Manufacture and trade parlance in plywood classification determine excisability and tariff treatment of resin-processed and laminated goods.

Application of phenol formaldehyde resin on commercial plywood followed by high-temperature pressing was treated as manufacture because it changed the character and utility of the goods, created a commercially distinct product with a separate market, and attracted duty even though duty had already been paid on the original plywood. For classification, paper faced laminated plywood and block board were held not to be decorative plywood because mere suitability for decorative use is insufficient; trade parlance and the accepted meaning of decorative plywood govern. The goods were therefore classifiable under Heading 4410.90 as articles of wood not elsewhere specified.

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Issues: (i) Whether application of phenol formaldehyde resin on commercial plywood and pressing it at high temperature results in manufacture of a new excisable product; (ii) whether paper faced laminated plywood and block board are classifiable as decorative plywood or under Heading 4410.90 as articles of wood not elsewhere specified.

Issue (i): Whether application of phenol formaldehyde resin on commercial plywood and pressing it at high temperature results in manufacture of a new excisable product.

Analysis: The process was treated as substantial rather than nominal because it altered the character and utility of the plywood. The treated product became weather-proof and acquired a distinct commercial identity and separate market. The fact that duty had already been paid on the original plywood did not prevent levy on the new product emerging from further processing.

Conclusion: The process amounted to manufacture and the product was dutiable under Tariff Item 4408.90; the finding was against the assessee.

Issue (ii): Whether paper faced laminated plywood and block board are classifiable as decorative plywood or under Heading 4410.90 as articles of wood not elsewhere specified.

Analysis: Classification depended on trade parlance and the accepted meaning of decorative plywood. Decorative plywood is plywood with ornamental faces produced by bonding veneers for decorative use. Mere suitability for decorative purposes does not make a product decorative plywood. The treated goods did not conform to the trade and technical understanding of decorative plywood, and the material on record supported that view.

Conclusion: The goods were not decorative plywood and were classifiable under Heading 4410.90 as articles of wood not elsewhere specified; this issue was in favour of the assessee.

Final Conclusion: The appeal succeeded in part. The demand was sustained for the resin-processed plywood, but the classification of paper faced laminated plywood as decorative plywood was set aside and replaced by classification under Heading 4410.90.

Ratio Decidendi: A process amounts to manufacture when it brings into existence a commercially distinct product with a separate market, and tariff classification must follow the accepted trade parlance meaning of the description used in the tariff.

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