1. The captioned appeal was initially filed as a Revision Application before the Central Government which, under Section 35-P of the Central Excises and Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2. The dispute in the present case is with regard to the correct classification under the First Schedule to the Central Excises and Salt Act, 1944 (GET, for short), of a product called "Epoxy Glass Textolite Sheets" manufactured by the appellants. The goods comprise of resin and mineral fibres. On 20-2-1978, the appellants submitted a claim before the Assistant Collector of Central Excise, Calcutta for a sum of Rs. 1,17,675.01 on the ground that, though duty had been paid on the said goods under Item No. 15A(2) GET, the goods were correctly assessable to duty under Item No. 22F CET. In his order dated 15-12-1978, the Assistant Collector stated that since the goods were articles of glass fibre reinforced plastics, classifiable as 'rigid plastic sheets' under Item No. 15A(2) CET, no refund was due. Accordingly, he rejected the claim.
3. Earlier, it appears, the Assistant Collector had in an order dated 26-6 1978, ordered the classification of the very same product under Item 22F from 16-3-1976 and held that the appellants would no longer be eligible to avail themselves of the procedure under Central Excise Rule 56-A in respect of the resin received by him for the manufacture of the product. It was, thus, that the appellants came to file the refund claim which was rejected by the Assistant Collector by the order dated 15-12-1978 in which he held the product was classifiable under Item 15A (2).
4. The above contradiction was, among other contentions, brought to the Appellate Collector's notice by the appellants who contended that if their product was again to be classified under Item 15A, the Assistant Collector's order denying them the facility under Rule 56-A would be illegal. The Appellate Collector, vide the impugned order, held the product to fall under Item 15-A and the appellants entitled to the facility of Rule 56A. Therefore, he said, they were not entitled to the refund asked for. Consequently, he rejected the appeal. With respect to the first order of 26-6-1978 of the Assistant Collector, he observed that it did not form part of the appeal before him. However, it was wrong and liable to be set aside.
5. We have heard Shri R.M. Das, Consultant, for the appellants and Smt.
Vijay Zutshi, S.D.R., for the Respondent.
6. The issue arising for determination is whether the subject product was correctly classifiable during the relevant period under Item 15A (2) CET as held by the lower authorities or under Item 22F as claimed by the appellants.
7. The appellants' contention is that the product contains 61.8% of glass fabric, the balance being comprised of epoxy resin and hardener.
The process of manufacture, as described by the appellants, is that glass yarn, on which duty had been paid under Item No. 22F, purchased from the market is woven in the appellants' factory into glass fabric containing 100% glass yarn. (The said glass fabric, it is averred, has been and continues to be assessed under Item 22F). Epoxy resin is applied on the glass cloth by means of a brush and layer after layer is built up to obtain the required thickness. The layers of cloth are then pressed in a hydraulic press with heated plattens. The resultant product is called "Epoxy Textolite Glass Sheets".
(b) by virtue of Explanation (iv) to Item 22F the product is squarely covered by the said item.
This argument is also supported by the new Explanation as inserted in Item 22F by the Finance Act, 1979 ; (c) the product is not known in the trade as an Article of plastics but as Article of epoxy glass textolite sheets. The plastic material is present only as a binding agent. The real character of the product is due to the predominant material, i.e. glass fabric. The goods are not rigid plastic sheets falling under Item 15A(2) CET, as wrongly held by the lower authorities.
9. Shri R.M. Das, Consultant for the appellants, submitted that the Assistant Collector could not have re-classified the product under Item No. 15A (2) CET after having classified it under Item No. 22F. The presence of mineral fibre was sufficient for the classification of the product under Item 22F. In fact, after the amendment of Item No. 22F by the 1979 Finance Act when the predominance criterion was introduced, the product was being classified under Item No. 22F. In support of his stand, the Consultant relied upon the decision of the Gujarat High Court in Bhor Industries Ltd. v. Union of India (1980 E.L.T. 752), of the Special Bench 'D' of this Tribunal in Talbros Automotive Components Ltd. v. Collector of Customs, Bombay [1984 (15) E.L.T. (193)] and of the Special Bench 'C in Formica India Division, Pune v. Collector of Central Excise, Bombay 10. Smt. Zutshi, on behalf of the Respondent, agreed that there was no dispute about the product being composed predominantly of glass fibre.
However, the predominance test came only on 1-3-1979. The classification list filed by the appellants showed the declared classification as Item No. ] 5A (2) CET and the term used was "rigid plastic sheets". This was so in the classification list of 15-4-1976 and again in the list of 30-11-1974.
11. We have carefully considered the submissions of both sides. There is no dispute about the composition of the subject goods. They are predominantly composed of glass fabric (61.8%), the balance being made up of epoxy resin and hardener. In one of the documents on record, the composition is given as follows :- It is, thus, clear that the predominant component material is glass fibre yam, the next predominant material being epoxy resin. The question is whether goods having the said composition were appropriately classifiable under Item No. 22F CET, as claimed by the appellants or Item No. 15A (2) as held by the lower authorities, during the period prior to 1-3-1979. It should be noted here that Item No. 22F underwent a change as a result of the Finance Act of 1979. The change was in sub-item (iv) which was revised from- "manufactures containing mineral fibres and yarn, other than asbestos cement products", "manufactures in which mineral fibres or yarn or both predominate or predominates in weight".
The goods have been classified under Item No. 22F (iv) on and from 1-3-1979 because of their satisfying the predominance test. The question arises whether notwithstanding the absence of the predominance criterion during the period prior to 1-3-1979, the goods would have fallen under Item No. 22F (iv). The words employed in sub-item (iv) during the said period are manufactures "containing" and not manufactures "of" or "made of" or "made from". The logical inference would be that the sub-item did not require that the manufacture should have been composed entirely of mineral fibres or yarn or both. The manufacture should contain mineral fibres and yarn. How much of these should it contain It seems unnecessary, for the present purpose, to speculate. The present goods are composed predominantly of mineral fibre yarn. That, in our view, should suffice for bringing them under Item No. 22F (iv) CET. From the process of manufacture of the goods, it is clear that glass fabric is treated with epoxy resin. Plastic sheet, as it is generally known, does not seem to emerge as such in that process. Unless plastic sheet emerges, the question of placing the goods under Item No. 15A (2) would not, in our view, arise.
12. The view which we have taken above gains support from the Gujarat High Court decision in the Bhor Industries case reported in 1980 E.L.T.752. In that case, the goods were "Marblex Asbestos Vinyl Floor Tiles" composed predominantly of limestone (45%), asbestos (26%) and resin plasticiser (10%) and a few other ingredients. The resin was stated to be used as a binding agent (as is the averment in the present case which remains uncontrovcrted). Keeping this in view and the fact that the plastic material was not the principal ingredient, the Court held that the tiles were not "Articles of plastics" falling under Item No.15A(2) CET.13. In the Talbros case reported in 1984 (15) E.L.T. 193, (his Tribunal was concerned with the classification (prior to the amendment of item No. 22F) of a product containing less than 50% of asbestos (in the range of 28-39%). The appellants' contention was that unless the percentage of asbestos was over 50, the goods could not be called a manufacture of asbestos fibre or mineral fibre. The Bench negatived this contention and held the goods to fall under item No. 22F(iv).
14. In the Formica case reported in 1984 (17) E.L.T. 590, this Bench was dealing with the classification inter alia of "glass treated fabrics". However, in the absence of sufficient material on record the Bench did not give a definite finding on the classification (which was left to the lower authorities to redetermine) except that the classification under Item No. 22B CET was set aside. This decision is, therefore, of no help.
15. In the result, we direct that the product "Epoxy Glass Textolite Sheets" manufactured by the appellants shall be classified under Item No. 22F CET during the period relevant to the impugned order with consequential relief to the appellants which shall be granted to the appellants within 4 months from the date of communication of this order.