Collector of Central Excise Vs. Abeline Engineers

1. The dispute in the present matter is as to the correct classification under the First Schedule to the Central Excises and Salt Act, 1944 (the Schedule being referred to hereinafter as the CET), of impregnated glass fabrics (the original dispute covered also impregnated asbestos fabrics but their classification is not in issue in these proceedings). Glass fabric is passed through a trough containing phenol formaldehyde resin or a similar product of desired density, and then the impregnated fabric is passed through a drier. The respondents claimed that the goods were classifiable under Item No.15A, CET on the ground that the plastic material contents (60%) predominated. The Assistant Collector classified the goods under Item No. 22B, CET. In appeal, by order dated 27-3-1981, the Appellate Collector of Central Excise, held that the goods were classifiable under Item No. 22F, CET, prior to 1-3-1979 and that on and from 1-3-1979, they were classifiable under Item No. 22B because of the non-predominance of the mineral fibre/yarn content in them. On examination of the said order and records, the Central Government formed a tentative opinion that the order was not proper, legal and correct. The basis for this opinion, in the Central Government's words, is the following : "It would appear that there could be no dispute that the impregnated glass fabrics are nothing but glass fabrics impregnated with plastic material and, therefore, prima facie would be covered by Tariff Item 22B, Central Excise Tariff. It appears to the Government that Tariff Item 22B is more specific for the goods than the Tariff Item 22F and in matters of classification a specific entry should be given preference to a general entry. It further appears that the trade also understand the goods as impregnated fabrics. The assessee themselves describe the goods in the invoices as impregnated glass fabrics. It, therefore, appears to the Government that the Appellate Collector erred in holding that prior to 1-3-1979 the goods were classifiable under Tariff Item 22F, Central Excise Tariff. It further appears that even after the period 1-3-1979 although the Appellate Collector held that the goods were classifiable under Tariff Item 22B the reasons given, namely, that the mineral fibres and yarns contents were not predominant do not appear to be correct.

It appears to the Government that both prior to 1-3-1979 and after 1-3-1979 the goods are classifiable under Tariff Item 22B, Central Excise Tariff because it appears to be specific to the goods and the goods are understood in the trade as impregnated fabrics." A Notice (F. No. 198/B/5/28/82-CX.5 dated 6-3-1982 Under Section 36(2) of the Central Excises and Salt Act, was, therefore, issued to the respondents proposing to set aside the Appellate Collector's order or to pass such order as deemed fit after considering the respondent's submissions. It is the proceedings so instituted that have come to this Tribunal, on transfer, to be disposed of as if it were an appeal filed by the Collector of Central Excise, Bombay.

2. We have heard Shri Balbir Singh, Sr. D.R., for the department and Shri B.P. Sonar and Shri C.S. Kawatkar, partners of the respondent firm, and have read the record.

3. It is Shri Balbir Singh's contention that Item No. 22B, whether prior to 1-3-1979 or later, was wide enough to cover woven glass fabrics. The fact that the fabrics were impregnated with plastics would not detract from this position. Besides, the respondents were themselves invoicing the goods as impregnated glass fabrics. And Item No. 22B was more specific than Item No. 22F. The respondent's claim for classification under Item No. 15A(1) was, in any case, untenable.

4. The respondent's case is, however, that neither Item No. 22B nor 22F is appropriate for the goods, the appropriate one being Item No.15A(1). The goods are a moulding compound in sheet form wherein the filler happens to be glass fabric. The characteristics of the goods are attributable to the plastics content. In this context, it is submitted, the goods conform to the test of plasticity as laid down in note 1 to Chapter 39 of the new (in force from 28-2-1986) CET and the definition of "primary forms" which includes moulding powders in note 6. Reference is made to the book "Laminated Plastics" by D.J. Duffin (Reinhold Publishing Corporation, New York) to show that the goods are recognised as laminated plastics. Therefore, the goods fell under Item No. 15A(1).

In the alternative, it is claimed that Item No. 22F which is specific for glass fabrics is more appropriate than Item 22B which is a residuary item.

5. We have carefully considered the submissions of both sides and read the record.

6. The classification list which has given rise to the present dispute is dated 17-6-1978. At that time, Item No. 22B CET read as follows :- "Textile Fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials, not elsewhere specified." No doubt, as the respondents contend, this item is a residuary entry.

However, in our opinion, the proper way to read this entry is not "Textile fabrics not elsewhere specified, impregnated, coated, or laminated with preparations of cellulose derivatives or of other artificial plastic materials". That would be doing violence to the arrangement of the words. The entry covers textile fabrics which are impregnated, coated, or laminated with preparations of cellulose derivatives or of the artificial plastic materials and which are not elsewhere specified. That this is the proper reading of the entry will be clear by reference to certain other items in the CET. Item No. 19 for instance covers inter alia cotton fabrics similarly impregnated, coated, or laminated. Item No. 22 also covers inter alia similar man-made fabrics. Such fabrics being specified elsewhere in the schedule are excluded from the purview of Item No. 22B. Any textile fabric, impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials and not elsewhere specified would, in our view, fall under Item No. 22B. Now, Item No.22F undoubtedly covers glass fabrics but not, having regard to the above analysis, glass fabrics subjected to similar impregnation, coating or lamination. As between these two entries, it is our view that Item No. 22B is more appropriate.

7. Turning to Item No. 15A(1) the claim that the goods are moulding powder in sheet form has to be rejected since that is not how the goods are invoiced by the appellants themselves. They describe the goods as impregnated glass fabrics. The contention that glass fabric is a filler is untenable. Moulding powders, as the CCCN Notes on which reliance has been placed by the respondents show, contain certain fillers such as wood flour, cellulose, textile fibres or mineral substances - not substances like glass fabrics. The chapter notes in the new CET which came into force on 28-2-1986 are not relevant for the issue, the present dispute being of 1978. In any event, these notes are of no help to the appellants. The resin used for impregnation may have had "plasticity" but that is not the point. The reliance on moulding powders, again, is of no help since we are not dealing here with any moulding powder but impregnated glass fabric. The "primary forms" in Chapter 39 have reference to the polymers and some specified derivatives, not to glass fabrics impregnated with polymer resins.

8. The passage in the book "Laminated Plastics" relied on by the respondents is also of no assistance to the respondents. The goods in dispute could possibly qualify for the nomenclature "laminated plastics" as described in the book but that would not mean that they would come under Item 15A(1), CET which sets out in great detail what it covers. We have clearly noted that Chapter 39 of the new CET (corresponding to Item 15A of the previous CET) is not appropriate for the present goods.

9. Having regard to the words used in Item Nos. 22B and 22F, CET, the subject goods continued to be classifiable under the former item even on and from 1-3-1979.

10. We hold that the subject goods fell under Item No. 22B, CET prior to 1-3-1979 and also on and from 1-3-1979. We allow the appeal.