Supreme Court of India
COLLECTOR OF CENTRAL EXCISE, HYDERABADversusFENOPLAST (P) LTD. {II)
- Citation
- 1994 INSC 226
- Decided
- 27 June 1994
- Bench
- M M PUNCHHI
Holding
Tariff Item 19(III) includes coated fabrics like rexine cloth, and the predominance percentages apply to the 100% cotton base fabric, making the product a "cotton fabric" for excise duty purposes.
Summary
The respondent, Fenoplast (P) Ltd., manufactures rexine cloth by coating 100% cotton fabric with PVC resin, plasticizers and fillers. It argued that because cotton constituted only 8% of the finished product, the cloth could not be classified as a "cotton fabric" under Tariff Item 19(III) of the Central Excise and Salt Act and therefore should not attract the higher excise duty. The Collector (Appeals) and the Customs, Excise and Gold (Control) Appellate Tribunal held that the product was not a cotton fabric, while the Original Authority had classified it as such. The Supreme Court examined the wording of Tariff Item 19, its proviso and Explanation I, and held that the predominance and percentage requirements apply to the base fabric, which is 100% cotton, so the coated fabric remains a cotton fabric within the ambit of Item 19(III). The Court also ruled that the Government’s interpretation as revising authority is not binding on the judiciary. Consequently, the appeal was allowed, the Tribunal and Collector (Appeals) orders were set aside, and the Original Authority’s decision was restored.
Issues considered
- Whether rexine cloth, a PVC‑coated cotton fabric, falls within Tariff Item 19(III) "cotton fabrics" for the purpose of levying excise duty.
- Whether the predominance or percentage criteria in Tariff Item 19 are to be measured against the base fabric or the finished coated product.
- Whether Parliament’s inclusion of coated/laminated fabrics within the definition of "cotton fabrics" overrides the commercial or common‑parlance meaning of the term.
- Whether the interpretation of a taxing statute by the Government acting as revising authority is binding on the courts.
- Whether a term defined in the Central Excise and Salt Act must be given its statutory meaning rather than the meaning assigned by trade.
Legislation cited
Subjects
Excise dutyTariff classificationCotton fabricsCoated fabricsStatutory interpretationProvisoExplanation IBase fabricGovernment interpretationCentral Excise Act
Judgment
COLLECTOR OF CENTRAL EXCISE, HYDERABAD A
v.
FENOPLAST {P) LTD. {II)
JUNE 27, 1994
B
[M.M. PUNCHHI, S.C. AGRAWAL AND B.P. JEEVAN REDDY, JJ.]
Central Excises and Salt Ac~ 19~Tariff Item 19-'Cotton Fabric'-
Held, wauld include coated fabrics like.rexine cloth produced by coating 100%
cotton cloth with P. V. C. resin and other plasticizers.
c
lntelpretation of Statutes-Taxing statutes-Commercial parlance or
common parlance meaning, held applicable only when word not defined in
statute-lntelpretation by Government, an authority under the A.ct, held not
binding on Cowt.
D
The respondent-Company manufacturers rexine cloth by coating
100% 'cotton cloth' with P.V.C. resin and other plasticizers. The composi-
tion by weight ofrexine cloth so manufactured includes cotton fabrics, PVC
Resin, Plasticizers and other fillers to the extent of 8%, 24.5%, 13.0% and
54.5% respectively. The respondent contended that rexine cloth could not E
be treated as "Cotton fabric" under Tariff Item 19 as it obtained at the
relevant time since cotton cloth represented a mere 8% of the final product
by weight whereas the remaining 92% Is represented by coating material.
The original Authority rejected the contention of the Company and held
that it fell within Tariff Item 19 (DI) but the Collector (Appeals) held to
the contrary. The order of the Collector (Appeals) was upheld by a F
majority of the Customs, Excise and Gold (Control) Appellate Tribunal.
The Revenue appealed to the Supreme Court. Initially the appeal was
heard by a Bench of two hon'ble Judges (B.P Jeevan Reddy and B.L.
Hansaria JJ,) but was subsequently referred to the preseut larger Bench
of three Hon'ble Judges since the Bench originally heai'ing the matter G
entertained a doubt regarding the correctness of the decision of the Court
in Collector of Central Excise, Calcutta v. Multiple Fabrics Pvt. Ltd., [1987]
2 sec 636 on which the Respondents relied.
Allowing the appeal, this Court H
U,7
268 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A HELD : 1. Tariff item 19 deals with 'cotton fabrics', whether made
wholly or partially from cotton. It includes several other goods within the
ambit of the expression 'cotton fabrics'. The proviso as well as Explanation
1 to the Tariff Item it clear beyond doubt that the predominance and
percentages referred to in clause (i) and (ii) shall be in relation to the base
fabric which are impregnated, coated or laminated as the case may be. The
B proviso excludes any room for argument that the predominance or per·
centages referred to in the aforesaid clause (i) and (ii) should be applied
to the impregnated, coated or laminated fabrics. It must follow therefrom
that the question of predominance of percentages is irrelevant in the case
or the respondent's product inasmuch as the base fabric iL the
C respondent's prodnct is 100% cotton. [274·H; 275·A; F-G; 278-C-D]
2. When the Parliament has chosen to include the coated/laminated
fabrics within the ambit and purview of 'cotton fabrics' and when
Parliament's power to do so is not questioned, it cannot be argued that the.
cotton fabric after coating no longer retains its Identity as cotton fabric and
D that a new distinct commodity emerges. The fact remains that to start with,
It is a cotton cloth upon which certain coating material is applied. [278'A·B]
3. The proposition that the meaning assigned to the words in a taxing
statute by the trade and the popular meaning should be accepted is
E correct, but it applies only when the words in question are not defined.
This Is not so in the present case. [277·B·C)
4. The view of the Government of India acting as the revising
authority under the Act that if the end product has lost its identity as a
cotton fabric it cannot be said to fall within the expression 'cotton fabrics'
F under Tariff Item 19 cannot bind the court. The Supreme Court is the final
authority to interpret the Tariff Item and cannot be bound by the inter·
pretation placed by an authority under the Act. [277-F-G]
Collector of Central Excise, Calcutta v. Multiple Fabrics Pvt. Ltd.
[1987] 2 sec 636, distinguished.
G
Indo International Industries v. CST, UP, [1981] 2 SCC 528, relied on.
Dunlop India Ltd. Re. [1982) 10 ELT 634, distinguished.
Encyclopaedia Americana Vol. 22 (1988) Edn.) P. 375, 217, referred
H to, McGraw-Hill Encyclopaedia of Science and Technology, Vol. 14, p. 170
CENTRAL EXCISE v. FENOPLAST (P) LTD. [JEEV AN REDDY.J.j 269
(1987 Edu) referred to and Chemicals and Fibres Ltd. v. Union of India, A
(1982) 10 ELT 917 (Born) referred to.
CIVIL APPALLATE JURISDICTION: Ch'1 Appeal Nos. 3094-95
of 1989.
From the Judgment and Order dated 9.3.1989 passed by the Cus- B
toms, Excise 'Gold (Control) Appellate Tribunal in Order Nos. 26-87/89-D.
Joseph Vellapally, V.K. Verma, M.Gourishankar Murthy, P. Parmes-
waran and Dalip Tandon for the Appellants.
Soli. J. Sorabjee, V. Sridharan, A.R. Madhava Rao, V. Balachandran
c
and S. Aravindh for the respondent.
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J. The respondent-company manufactures D
coated fabrics, popularly known as "reicine cloth" in the market. The
question in issue in this appeal is whether the. said product falls within
Tariff Item 19(III) of the Schedule to the Central Excise and Salt Act, as
it obtained at the relevant time. The Original Authority held that it does
but the Collector (Appeals) held to the contrary. The Revenue's appeal E
before the Customs Excise and Gold (Control) Appellate Tribunal
(CEGAT) was heard by a Bench of three Members. By majority, the
Tribunal affirmed the judgment of the Collector (Appeals). The appeal
preferred by the Revenue in this Court was heard in the first instance by
a Bench comprising one of us (B.P. Jeevan Reddy, J.) and B.L. Hansaria,
F
J. Inasmuch as the Bench entertained a doubt as to the correctness of an
earlier decision of this Court in Collector of Central Excise, Calcutta v. M/s.
Multiple Fabrics Pvt. Ltd. & Ors., (1987] 2 S.C.C. 636, (a judgment rendered
by a Bench comprising Ranganath Misra, J. (as he then was) and G.L. Oza,
J.] which constituted the sheet anchor of the re,pondent's case, the matter
was referred to a larger Bench. That is how the appeal is before this Bench. G
The respondent purchases 100% cotton cloth and coats it with P.V.C.
resin and other plasticizers. The product is popularly known in the market
as "rexine cloth". The composition of the rexine cloth manufactured by the
respondent is to the following effect : H
270 SUPREME COURT REPORTS (1994] SUPP.1 S.C.R.
A "(1) Cotton Fabrics 8.0%
(2) PVC resin 24.5%
(3) Plasticizers (DIP/DIOP/BBP) 13.0%
B . (4) Other [Fillers, (Calcium Carbonate) 54.5%
Secondary Plasticizers, pigments, solvents,
thinners, Foaming agents)
The above composition is by weight."
C The main contention of the respondent which found favour both with
the Collector (Appeals) and the majority of the Members of the
C.E.G.A.T. is that the rexine cloth manufactured by the respondent cannot
be called a 'cotton fabric' in view of the fact ·that cotton fabric represents
a mere 8% of the final product (by weight) whereas the remaining 92% is
D represented by coating material. The respondent's case which has been
reiterated before us by its learned counsel, Sri Soli Sorabjee' is that in
commercial or in common parlance, rexine cloth is not understood or dealt
with as a cotton fabric but as a distinct commodity. It cannot, therefore, be
called a cotton fabric and even if it is treated as· one by virtue of Tariff
Item-19, the predominance or percentage referred to in the said Tariff Item
E should be applied in relation to the final product and not with reference
to. the cotton cloth which represents a very minor portion of the final
product. The contention of the Revenue, on the other hand, is that coated
fabric (in the case of the respondent, rexine cloth) is expressly placed
within the purview of the cotton fabric by the Parliament. In the face of
such express inclusion, there is no room for arguing that the rexine cloth
F or coated fabric is not cotton fabric. May be that rexine cloth is not called
or dealt with as a cotton fabric in the commercial world or in common
parlanc~ but that does not prevent the Parliament from treating it as a
cotton fabric for the purposes of the Act and .indeed the Parliament has
chosen to include it within the ambit of cotton fabrics for the purposes of
G levying excise duty. Since the power of the Parliament to do so is unques-
tioned, the respondent's product is bound to be treated as 'cotton fabrics'
within the purview of Tariff Item-19 and subjected to duty prescribed
under sub-item (III) thereof. So far as the predominance or percentag"s
referred to at the end of the first para of the Tariff Item is concerned, they
are wholly irrelevant in the case of the respondent's product inasmuch as
H the said predominance or percentage are applicable in relation to the 'base
' '
CENTRAL EXCISE v. FENOPLAST (P) LTD. [JEEVAN REDDY, J.] 271
fabric' and the base fabric in the case of respondent's product is 100% A
cotton.
For resolving the above controversy, it is necessary to turn to the
Tariff Item itself. It reads thus:
19. COTTON FABRICS B
Tariff Rate of Duty
Item Description of goods Basic Special
No. Excise
19. COTTON FABRICS - c
"Cotton fabrics" means all varieties
of fabrics manufactured either whol-
ly or partly from cotton and includes
dhoties, sarees, chaddars, bedsheet,
D
bed spreads, counterpanes, Table-
cloths, embroidery in the piece, in
strips and in motifs, fabric impreg-
nated, coated or laminated with
preparations of cellulose derivatives
or of other artificial plastic materials E
and fabrics covered articially or fully
with textile flocks or with prepara-
tions containing textile flocks, if (i)
in such fabric cotton predominates
in weight, or (ii) such fabrics contain F
more than 40 per cent, by weight of
cotton and 50 per cent, or more by
weight of non-cellulosic fibres or
yarn or both :
Provided that in the case of G
embroidery in the piece in strips or
in motifs, fabrics impregnated,
coated or laminated with prepara-
tions of cellulose derivatives or of
other artificial plastic materials and H
272 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A fabrics covered partially or fully with
textile flocks, such predominance or
percentages, as the case may be,
shall be in relation to the base
fabrics which are embroidered or
impregnated, coated or laminated or
B
covered, as the case may be -
· J. Cotton fabrics, other than (i)
embroidery in the piece, in strips or
in motifs, (ii) fabrics impregnated,
c coated or laminated with prepara-
tions of cellulose derivatives or of
other artificial plastic materials and
(iii) fabric covered partially or fully
with textile flocks or with prepara-
D tions containing textile flocks-
(a) cotton fabric, not subjected to Twenty 10% of
any process. per cent the
ad duty
'E valorem. chargeable.
(b) cotton fabrics, subjected to the Twenty 10% of
process of bleaching, mercerising per cent the
water-proofing, rubberising, shrink- ad duty
proofing, organdie processing or any valorem. chargeable.
F
other process or any two or more or
these processes.
IT. Embroidery in the piece, in strips or The duty 10% of
in motifs, in or in relation to the for the basic duty
G manufacture of which any process is time being chargeable.
ordinarily carried on with the aid of leviable on
power. the base fabrics,
if not already
paid, plus 20%
H adv.
CENTRAL EXCISE v. FENOPLAST (P) LTD. [JEEVAN REDDY, J.] 273
III. Cotton fabrics impregnated coated The duty -do- A
or laminated with preparations of for the
cellulose derivatives or of other ar- time being
tificial plastic materials. leviable on
the base
fabrics, if
B
not already
paid, plus
30% adv.
IV. Cotton fabrics covered partially or The duty -do-
fully with textile flocks or with for the c
preparations containing textile time being
flocks such as flocks printed fabrics leviable on
and flocks coated fabrics. the base
fabrics, if
not already
paid, plus
D
30% adv.
Explanation : I
"Base fabrics" means fabrics falling E
under sub-item I of this item which
are· subjected to the process of
embroidery or which are impreg-
nated, coated or laminated with
preparations or cellulose derivatives
or of other plastic materials of which F
are covered partially or fully with
textile flocks or with preparations
containing textile flocks.
Explanation : II
G
Where two or more of the following
fibres, that is to say,
(a) man-made fibre of cellulosic
origin ; H
274 SUPREME COURT REPORTS [1994) SUPP. 1 S.C.R.
A (b) cotton
(c) wool;
(d) silk (including solk nail);
B (e) jute (including Bimlipatam jute
or mesta fibre);
(I) man-made fibre of non-cellulosic
origin;
c (g) flax;
(h) ramie.
in any fabric are equal in weight,
then, such one of those fibres the
D predominance of which would
render such fabric fall under that
Item (hereafter in this Explanation
referred to as the applicable Item)
among the Items Nos. 19, 20, 21, 22,
E 22A and 22AA, which, read with the
relevant notification, if any, for the
time being in force issued under the
Central Excise Rules, 1944, involves
the highest amount of duty, shall be
deemed to be predominant in such
F fabric and accordingly such fabric
shall be deemed to fall under the
applicable item.
Explanation : III.
G This Item does not include floor·
-'
coverings falling under Item No.
22G."
The Tariff Item deals with 'cotton fabrics', whether made wholly from
H cotton or partially from cotton. It includes several other goods within the
CENTRAL EXCISE v. FENOPLAST (P) LTD. [JEEVAN REDDY, J.] 275
ambit of the expression 'cotton fabrics'. The items so included are : (a) A
dhoties, sarees, chaddars, bed-sheets, bed-speads, counter-panes, and table
cloths; (b) embroidery in piece, in strips or in motifs; (c) fabrics impreg-
nated, coated or laminated with preparations .of cellulose derivatives or of
other artificial plastic materials; and ( ~) fabrics covered partially or fully
with textile flocks or with preparations containing textile . flocks. After B
includ'mg the said four categories of goods within the ambit of the expres-
sion "cotton fabrics", the Tariff Item proceeds to say that for being called
cotton fabrics (i) the cotton must predpminate in such fabrics by weight or
(ii) such fabrics must contain more than 40% cotton by weight and 50%
or more of non-cellulose fibre or yarn or both by weight. Now, if the Tariff C
Item had stopped here, i.e., with the first para, a doubt could probably have
arisen whether the fabrics referred to in clauses (i) and (ii) mentioned
above refer to cotton fabrics simpliciter or to the other goods s_pecifically
brought within the ambit of the Tariff Item. In short, in the case before us,
a doubt could have arisen whether the predominance of cotton or the
requirement of 40% cotton by weight etc., is to be applied to the cotton D
cloth simpliciter upon which coating is done or to the rexine cloth manufac-
tured by the respondent. Precisely, with a view to obviate such doubt, has
the Parliament added the proviso as well as Explanation (I) to the Tariff
Item. The proviso provides in clear words that in the case inter a/ia of
"fabrics impregnated, coated or laminated with preparations of cellulose E
derivatives or of other artificial plastic material... ..... such predominance or
percentages, as the case may be, shall be in relation to the base fabrics
which are ....... impregnated, coated or laminated ....." indisputably, when the
proviso speaks of predominance or percentages, it is referring to clauses
(i) and (ii) referred to above (which occur at the end of the first para of f·
the Tariff Item). The proviso makes it clear beyond any doubt that the
predominance and percentages referred to in the said clauses shall be in
relation to the base fabric which are impregnated, coated or laminated, as
the case may be. The proviso excludes any room for the argument that the
predominance or percentages referred to in the aforesaid "clauses (i) and
(ii) should be applied to the impregnated, coated or laminated fabrics. The
Parliament did not even stop with this. To make its meaning even more
clearer, it appended Explanation (I) defining the expression "base fab.rics".
The explanation says that" "base fabrics" means fabrics falling under sub-
item (I) of this item which are impregnated, coated or laminated with
''
276 SUPREME COURT REPORTS [1994] SUPP. I S.C.R.
A preparations of cellulose derivatives or of other plastic materials ..... " For a
fuller appreciation of the Explanation (I), it would be appropriate to refer
tci sub-item (I) of the Tariff Item as also sub-items (11), (III) and (IV).
Sub-item (I) expressly speaks of' "cotton fabrics" other than ........ (ii) fabrics
impregnated, coated or laminated with preparations of cellulose derivatives
B or of other artificial plastic materials ....... " The duty on such cotton fabrics
is 20% ad valorem and the special excise duty is 10% of the basic charge-
able duty irrespective of the fact whether such cotton fabrics fall under
clause (a) or clause (b) mentioned under the said sub-item. Sub-item (I)
may be contrasted with sub-item (III) which pertains to "cotton fabrics
impregnated, coated or laminated with preparations of cellulose derivatives
c or of other artificial plastic materials", the rate of duty whereon is the duty
for the time being leviable on the base fabric, if not already paid, plus 30%
ad valorem. (The special excise duty is retained at 10% of the basic duty
chargeable.) It may also be seen that sub-item (II) deals with "embroidery
in piece, in strips or in motifs in relation to the manufacture of which any
D process is ordinarily carried on with the aid of power" while sub-item (IV)
deals with "cotton fabrics covered partially or fully with textile flocks or
with preparations containing textile flocks such as flock printed fabrics and
flock coated fabrics". Separate rates of duty are prescribed for each of
these sub-items. It would thus be clear that the cotton fabrics simpliciter
E including dhoties, sarees, chaddars, bed-sheets, bed-spreads, connter-
panes and table cloths fall under sub-item (I), while the other three
categories included within the ambit of cotton fabrics fall within sub-items
(II), (III) and (IV) respectively.
F Now, coming back to Explanation (I), it says that 'base fabrics',
defined by it and referred to in the proviso, means the cotton fabrics falling
under sub-item (I) of this Item, i.e., cotton fabrics exclnding inter alia
fabrics impregnated, coated or laminated with preparations of cellulose
derivatives or of other artificial plastic materials. We are of the opinion
that in view of the clear language of the proviso read with Explanation (I),
G there remains no room for the argument that the predominance and
percentages referred to in clauses (i) and (ii) [occurring at the end of the
first para of the Tariff Item] must be applied not in relation to the base
fabric but in relation to the coated fabric or for that matter impregnated
or laminated fabric. Clauses (i) and (ii) were found necessary for the
H reason that "cotton fabrics" mean not only fabrics manufactured wholly of
CENTRAL EXCISE v. FENOPLAST (P) LTD. [JEEVAN REDDY, J.] 277
cotton but also fabrics manufactured partly from cotton. The two clauses A
clarify what does the cotton fabric manufactured partly of cotton mean.
Sri Sorabjee cited several decisions of this Court holding that in
interpreting the meaning of the words in a trucing statute like the Excise
Act, the meaning assigned to the words by the trade and its popular B
meaning should be accepted and that the test to be applied is to see how
the product is identified by the class or section of people who deal in the
product or who use the product. There can be no quarrel with the said
proposition but it applies only when the words in question are not defined
in the Act. This is so held by this Court in Indo International Industn"af v.
Sales Tax Commissioner, Uttar Pradesh, [1981] 2 S.C.C. 528. It says: "It is C
well settled that in interpreting items in statute like the Excise Tax Acts or
- Sales Tax Acts, whose primary object is to raise revenue and for which
purpose they classify diverse products, articles and substances, resort
should be had not to the scientific and technical meaning of the terms or
expressions used but to their popular meaning, that is to say, the meaning D
attached to them by those dealing in them. If any tenns or expression has
been defined in the enactment then it must be understood in the sense in
which it is defined but in the absence of any definition being given in the
enactment the meaning of the tenn in common parlance or commercial
parlance has to be adopted". In this view of the matter, we do not think it
necessary to deal with the several decisions cited by Sri Sorabjee regarding E
the relevance of commercial or common parlance test.
It is next contended by Sri Sorabjee that the Government of India,
acting as the revising authority under the Act has also taken the view that
if the end-product has lost its identity as a cotton fabric, it cannot be said F
to fall within the expression "cotton fabrics" under Tariff Item-19. Reliance
is placed upon its decision in Dunlop India Limited v: Government of India,
[1982] 10 E.L.T. 634. We do not think that on a question of interpretation
of a Tariff Item, we should be bound by the view taken by the Government
of India in a particular case. (The said decision does not also pertain to
reicine cloth but to conveyor belt). This Court is the final authority to G
interpret the Tariff Item and cannot be bound by the interpretation placed
by an authority under the Act.
It is argued by Sri Sorabjee that after coating, the cotton fabric no
longer retains its identity as cotton fabric and that a new distinct com- H
278 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.
A modity emerges. It is submitted that if the degree and extent of lamination
or coating of fabric is such that it ceases to retain its identity as cotton
fabric and a new distinct commodity emerges as a result of such coating
or lamination, the resultant product cannot be regarded as cotton fabric
within the meaning of Tariff ltem-19. This' argument does not take into
account the fact t_hat the Parliament has chosen to include the
B coated/laminated fabrics within the ambit and purview of "cotton fabrics"
- and the Parliament's power to do so is not questioned and probably
cannot be questioned. The fact remains that to start with it is a cotton cloth
upon whi~h certain coating material is applied.
c We have already held that the predominance or the percentages
referred to in clauses (i) and (ii) (occurring at the end of the first para of
the Tariff Item] is applicable only in relation to the base fabric as clarified
and defined in the Proviso and Explanation (1). It must follow therefrom
that the question of predominance or percentages is irrelevant in the case
of respondent's product inasmuch as the base fabric in the respondent's
-
D product is 100% cotton. The argument to the contrary is, however, based
upon the decision of this Court in Multiple Fabrics. The said decision dealt
with Tariff ltem-22 and the product concerned was P.V.C. conveyer belting
manufactured by the respondent therein. Tariff ltem-22 deals with "man- .
made fabrics" and the Entry is substantially in the same terms as Tariff
Item 19. Tariff Jtem-22 also contains a Proviso and Expianation (I) cor-
E
r.esponding to the Proviso and Explanation (I) in Tariff Jtem-19. But
unfortunately the Proviso was not brought to the notice of the Court.
Though Explanation (I) was noticed, its purport was not given effeci to
while holding that "in view of the higher percentage of P.V.C. compound
in commodity, it becomes difficult to treat the ultimate goods as man-made
F fabrics for holding that it is covered by Item-22". Indeed, the above reason
is the second of the two reasons given for holding in favour of the
respondent manufacturer. The first reason' is that since the manufacture of
fabric and application of P.V.C. compound is simultaneous, there is no
pre-existing base fabric for the purposes of and within the meaning of
Tariff Item- 22. Be that as it may, since the proviso was not brought to the
G notice of this Court and for that reason the significance of Explanation (I)
escaped the Court's notice, it is difficult to hold that the said decision lays
down the correct interpretation of Tariff Item-22 or that it helps the
,__
respondent before us in interpreting Tariff ltem-19.
H A look at Tariff Item-19 before its amendment in 1969 confirms the
CENlRAL EXCISE v. FENOPLAST (P) LTD. [JEEVAN REDDY, J.] 279
correctness of our interpretation. Prior to 1969, the only goods included A
within the expression 'cotton fabrics' were, what we called category (a)
goods. Goods in categories (b), (c) and (d) were not there. Yet the
percentages were there. Tariff Item-19 as it then stood and in so far as is
relevant read thus :
'19. COTTON FABRICS- B
"Cotton Fabrics" means all varieties of fabrics manufactured either
wholly or partly from cotton and include dhoties, saries, chadars,
bed-sheets, bed- spreads, counter-panes and table-cloths, but do
not include any such fabric-
c
(a) if it contains 40 per cent, or more by weight of wool;
(b) if it contains 40 per cent, or more by weight of silk; or
(c) if it contains 60 per cent, or more by weight or rayon or artificial
silk." D
It may also be mentioned that the Proviso and Explanation (I) came
in along with the inclusion of the new goods, in particular, coated or
laminated fabrics within the ambit of "cotton fabrics", by virtue of the
Finance Act, 1969, which amended the Tariff Item. E
Sri Sorabjee lastly conte.-,ded that the coating material employed by
the respondent in his product is not one of the impregnating, coating and
laminating materials referred to in Tariff Item-19. In other words, his
submission is that the coating material does not represent either "prepara-
tions of cellulose derivatives' or "other artificial plastic materials'. He F
submitted that this submission was raised by the respondent both before
the Collector (Appeals) as well as before the C.E.G.A.T. but was not
pronounced upon specifically in view of the fact that they held in favour of
the respondent on other grounds.
We have seen the grounds of appeal preferred by the respondent G
before the Collector (Appeals). It does not contain any ground to the above
effect. The order of the Collector (Appeal) refers to the argu!'lent of the
respondent's counsel that "the Assistant Collector has wrongly referred the
plasticizers and fillers as materials falling under the then Tariff Item 15-A,
i.e., plasticizers without any application of mind" and the further argument H
280 SUPREME COURT REPORTS [1994] SUPP. l S.C.R.
A that "in fact plasticizers are chemicals and fillers and other goods which
are not covered nor are assessed under Tariff Item 15-A not being plastic
materials". On the above basis. it was argued that the predominant material
in the rexine" cloth is not plasticizers inasmuch as the plastic content is only
24.5%. For appreciating the said argument, one has to turn to Tariff Item
15-A, which speaks of "artificial or synthetic resins and plastic materials
B and cellulose esters and ethers, and articles thereof." It may be noticed that
the goods referred to under Tariff Item 15-A and the coating material
referred to in Tariff Item 19 are not identical. Tariff Item 19 speaks of
impregnation, coating and lamination by "preparations of cellulose deriva-
tives or of other artificial plastic materials". So far as the Tribunal is
C concerned, only one Member (Sri P.C.Jain), in his dissenting opinion, deals
with this aspect in para 16.of his judgment. He rejects the said argument
holding that "P.V.C. formulation being used by the respondent-company is
certainly governed by the expression 'other artificial plasticizers"'. For the
said proposition, the learned Member relies upon the decision in Chemi-
D cals and Fibres India Ltd. v. Union of India, 82 E.L.T. 917, a decision of
the Bombay High Court wherein it was held that "whereas synthetic resin
is a polymer itself, plastic is polymer plus such additives as fillers, colorant
plasticizers etc." Pausing here for a moment, we may say that even accord-
ing to the respondent the coating material is of three categories, viz., P.V.C.
resin - 24.5% plasticizers-13.0% and other fillers, calcium carbonate,
E secondary plasticizers, pigments, solvents, thinners and foaming agents -
54.5%. Now, P.V.C. resin is also a plastic as would be evident from the
meaning given to it in Encyclopedia American, Vol. 22 - P. 375 (1988 Edn.).
"The following statement occurs therein :
"POLYVINYL CHLORIDE (PVC) is a tough, strong thermoplas-
F
tic polymer with an excellent combination of physical and electrical
properties. One of the leading plastics, PVC is used in a wide variety
.~ of products, including coated fabrics for upholstery and raincoats,
garden hoses, pipes, phonograph, records, floor-tiles, food-wrap films,
and insulation for wire and cable. PVC products basically are made
G from a powdery PVC resin, which in turn is made from a gas called
vinyle chloride (VC). A large number of molecules of vinyle
chloride (CH2=CHCI) are linked like beads on a chain to form
the PVC polymer (-CH2CHCI-)."
H To the same effect is the statement in McGraw-Hill Encyclopedia of
• CENTRAL EXCISE v. FENOPLAST (P) LID. [JEEVAN REDDY, J.] 281
Science and Technology, Vol. 14 - P. 170 {1987 Edn.) : A
"Polyvinyle chloride (PVC) is a tough, strong thermoplastic
material which has an excellent combination of physical and
electrical properties. The products are usually characterised as
plasticised or rigid types. Polyvinyle chloride (and copolymers) is
the second most commonly used in polyvinyle resin and one of the B
most versatile plastics."
The second category is plasticizers (13%), which is undoubtedly one
of the basic materials of the plastics. (See Encyclopedia Americana, Vol.
22 at P.217). Even in the third category, there are plasticizers but we do C
not know to what extent. It thus appears ex facie that the coating material
employed by the respondent is predominantly, if not wholly, "other artificial
plastic materials11 •
The majority opinion, of course, does not refer to this aspect at all.
D
No reasons are shown and no material is placed before us to show
that the said opinion of the Member of the Tribunal (Sri P.C. Jain) is not
correct. The only submission has been that the matter be remitted to the
Tribunal for a decision on this question. We are not inclined to do so, for
if this were the case, the respondent ought to have put forward this E
argument at the forefront and not concern itself with the interpretation of
the Tariff Item. It could have simply said, 'my coating material is not one
contemplated by the Tariff Item', and it it were so, no further question
would have arisen. Instead, it concentrated upon the applicability of the
clauses relating to predominance and percentages relying upon the
decision of this Court in Multiple Fabrics. Before the Collector (Appeals) F
it relied upon Tariff Item 15-A and submitted that since its coating material
is not covered by Tariff Item 15-A, Tariff Item-19 is also not attracted. For
all the above reasons, we are not inclined to accede to the request for
remand of the matters to the Tribunal for deciding the said question.
G
The appeals are accordingly allowed and the orders of the
C.E.G.A.T. and Collector (Appeals) are set aside. The order of the
Original Authority is restored. No costs.
R.R. Appeals allowed.
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