- Bookmark
- Share
- CaseIQ
Kemrock Industries & Exports Ltd. v. Commissioner Of Central Excise, Vadodara .
Factual and Procedural Background
The judgment decides two connected statutory appeals. The primary matter, Civil Appeal No. 527 of 2002, was filed by the assessee against Final Order No. 185/2001-D dated 11-9-2001 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT), New Delhi. The dispute concerns the correct classification under the Central Excise Tariff Act, 1985 of glass fibre mats that have been impregnated with resins/plastics. The assessee, a manufacturer of glass fibre reinforced plastic products (roofing sheets, panels, doors, etc.), sought classification under Heading 70.14 (“Glass fibres … whether or not impregnated …”), whereas the Revenue classified the product under Heading 39.20 (“Other plates, sheets … of plastics … combined with other materials”).
Civil Appeal No. 3321 of 1998 (CCE v. S.S.B. Industries Ltd.) was disposed of in light of the holding in Civil Appeal No. 527 of 2002.
Legal Issues Presented
- Whether glass fibre mats impregnated with resins/plastics are classifiable under Heading 70.14 (Chapter 70: “Glass and glassware”) or under Heading 39.20 (Chapter 39: “Plastics and articles thereof”) of the Central Excise Tariff Act, 1985.
- Whether, for composite goods containing both glass fibres and plastics, the “test of essentiality” embodied in Rule 3(b) of the General Rules for the Interpretation of the Tariff requires classification according to the component that imparts the essential character to the product.
Arguments of the Parties
Assessee's Arguments
- The impregnated mat retains the essential character of glass fibre even after processing; therefore, it should remain under Heading 70.14.
- The presence of plastics serves only as a supporting or coating medium and does not transform the basic nature of the product.
Revenue's Arguments
- Impregnation with resin gives the mat additional stiffness, a property crucial for its subsequent use in roofing sheets, partitions, and similar applications.
- Because stiffness is conferred by the plastic component, the product’s essential character is derived from plastics, warranting classification under Heading 39.20.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court, per Kapadia J., applied Rule 3(b) of the Rules for the Interpretation of the Tariff. Because the goods are a composite of glass fibre and plastics, classification must turn on the component that imparts the product’s essential character. The Tribunal had found—and the Court agreed—that impregnation with plastics provides the stiffness necessary for the product’s commercial function as roofing sheets and partitions. Without that stiffness the glass fibre mat could not serve its intended structural purposes.
Chapter 39 expressly covers “plastics and articles thereof,” and Heading 39.20 specifically includes sheets of plastics “laminated, supported or combined with other materials.” By contrast, Heading 70.14, although it mentions glass fibres “whether or not impregnated,” is situated in the chapter on glassware and presupposes goods whose primary character remains glass. Given that the critical attribute of the disputed product is the stiffness derived from plastic impregnation, the Court concluded that its essential character is that of an article of plastic, not glass.
The Court noted analogous treatment of other composite goods (e.g., insulation paper combined with plastics) to illustrate consistent application of the essentiality test.
Holding and Implications
Civil Appeal No. 527 of 2002 was dismissed. The classification adopted by the Revenue—Heading 39.20—stands affirmed, and the order of the CEGAT dated 11-9-2001 remains undisturbed.
Civil Appeal No. 3321 of 1998 was allowed following the above ruling.
Implications: The immediate effect is that the assessee’s products are liable to duty applicable to goods under Heading 39.20. The decision reinforces the use of the essential character test for classification of composite goods but does not establish a new doctrinal standard beyond the settled Rule 3(b) analysis.
S.H Kapadia, J.—
CA No. 527 of 2002
1. This is a statutory appeal filed by the assessee against Final Order No. 185/2001-D dated 11-9-2001 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (“cegat”) in Appeal No. E/1994-R/97 Mum. The matter pertains to the issue of classification of glass fibres impregnated with resins/plastics.
2. The assessee Company is the manufacturer of glass fibre reinforced plastics. They seek classification of the said item under Heading 70.14 of the Schedule to the Central Excise Tariff Act, 1985. According to the Revenue, the said item is classifiable under Heading 39.20 of the Central Excise Tariff Act, 1985.
3. To resolve the above controversy, we quote hereinbelow the above two headings:
“Heading No. Sub-Heading No. Description of goods Rate of duty 39.20 Other plates, sheets, film, foil and strip, of plastics, non-cellular, whether lacquered or metallised or laminated, supported or similarly combined with other materials or not -Of polymers of vinyl chloride: 3920.11 —Rigid, plain 30% 3920.12 —Flexible, plain 30% 3920.13 —Rigid, lacquered 30% 3920.14 —Flexible, lacquered 30% 3920.15 —Rigid, metallised 30% 3920.16 —Flexible, metallised 30% 3920.17 —Rigid, laminated 30% 3920.18 —Flexible, laminated 30% 3920.19 —Other 30% -Of regenerated cellulose: 3920.21 —Film, plain 30% 3920.22 —Film, lacquered 30% 3920.23 —Film, metallised 30% 3920.24 —Film, laminated 30% 3920.25 —Sheet, plain 30% 3920.26 —Sheet, lacquered 30% 3920.27 —Sheet, metallised 30% 3920.28 —Sheet, laminated 30% 3920.29 —Other 30% -Of other plastics: 3920.31 —Rigid, plain 30% 3920.32 —Flexible, plain 30% 3920.33 —Rigid, lacquered 30% 3920.34 —Flexible, lacquered 30% 3920.35 —Rigid, metallised 30% 3920.36 —Flexible, metallised 30% 3920.37 —Rigid, laminated 30% 3920.38 —Flexible, laminated 30% 3920.39 —Other 30% * ** 70.14 7014.00 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”
4. We do not find any merit in this civil appeal for the following reasons.
5. The process of manufacturing articles in question of glass fibre reinforced plastics is indicated in the Tribunal's order in para 2.1 In short, the assessee makes use of fibre glass mat of suitable specification and thereafter impregnates the said mat with a suitable resin, catalyst, pigment and accelerator. On impregnation/injection, the pigment spreads throughout the mat. This impregnation gives stiffness to the mat. The glass fibre mat is used as a raw material to manufacture roofing sheets, panels, doors, etc. It is this stiffness which provides value addition to the fibre glass mat in the sense that the strength of the mat gained by impregnation makes the mat strong enough to be used in partitions, roofs, etc. But for that stiffness, the fibre glass mat would not be in a position to be used as a roofing sheet. Further, the “glass fibre mat” is not an article of glassware per se under Heading 70.14 of the Central Excise Tariff Act. According to the assessee, even after impregnation the essential character of the product remains a fibre glass mat and, therefore, it is classifiable as a glass fibre under Heading 70.14 of the Central Excise Tariff Act, 1985. We do not find merit in the said contention.
6. As stated above, Chapter 39 deals with “plastics and articles thereof”. As stated above, under Heading 39.20 sheets of plastics, laminated, supported or combined with other materials stand covered as plastics and articles thereof. On the other hand, Heading 70.14 falls under Chapter 70, which refers to “glass and glassware”. It is not in dispute that the item in question is a composite item. However, as found by the Department, in the above process, the glass fibre mat when impregnated with plastic gains certain amount of stiffness which helps in the manufacture of roofs and partitions. In the present case, since the article in question is a composite article, the test of essentiality shall apply. This test of essentiality refers to “essential character”. The test states that, if the manufactured goods has the essential character, mainly of stiffness, required for the manufacture of roofs, partitions, etc. then one has to treat the item in question as an article of plastic. In the present case, Rule 3(b) of the Rules for the interpretation of tariff entries would apply. The said Rule requires that composite goods, mixtures and goods put up in sets have to be classified on the classification of that material or component which gives to the product their essential character. In the present case, if we keep in mind the manufacture of roofs, partitions, etc. then the stiffness is the main attribute of such a product. The glass fibre mat when impregnated gives stiffness which helps in the manufacture of roofs, partitions, etc., e.g in the context of an insulation paper which is a composite of plastic and paper, the item will fall under Heading 39.01/06 of the previous Customs Tariff Act since plastic gives higher degree of insulation quality. Rule 3(b) requires classification based on the material which gives it the essential characteristics. This is the test of essentiality. The effect of the Tariff Schedule is to classify the products under different heads according to the character of the product. In interpreting a tariff entry, Rules for the Interpretation are helpful, particularly in cases of composite goods.
7. For the aforesaid reasons, we do not find any infirmity in the impugned judgment dated 11-9-2001 of cegat and accordingly this civil appeal filed by the assessee is dismissed with no order as to costs.
CA No. 3321 of 1998 (CCE v. S.S.B Industries Ltd.)
8. In view of our judgment in CA No. 527 of 2002 this civil appeal stands allowed with no order as to costs.
Alert