ORDER
G.A. Brahma Deva, Member (J)
1. This is an appeal filed by the Department against the Order-in-Appeal No. 7/92(M), dated 21-1-1992 passed by the Collector of Central Excise (Appeals), Madras.
2. The facts of the case in brief as stated in the statement of facts are that the respondents M/s. Coromandal Prodorite Pvt. Ltd. are manufacturers of articles of fibre glass such as pipes and fittings, storage tanks, fume exhaust systems, tank covers, chimney and other tailor-made items against specific orders from their customers. These items are manufactured by moulding plastic sheets like PVC/Polypropylene/Polyethylene and on these layers of fibre glass are laid and coated with resins. During the relevant period the respondents were clearing these goods on payment of duty at the rate applicable to Chapter 39. The Department was of the view that the items merit classification under Chapter Heading 70.14 and accordingly issued show cause notices periodically covering the period from 1-8-1989 to 23-7-1991 on the ground that Chapter Heading 70.14 would cover glass fibres (including glass wool and glass filaments) and articles thereof (for example yarn, woven fabrics) whether or not impregnated, coated, covered or laminated with plastics or varnish. The Assistant Collector who adjudicated the proceedings held that the impugned goods are classifiable under Chapter Heading 70.14 and accordingly confirmed the demand for differential duty. The respondents filed appeal to the Collector (Appeals) who has allowed observing that Board had clarified in 1985 that classification of composite articles of plastics made out of a combination of plastics and non-plastic materials would depend on the predominance of weight and value of the component materials which have gone into the manufacture of such composite articles and that in the impugned articles, plastic constitutes 65% and glass reinforcement only 30 to 35%.
3. Shri J.P. Singh Junior Departmental Representative appearing for the Revenue explained the nature and characteristics of the product in question with reference to technical literature as appeared in pages 52 to 55 of the paper book and submitted that predominance of weight of plastics material in the composite articles is not criterion to decide the issue of classification but main characteristic of the item plays an important role in determining the issue of classification. He referred to the Concise Encyclopaedia of Composite Materials by Anthony Kelly and relevant extracts from Encyclopaedia of Chemical Technology, Third Edition, Volume 13 by Kirk Othmer (pages 968 & 969) and explained nature to the composite of material submitting that reinforced plastics are combinations of fibres and polymeric binders or matrices that form composite materials. The combination of strong fibres and synthetic polymers to form reinforced plastics and laminated derives from several basic considerations of material science : the inherent strength of fine fibres, the wetting requirement for adhesion, and the ease of the liquid-solid phase a change by synthetic polymers. The reinforced plastics are used very widely in chemical applications, such as pipes, tubes, tanks, hoods, ducts, flues, fittings, and general hardware. He said that Chapter Heading 70.14 covers glass fibre and articles thereof whether or not impregnated, coated, covered or laminated with plastics or varnish. By virtue of additional clause whether or not in the tariff of articles of glass fibre including those impregnated etc. with plastic would fall within the scope of Chapter Heading 70.14 only irrespective of predominance of weight. He also submitted that the product in question sold in the market as “glass” and not such as articles of plastic. He contended that Chapter Heading 70.14 is more specific than the Heading Chapter 39 and accordingly Chapter 70.14 is to be preferred as per Rule 3(a) of Interpretative Rules. He said that Chemical Examiner’s report dated 18-12-1991 confirms that it is a composite material composed of fibre glass reinforced plastic and can be considered as glass fibre laminate. In support of his contention that specific heading is to be preferred to general heading, he referred to the decision of Supreme Court in the case of Moorco (India) Ltd. v. Collector of Customs – 1994 (74) E.L.T. 5 (S.C.) wherein it was observed that where the class of goods manufactured by an assessee falls say in more than one heading, one of which may be specific, other more specific, third most specific and fourth general and in that event clauses of a, b and c of Rule 3 are to be applied in sequence and the rule requires the authorities to classify the goods in the heading which satisfies most specific description.
4. Shri Laxmi Kumaran, learned Counsel for the respondents submitted that the respondents have filed a classification list for the goods viz. (1) pipes and fittings, (2) tanks more than 300 Itrs. capacity – parts of tank – cell tops etc., (3) parts of machineries, parts of compressors and (4) gratings. Since there was no finding by the Collector (Appeals) with reference to Serial Nos. 3 & 4 and no appeal filed by the Department in respect of those items, the dispute cannot be enlarged at this stage and controversy revolves around Item No. 1 pipes and fittings and 2. tanks of more than 300 ltrs. capacity. He said that they are not articles of fibre glass as stated by other side but the articles are made of plastic reinforced by fibre glass (FRP) and it cannot be called as glass fibres or fibre glass as understood in commercial parlance. Orglas is not a product but the products have been marketed as ‘Orglas’ which is nothing but a trade name and this point has been correctly considered in the impugned order. He explained that articles are manufactured by moulding plastic sheet such as PVC, polypropylene and polyethylene into the said articles and on them, strands of glass fibre are laid and coated with resin. The above articles are primarily articles of plastics on which glass fibre is laid and bonded together by resin for reinforcement. The product so obtained is predominantly a plastic product and the quantum of fibre glass in each of the above products ranges only between 30 to 40%. These products are sold in the market as articles of plastics reinforced with fibre glass. Referring to the relevant pages under Chapter laminated and reinforced plastics from Encyclopaedia of Chemical Technology – third edition, Vol. 13 by Kirk-Othmer and Concise Encyclopaedia of Composite Materials by Anthony Kelly, he submitted that arguments advanced on behalf of the Revenue that essential characteristics of the product is that of glass is not correct and argued that material which is given for ancillary purpose is not the criterion to classify the composite material as if it belongs to that category. Referring to the relevant tariff entries, he said that tubes, pipes and fittings are specified in Entry 39.17 and similarly 39.25 specifies builders’ ware of plastics, not elsewhere specified or included, whereas Entry 70.14 refers to glass fibres and articles thereof and articles thereof is too wider and in general, accordingly Chapter 39 is more specific with reference to the items in question and it should be preferred to Chapter 70. He submitted that either of predominance of weight or value of material in the product or of essential character and in view of the Board’s Circular No. 7/90-CX-3, dated 23-2-1990, and particularly with reference to Rule 3 of Interpretative Rules in sequence in respect of composite material, the items are to be assessed under Chapter 39. He relied upon the latest decision of the Supreme Court in the case of Fenner (India) Ltd. v. Collector of Central Excise, Madurai reported in 1995 (77) E.L.T. 8 (S.C.) wherein it was held that PVC impregnated cotton conveyor belting and PVC impregnated flame resistant colliery conveyor belting classifiable under sub-heading 3922.90 of the Central Excise Tariff for the period from December, 1986 to 9th February, 1987 and under sub-heading 3926.90 for the period 10-2-1987 to June, 1987 and not as strips while reversing the findings of the Tribunal that the belting made by the appellants is a strip and classifiable under Headings 3920.11 and 3920.12 respectively and further observed with reference to Interpretative Rules that Rule 3 states that when goods are prima facie classifiable under two or more headings, classification will be effected thus the heading which provides the most specific description shall be preferred to Headings providing a more general description. Also, when goods cannot be classified under the heading which occurs last in the numerical order among those which equally merit consideration…. In support of his contention that composite article made out of combination of plastic and non-plastic material are articles of plastic and tubes, pipes and pipe fittings being articles of general use of plastic are classifiable under Chapter 39.
5. We have carefully considered the submissions made by both sides and perused the records. The point to be considered in this case is whether composite articles made up of plastics and fibre glass where plastic predominates, are classifiable under Chapter 39 or under Chapter 70. Chapter 39 deals with plastics and articles thereof and Chapter 70 concerns with glass and glassware. It was contended on behalf of the Revenue that merely by reason of predominance of plastics, the items in question cannot be classified under Chapter 39. In other words it is an admitted position that plastic is in dominance by weight and Collector (Appeals) has given a categorical finding that these articles are known as articles of plastics in the market. The relevant finding portion of the Collector (Appeals) is reproduced as under :-
“From the admitted facts of this case, no doubt plastic is in dominance by weight, and the impugned articles are also known as articles of plastics in the market. From the write-up given by the appellants, it is observed that in all the impugned articles, plastic constitutes 65% to 70% and glass reinforcement constitutes 30% to 35%. It is also observed that the impugned items are used for stering, conveying corrosive chemicals, liquids and gases and other purposes in pollution control and hence could be regarded as ‘builder wares’. From the process of manufacture involved which is not in dispute also, it is observed that the items are manufactured by moulding plastic sheets like PVC/polypropylene/polyethylene and on those moulded articles layers of fibre glass are laid as reinforcement material and coated with resins. Thus, fibre glass is not the basic article, but only a reinforcement material on a plastic article already moulded.”
The plea was taken by the Revenue that essential characteristic of the product is the criterion to decide the issue of classification and main characteristic of the product is that of glass but same was not substantiated and technical literature referred to by them also is not of much help to them. Further it was argued that Chapter 70.14 covers articles whether or not impregnated, coated covered or laminated with plastic and accordingly it falls under Chapter 70.14. The Tariff Heading 70.14 reads as under :-
Heading Sub-head Description Rate
Ing
70.14 7014.00 Glass fibres
(including glass wool 35%
and glass filaments)
and articles thereof
(for example, yarn,
woven fabrics), whether
or not impregnated,
coated, covered or
laminated with plashes
or varnish.
6. There is force in the arguments advanced on behalf of the respondents that phrase whether or not would illustrate those articles of glass fibre which are coated or laminated or covered with plastics or varnish and not the plastic article which is coated with glass fibre to classify under Heading 70.14. Respondents also drew our attention to the Circular issued by the Board No. 7/90-CX-3, dated 23-2-1990, which reads as under :-
“Products made out of combination of plastics and material other than textiles. – The classification of products made out of combination of plastic materials, other than textile, has been explained in the Explanatory Notes of HSN to Chapter 39 on page 554. Under the heading “combination of plastic and materials” other than textiles, at S. No. (b) it has been clearly mentioned that products consisting of plastic plates, sheets, separated by a layer of another material such as metal foil, paper board etc., are covered by Chapter 39 provided they retain the essential character of articles of plastics. As regards the determination of the essential character, the same may vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value or by the role of a constituent material in relation to the use of the goods. For example a product which is made of 12 micron aluminium foil and having 10 micron polyester film on one side and 40 micron polyester film on other side and in which the printing is done on the plastic film/sheets shall have the essential character of plastics inasmuch as the bulk and role of the constituent material is determined by plastics only.”
7. In the facts and circumstances of the case and with reference to the case law cited by the respondents on this issue, we do not find any merit in the contention of the Department for classifying the products in question under Chapter Heading 70.14 and since we do not find any infirmity in the impugned order, we uphold the impugned order passed by the Collector and accordingly appeal filed by the Department is hereby dismissed.