2007 (3) TMI 260 - SC - Central Excise

Supreme Court affirms Revenue's classification of Glass Fibres with resins/plastics under Central Excise Tariff Act

The Supreme Court upheld the impugned CEGAT order, dismissing the civil appeal and ruling in favor of the Revenue's classification of Glass Fibres ... Whether Glass Fibre Reinforced Plastics will be classifiable under Heading 39.20 of Central Excise Tariff Act, 1985? Held that:- Keeping 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 manufactures 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. Against assessee. Issues:Classification of Glass Fibres impregnated with resins/plastics under Central Excise Tariff Act, 1985.Analysis:The appeal involved the classification of Glass Fibres impregnated with resins/plastics under Heading 70.14 of the Central Excise Tariff Act, 1985, as sought by the assessee, versus the Revenue's classification under Heading 39.20. The manufacturing process involves impregnating Fibre Glass mat with resin, catalyst, pigment, and accelerator to provide stiffness, making it suitable for use in roofing sheets, panels, and doors. The essential character of the product post-impregnation was debated, with the assessee contending that it remained a glass fibre mat classifiable under Heading 70.14. However, the Court disagreed, emphasizing the stiffness gained post-impregnation that added value and made it suitable for use in partitions and roofs.Under Chapter 39, dealing with 'plastics and articles thereof,' sheets of plastics combined with other materials are covered. On the other hand, Heading 70.14 falls under Chapter 70, 'glass and glassware.' Given the composite nature of the item in question, the test of essentiality was applied, focusing on the essential character, mainly stiffness, required for manufacturing roofs and partitions. Rule 3(b) of the Rules for the Interpretation of Tariff Entries mandates classification based on the material giving the product its essential character. In this case, the glass fibre mat impregnated with plastic gained stiffness crucial for manufacturing roofs and partitions, leading to classification as an article of plastic under Heading 39.20, not as glass fibre under Heading 70.14. The Court highlighted the importance of the test of essentiality in interpreting tariff entries for composite goods.The judgment upheld the impugned CEGAT order, dismissing the civil appeal filed by the assessee. The Court found no infirmity in the CEGAT's decision and ruled in favor of the Revenue's classification under Heading 39.20. Additionally, another civil appeal was allowed based on a prior judgment, with no order as to costs.In conclusion, the Supreme Court's detailed analysis emphasized the significance of the test of essentiality in classifying composite goods and the application of Rules for the Interpretation of Tariff Entries. The judgment clarified the classification of Glass Fibres impregnated with resins/plastics under the Central Excise Tariff Act, 1985, providing a comprehensive legal interpretation of the relevant tariff headings and the essential characteristics determining classification.