rule(b) of rule 2 or for any other
B reason, goods are, prim a f acie, classifiable under two or more
headings, classification shall be effected as follows :
(a) The heading which provides the most specific description
shall be preferred to headings · providing a more general
c description ............ .
(b) Mixtures, composite goods cons1stmg of different
materials or made up of different components, and goods put
up in sets, which cannot be classified by reference to (a), shall
be classified as if they consisted of the material or component
D which gives them their essential character, insofar as this
criterion is applicable.
(c) When goods cannot be classified by reference to (a) or
(b ), they shall be classified under the heading which occurs
last in the numerical order among those which equally merit
E consideration."
(underlining ours)
Rule 1 does not help to classify the goods in the present case because
p Note l(f) in Chapter 48 is not applicable to these goods. The other
interpretation is Rule 3(b) which provides that mixtures or composite
goods consisting of different materials which cannot be classified with
reference to Rule 3(a) as in the present case, are to be classified as if they
consisted of the material or component which gives them their essential
character. In the present case, the essential character of a decorative
G laminated sheet is its rigidity or strength and its resistance to heat and
moisture. These are essentially characteristics which are imparted by
resins. Paper does not process any of these characteristics. Therefore,
applying Rule 3(b) and going by the essential characteristics of such
laminated sheets, these goods are more appropriately classifiable under
H chapter 39.
COLLECTOR OF CENTRAL EXCISE,. BAKELITE HYLAM LTD. [MRS. SUJATA V. MANDHAR, J.] 841
In the Explanatory Note to Chapter 39 in the Harmonised System of A
Nomenclature also, it is provided as follows :
"Combinations of plastics and materials other than textiles :
This chapter also covers the followings products, whether they have
been obtained by a single. operation or by a number of successive B
operations provided that they retain the essential character of
articles of plastics:
(c) Paper-reinforced stratified plastic sheeting, and products con-
sisting of one layer of paper or paperboard coated or covered with C
a layer of plastics, the latter constituting more than half the total
thickness, other than wall coverings of heading 48.14.
(d) Products consisting of glass fibres or sheets of paper, impreg-
nated with plastics and compressed together, provided they have
a hard, rigid character. (If having more the character of paper or D
of articles of glass fibres, they would be classified under Chapter
48 or 70, as the case may be)."
Note (d) clearly provides that products consisting of glass fibres
or sheets of paper impregnated with plastics and compressed E
together as in the present case, if they have a hard and rigid
character, would fall under Chapter 39. If they have more the
character of paper or of the articles of glass fibres, they would be
classified under Chapter 48 of Chapter 70, as the case may be. The
decorative laminated sheets which have a hard and rigid character F
are, therefore, classifiable under chapter 39 and not uqdet Chapter
48. The appropriate entry is 3920.31/3920.37 which deals, inter alia,
with sheets of other plastics, rigid, laminated. Decorative laminated
sheets, therefore, cannot be classified under Tariff Entry
4818.90/4823.90. CEGAT is not right in classifying these under
Entry 4818.90/4823.90. G
Industrial laminated sheets which are paper-based are used for
electrical insulation. Glass epoxy laminates are also used as electrical
insulators. The New Tariff Act contains a separate Section XVI which
deals, inter alia, with electrical equipment and parts thereof. Chapter 85 H
842 SUPREME COURT REPORTS (1997] 2 S.C.R.
A which forms part of Section XVI deals with electrical machinery and
equipment and parts thereof. Entry 8546 deals with "electrical insulators of
any material." There is, therefore, a specific entry in the New Tariff Act
dealing with electrical insulator of any material. Under Chapter 39 which
deals with plastics and articles thereof, Chapter Note 2 (n) which is set out
B earlier, provides that this Chapter does not cover articles of Section XVI.
therefore, industrial laminates and glass epoxy laminates which are used
for electrical insulation will not fall under Chapter 39 but will fall under
Chapter 85 under Entry 8546.00 (Entry 7014 under the New Tariff Act
prior to l.3.1988).
c· It is the contention of the Central Excise Department that industrial
laminates and glass epoxy laminates cannot be considered as electrical
insulators because these sheets are required to be cut in the requisite shape
and holes may have to be punched in them before they could be fitted as
insulators. However, mere cutting or punching holes does not amount to
D manufacture. These sheets have insulating properties and are used as
electrical insulators. They cannot be taken out of the category of electrical
insulators only because they have to be cut to the requisite shape or a few
holes may be required to be punched in them in order that they may fit
into the electrical instrument/appliance in question. The Tribunal, there-
E fore, has correctly classified these industrial laminates and glass epoxy
laminates under Tariff Item 8546 of the New Customs Tariff (after 1.3.88)
and under Tariff Entry 7014 under the New Customs Tariff upto 28-2-1988.
Under the Old Customs Tariff, however, there is no express entry dealing
with electrical insulators equivalent to Entry 8546.00 of the New Customs
F Tariff. Entry 15A(2) of the Old Tariff will not cover these laminated sheets
also for the same reason as in the case of decorative laminated sheets.
These sheets, therefore, have been rightly classified under the residuary
Tariff Entry 68 of the Old Customs Tariff.
To sum up, the Tribunal has rightly classified decorative laminates
G under the. Old Tariff Entry 68. The decision of the Tribunal, however, in
so far as it classifies decorative laminated sheets under Tariff Entry
4818.90/4823.90 of the New Tariff is set aside and decorative laminated
sheets are classified under Tariff Entry 3920.31/3920.37 of the New Tariff.
In respect of industrial laminates (paper-based) and glass epoxy laminates,
H the Tribunal has correctly classified these laminates under Tariff Item 68
COLLECTOR OF CENTRAL EXCISE'· BAKELITE HYLAM LTD. [MRS. SUJATA V. MMOHAR.l.J 843
of the Old Tariff and under Tariff Entry 7014/8546 of the New Tariff. A
Accordingly these appeals are partly allowed. Any entitlement to
refund will be processed in accordance with the decision of this Court in
Mafatlal Industries Ltd. Etc. Etc. v. Union of India Etc. Etc., (1996) 9
SCALE 457. There will be no order as to costs in the circumstances of the
case. B
v.s.s. Appeals partly allowed.
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