Composite goods classification under plastics tariff fails where the article is not wholly made of plastics; suppression also unproved.

Krinklglas was held not to fall under the plastics tariff where the product was a composite of methyl methacrylate monomer, polyester resin and fibre glass reinforcement, because goods under the plastics entry must be wholly of plastics and not made of plastics with other materials. It was therefore classified under Item 68 for the pre-01.03.1986 period. The materials on record also did not establish deliberate suppression or misdeclaration, so the extended limitation period was unavailable and the demand could survive only from 19.08.1985. In the absence of proved suppression or mala fide conduct, penalty was not sustainable and was set aside; post-1986 classification was left for fresh determination on remand.

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Issues: (i) whether the goods known as Krinklglas were classifiable under Tariff Item 15A(2) of the Central Excise Tariff or under Item 68 prior to 01.03.1986, and under the corresponding headings of the Central Excise Tariff Act, 1985 thereafter; (ii) whether the extended period of limitation was available on the ground of suppression or misdeclaration; and (iii) whether the penalty was sustainable.

Issue (i): whether the goods known as Krinklglas were classifiable under Tariff Item 15A(2) of the Central Excise Tariff or under Item 68 prior to 01.03.1986, and under the corresponding headings of the Central Excise Tariff Act, 1985 thereafter

Analysis: The product was found to be a mixture of methyl methacrylate monomer, polyester resin and fibre glass reinforcement. The governing principle applied was that articles falling under the plastics tariff must be articles made wholly of plastics, and not articles made of plastics along with other materials. The manufacture involved no chemical synthesis of the kind contemplated by Item 15A(1), and the test report also showed substantial fibre glass content. On that basis, the earlier classification under Item 15A(2) could not stand.

Conclusion: Krinklglas was not classifiable under Item 15A(2) prior to 01.03.1986 and was correctly classifiable under Item 68.

Issue (ii): whether the extended period of limitation was available on the ground of suppression or misdeclaration

Analysis: The correspondence with the Department, the earlier sample-drawals and the disclosures made by the assessee negatived the allegation of concealment. The materials on record did not establish deliberate suppression so as to justify invocation of the longer limitation period for the whole demand.

Conclusion: Suppression was not established and the demand, if any, was sustainable only from 19.08.1985.

Issue (iii): whether the penalty was sustainable

Analysis: In the absence of proved suppression or mala fide conduct, the foundation for penalty did not survive.

Conclusion: The penalty was not sustainable and was set aside.

Final Conclusion: The pre-1986 classification and limitation objections succeeded for the assessee, the penalty was annulled, and the classification for the post-1986 period was left to be redetermined afresh on remand.

Ratio Decidendi: For tariff classification, an article is not treated as an article of plastics when it is made of plastics together with other materials and does not answer the statutory description of goods wholly made of plastics.

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