Glassfibro Products Vs. C.C.E. - Court Judgment

Excerpt:
1. this appeal has been filed by the appellants being aggrieved by the order dated 22-6-1990 passed by the ld. additional collector, central excise, bombay-i. the ld. addl. collector, in his order, had held that national test house had clarified that 'modulus of elasticity' in tension of the frp sheet sample was 36000 kgf/cm and therefore, the sample was that of 'rigid' plastic. the ld. adjudicating authority, therefore, not only confirmed the demand amounting to rs. 2,37,476.36 but also imposed a personal penalty of rs. 20,000/- under rule 173q of the central excise rules, 1944.2. the facts of the case, in brief, are that the appellants are engaged in the manufacture of fibreglass reinforced plastic sheet. the department alleged that the product manufactured by the appellants was classifiable under t. i. 15a(2) of the erstwhile central excise tariff.accordingly, a show cause notice was issued to the appellants asking them to explain as to why duty amounting to rs. 2,37,476.36 should not be demanded from them in respect of clearances of 1457 pcs. of fibre-glass reinforced plastic sheets cleared during the period 20-5-1983 to 18-10-1985 and why penalty should not be imposed. the case was adjudicated on 17-3-1989 by the addl. collector confirming the demand and imposing a penalty of rs. 20,000/-. the appellants filed an appeal against this order before this tribunal. the west regional bench of this tribunal, in its order no. 89/wrb, dated 13-9-1989 remanded the case back for de novo consideration holding as under: "when the stay petition was taken up for hearing during the course of arguments, its was submitted that the point over which the whole appeal lies is whether the product is rigid plastic sheet or flexible plastic sheet. for that purpose both the sides were placing reliance on the test certificate issued by the national test house, alipore, calcutta dated 25-7-1986. from the report it transpires that the test result indicated in the said report when read with the provision of notification no. 149/82-ce, dated 22-4-1982 would indicate the produce as the flexible plastic sheet whereas in the remarks of the asstt. director as laid down in the same test certificate opined that it is rigid plastic sheet. when the matter was considered by the lower authorities, he felt that there was some typographical error somewhere. however, he based his con- elusion on the remarks of the test certificate that the product is rigid plastic. as the only question before us was for interpreting the test certificate we decided to waive the condition of pre-deposit of duty and penalty and took up the appeal for final hearing only on the short point as to whether the test certificate is clear enough to provide a positive opinion as regard the classification of the item. we feel that the test result and remarks are more or less contradictory to each other and therefore, there ought to be some clarification on this point before the issue can be finally decided. under the circumstances, we set aside the order of the additional collector and remand the matter back to the additional collector and direct that the department may seek appropriate clarification from the authorities issuing the test certificate and re-adjudicate the issue on the basis of such clarification when received after giving due notice to the applicants/appellants, of being heard in that regard." 3. the clarification of the national test house was sought which clarified that modulus of elasticity in tension of frp sheet sample was 36000 kgf/cm . on receipt of this clarification, the appellants were given a copy of the clarification and the ld. addl. collector confirmed the demand and imposed a penalty of rs. 20,000/- in the de novo proceedings.4. shri r. parthasarathy, the ld. constt. appeared for the appellants and shri j.m. sharma, the ld. jdr represented the respondent commissioner.5. heard the submissions of both sides. the ld. constt. for the appellants submitted that it is a fact that the only issue agitated before the west regional bench of this tribunal was the error in the certificate issued by the national test house, alipore calcutta. the ld. constt. submitted that modulus of elasticity in tension was 36.000 kgf/cm2 and not 36000 kgf/cm2. he submitted that the clarification given by the national test house was not correct inasmuch as the elasticity of the product manufactured by the appellants could not be that high. the ld. constt. submitted that for subsequent period, the elasticity of the same .product has been found to be less than 700 kgf/cm2. it was also argued before us that explanation to notification no. 149/82-c.e. dated 22-4-1982 stipulated that in case modulus of elasticity in tension was more than 700 kgf/cm then the sheets will be rigid plastic. the ld. constt. submitted that this explanation under this notification has been struck down as ultra vires by the hon'ble bombay high court in the case of mechanical packaging industries pvt.ltd v. uoi reported in 1987 (32) e.l.t. 35 and therefore, this cannot be applied for determining the rigid plastic character of the product manufactured by the appellants. he, therefore, submitted that the product manufactured by them was not rigid plastic.6. in reply, the department argued that the only point which was referred back for de novo adjudication by the west regional bench was the clarification on the certificate given by the national test house.he submitted that national test house in most ambiguous terms classified that modulus of elasticity in tension of the sample of the product sent to them was 36000 kgf/cm . it was therefore, argued that there was nothing left after this clarification to hold that the product was rigid plastic sheets. on the question of hon'ble bombay high court's judgment, the department represented that even if the explanation to notification no. 149/82-c.e. was struck down, the notification itself excluded rigid plastic board, sheet etc. he submitted that the results of the test on the sample were communicated to the appellants and they did not challenge the findings or made a request for retest of the sample. he submitted that the only point in dispute was the clarification which was given by the national test house.7. after analysing the submissions made by both the sides as above, we find that the only point agitated before the west regional bench of this tribunal was the clarification about modulus of elasticity given in the certificate. we find that no evidence other than the certificate of any test conducted by any authorised agency has been produced by the appellants. we do not see any mistake or any ambiguity in the certificate as the figure 36000 kgf/cm has been stated by the national test house both in words and figures. we also find that the appellants did not make a request for retest of the sample when the results were conveyed to them. in this view of the matter, we hold that the product manufactured by the appellants was rigid plastic sheet. in this view of the matter, we hold that the benefit of notification no. 149/82-c.e., dated 22-4-1982 was not admissible to the appellants.8. the ld. constt. also agitated the question of classification of the product. he submitted that the product was not classifiable under tariff item 15a(2) of the erstwhile central excise tariff but was classifiable under tariff item 68. in support of his contention, he cited and relied upon the judgment of the apex court in the case of jeep flash light industries ltd. reported in 1985 (22) e.l.t. 3 (s.c.).he submitted that it is well settled in law by now that new grounds can be raised at appeal stage even if no cross-objection is filed by the other party and that the appellate tribunal can decide an appeal on any other ground taken by the party. in support of this contention, the ld.constt. cited and relied upon the judgment of this tribunal in the case of polycom paper ltd. v. c. c., bombay-i reported in 1994 (70) e.l.t.9. this contention of the appellants was objected to by the ld.departmental representative on the ground that reopening of the issue of classification will create an entirely new case in view of the fact that this issue was not agitated before the tribunal and the case was sent for de novo adjudication and, therefore, we have to confine the findings only on the point which was the subject-matter of decision before the adjudication authority in the impugned order. on careful consideration of the submissions of both the sides, we find that the issue of classification was not the subject-matter of remand. the case was remanded to the adjudicating authority only for checking the clarification received from the national test house and therefore, there was no question of extending the scope, when the entire case was considered by the tribunal but was earlier remanded for de novo adjudication only on clarification aspect. in the circumstances, we do not find any valid reason at this stage when the tribunal had considered the issues agitated before it on an earlier occasion and had remanded the case for de novo adjudication on specific issues. in this view of the matter and having regard to the special facts and circumstances of the case, we do not accept the plea of the appellants for admitting the arguments on classification.in view of the above findings, we uphold the impugned order and reject the appeal.

Judgment:
1. This appeal has been filed by the appellants being aggrieved by the order dated 22-6-1990 passed by the ld. Additional Collector, Central Excise, Bombay-I. The ld. Addl. Collector, in his order, had held that National Test House had clarified that 'Modulus of Elasticity' in tension of the FRP sheet sample was 36000 kgf/cm and therefore, the sample was that of 'rigid' plastic. The ld. adjudicating authority, therefore, not only confirmed the demand amounting to Rs. 2,37,476.36 but also imposed a personal penalty of Rs. 20,000/- under Rule 173Q of the Central Excise Rules, 1944.

2. The facts of the case, in brief, are that the appellants are engaged in the manufacture of fibreglass reinforced plastic sheet. The department alleged that the product manufactured by the appellants was classifiable under T. I. 15A(2) of the erstwhile Central Excise Tariff.

Accordingly, a show cause notice was issued to the appellants asking them to explain as to why duty amounting to Rs. 2,37,476.36 should not be demanded from them in respect of clearances of 1457 pcs. of fibre-glass reinforced plastic sheets cleared during the period 20-5-1983 to 18-10-1985 and why penalty should not be imposed. The case was adjudicated on 17-3-1989 by the Addl. Collector confirming the demand and imposing a penalty of Rs. 20,000/-. The appellants filed an appeal against this order before this Tribunal. The West Regional Bench of this Tribunal, in its Order No. 89/WRB, dated 13-9-1989 remanded the case back for de novo consideration holding as under: "When the stay petition was taken up for hearing during the course of arguments, its was submitted that the point over which the whole appeal lies is whether the product is rigid plastic sheet or flexible plastic sheet. For that purpose both the sides were placing reliance on the test certificate issued by the National Test House, Alipore, Calcutta dated 25-7-1986. From the report it transpires that the test result indicated in the said report when read with the provision of Notification No. 149/82-CE, dated 22-4-1982 would indicate the produce as the flexible plastic sheet whereas in the remarks of the Asstt. Director as laid down in the same test certificate opined that it is rigid plastic sheet. When the matter was considered by the lower authorities, he felt that there was some typographical error somewhere. However, he based his con- elusion on the remarks of the test certificate that the product is rigid plastic.

As the only question before us was for interpreting the test certificate we decided to waive the condition of pre-deposit of duty and penalty and took up the appeal for final hearing only on the short point as to whether the test certificate is clear enough to provide a positive opinion as regard the classification of the item.

We feel that the test result and remarks are more or less contradictory to each other and therefore, there ought to be some clarification on this point before the issue can be finally decided.

Under the circumstances, we set aside the order of the Additional Collector and remand the matter back to the Additional Collector and direct that the department may seek appropriate clarification from the authorities issuing the test certificate and re-adjudicate the issue on the basis of such clarification when received after giving due notice to the applicants/appellants, of being heard in that regard." 3. The clarification of the National Test House was sought which clarified that Modulus of Elasticity in tension of FRP sheet sample was 36000 kgf/cm . On receipt of this clarification, the appellants were given a copy of the clarification and the ld. Addl. Collector confirmed the demand and imposed a penalty of Rs. 20,000/- in the de novo proceedings.

4. Shri R. Parthasarathy, the ld. Constt. appeared for the appellants and Shri J.M. Sharma, the ld. JDR represented the respondent Commissioner.

5. Heard the submissions of both sides. The ld. Constt. for the appellants submitted that it is a fact that the only issue agitated before the West Regional Bench of this Tribunal was the error in the certificate issued by the National Test House, Alipore Calcutta. The ld. Constt. submitted that Modulus of Elasticity in tension was 36.000 kgf/cm2 and not 36000 kgf/cm2. He submitted that the clarification given by the National Test House was not correct inasmuch as the elasticity of the product manufactured by the appellants could not be that high. The ld. Constt. submitted that for subsequent period, the elasticity of the same .product has been found to be less than 700 kgf/cm2. It was also argued before us that Explanation to Notification No. 149/82-C.E. dated 22-4-1982 stipulated that in case modulus of elasticity in tension was more than 700 kgf/cm then the sheets will be rigid plastic. The ld. Constt. submitted that this Explanation under this Notification has been struck down as ultra vires by the Hon'ble Bombay High Court in the case of Mechanical Packaging Industries Pvt.

Ltd v. UOI reported in 1987 (32) E.L.T. 35 and therefore, this cannot be applied for determining the rigid plastic character of the product manufactured by the appellants. He, therefore, submitted that the product manufactured by them was not rigid plastic.

6. In reply, the Department argued that the only point which was referred back for de novo adjudication by the West Regional Bench was the clarification on the certificate given by the National Test House.

He submitted that National Test House in most ambiguous terms classified that modulus of elasticity in tension of the sample of the product sent to them was 36000 kgf/cm . It was therefore, argued that there was nothing left after this clarification to hold that the product was rigid plastic sheets. On the question of Hon'ble Bombay High Court's judgment, the department represented that even if the explanation to Notification No. 149/82-C.E. was struck down, the Notification itself excluded rigid plastic board, sheet etc. He submitted that the results of the test on the sample were communicated to the appellants and they did not challenge the findings or made a request for retest of the sample. He submitted that the only point in dispute was the clarification which was given by the National Test House.

7. After analysing the submissions made by both the sides as above, we find that the only point agitated before the West Regional Bench of this Tribunal was the clarification about modulus of elasticity given in the certificate. We find that no evidence other than the certificate of any test conducted by any authorised agency has been produced by the appellants. We do not see any mistake or any ambiguity in the certificate as the figure 36000 kgf/cm has been stated by the National Test House both in words and figures. We also find that the appellants did not make a request for retest of the sample when the results were conveyed to them. In this view of the matter, we hold that the product manufactured by the appellants was rigid plastic sheet. In this view of the matter, we hold that the benefit of Notification No. 149/82-C.E., dated 22-4-1982 was not admissible to the appellants.

8. The ld. Constt. also agitated the question of classification of the product. He submitted that the product was not classifiable under Tariff Item 15A(2) of the erstwhile Central Excise Tariff but was classifiable under Tariff Item 68. In support of his contention, he cited and relied upon the judgment of the Apex Court in the case of Jeep Flash Light Industries Ltd. reported in 1985 (22) E.L.T. 3 (S.C.).

He submitted that it is well settled in law by now that new grounds can be raised at appeal stage even if no cross-objection is filed by the other party and that the Appellate Tribunal can decide an appeal on any other ground taken by the party. In support of this contention, the ld.Constt. cited and relied upon the judgment of this Tribunal in the case of Polycom Paper Ltd. v. C. C., Bombay-I reported in 1994 (70) E.L.T.9. This contention of the appellants was objected to by the ld.Departmental Representative on the ground that reopening of the issue of classification will create an entirely new case in view of the fact that this issue was not agitated before the Tribunal and the case was sent for de novo adjudication and, therefore, we have to confine the findings only on the point which was the subject-matter of decision before the adjudication authority in the impugned order. On careful consideration of the submissions of both the sides, we find that the issue of classification was not the subject-matter of remand. The case was remanded to the adjudicating authority only for checking the clarification received from the National Test House and therefore, there was no question of extending the scope, when the entire case was considered by the Tribunal but was earlier remanded for de novo adjudication only on clarification aspect. In the circumstances, we do not find any valid reason at this stage when the Tribunal had considered the issues agitated before it on an earlier occasion and had remanded the case for de novo adjudication on specific issues. In this view of the matter and having regard to the special facts and circumstances of the case, we do not accept the plea of the appellants for admitting the arguments on classification.

In view of the above findings, we uphold the impugned order and reject the appeal.