COMMNR. OF CENTRAL EXCISE, NOIDAversusMIS. KITPLY INDUSTRIES LTD.

                   [2011] 11 S.C.R. 219


        COMMNR. OF CENTRAL EXCISE, NOIDA                       A
                             v.
              MIS. KITPLY INDUSTRIES LTD.
              (Civil Appeal No.4462 of 2003)
                  SEPTEMBER 7, 2011.
                                                               B
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.]

    Central Excise Tariff Act, 1985:

     Schedule - Heading 44. OB, sub-heading 4408. 90 - c
'Laminated panels of Particle' and 'Medium Density Fibre
Board' - HELD: Are classifiable under Chapter Heading 44.08
and not under Chapter Heading 44. 06, as the products are
similar to plywood and veneered panels, and after lamination
assume a distinct marketability and bring about a change in D
the products - Therefore, Heading 44.08 is. squarely
applicable and sub-heading 4408. 90 would be the appropriate
sub-heading for qlassification of the products in question .:..
Rules of interpretation of the Act - r. 3 - Interpretation of
statute.
                                                                E
     Words and Phrases:

     Word 'similar'. occurring in the expression 'similar
laminated wood' in Chapter-Heading 44.08 in the Schedule
to the Central Excise Tariff Act, 1985 - Connotation of.       F
     In the instant appeals filed by the Revenue, the
question for consideration before the Court was: whether
laminated panels of particle and medium density fiber
board should be classified under sub- heading no.              G.
4406.90 and 4407.90 or under sub-heading no. 4408.90
of the Schedule to the Central Excise Tariff Act, 1985.

    Allowing the appeals, the Court

                            219                                H
    220    SUPREME COURT REPORTS           [2011] 11 S.C.R.

A      HELD: 1.1. It is not in dispute that the product before
  the lamination is not classifiable under tariff heading
  44.08 of the Schedule to the Central Excise Tariff Act,.
  1985. The statement of the factory manager of the
  assessee discloses that in the process of manufacture
B of the panels, plain panels of the mother boards (plain
  particle/MDF fiber) are used. Papers are passed through
  the impregnating unit wherein the resin and other
  required chemicals are spread on the paper and the
  paper gets impregnated. The impregnated paper is further
c dried and cut into required length. These paper sheets
  are assembled with the mother boards in such a way that
  the impregnated paper is placed on the upper side and
  one layer of impregnated design paper is placed over
  one layer of impregnated tissue paper. This assembly is
  put for pressing under the required heat alid pressure
0
  and is taken out as pre-laminated boards and is ready for
  dispatch. The manager of the assessee has said in his
  statement that the panels after laminatioi:i, become water
  resistant and look attractive due to printed paper and
  brings about a change in the name, usage etc. From the
E process as explained, it is clear that the products are .
  pre-laminated wood, most aptly falling under chapter
  heading 44.08 as the said chapter heading specifically
  speaks of plywood, veneered panels and similar
  laminated wood. (Para 13-15] (227-C-H; 228-A]'
F
       1.2. The word "similar" has been discussed by this
  court in the case of MIS Wood Craft Products Ltd.* with
  regard to "Block board". The logic applied in the case
  of 'Block board' can very well be applied in the instant
G case. Heading_ 44.08 in the instant case covers
  "plywood", "veneered panels" together with all kinds of
  "similar laminated wood". Thus, it is treating "plywoQd"
  or "veneered panels" as "laminated wood". Therefore, it
  covers all kinds of laminated wood bearing any
H
COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY 221
            INDUSTRIES LTD.

resemblance to "plywood" or "veneered panels". The A
word used is "similar" and not "same". Thus, some
resemblance to "plywood" or "veneered panels" is
enough, provided the article can be treated as "laminated
wood". The sweep of the heading is, therefore, quite
wide. Therefore, for the product to be classified under B
heading 44.08, it is enough if it is similar to laminated
wood, which in the instant case is proved beyond
reasonable doubt. Thus, it is clear that the product is-
similar to plywood and veneered panels and, therefore,
tariff heading 44.08 is squarely applicable. [para 15-18) c
[227-H; 228-A-B; 229-A-C; F-G]
   . *CCE, Shillong v. Wood Craft Products Ltd. 1995 (77)
ELT 23 - relied on
     Mis Sausashtra Chemicals v. Collector of Customs,           D
Bombay 1986 (23) ELT 283, Decorative Laminated (India)
Pvt. Ltd. v. Co/Ir. Of C. Ex., Bangalore 1996 (86) ELT 186
(SC.); and CCE, Indore v. Bombay Burmah Trading Corpn.
Ltd. 2000(39) RLT 184 - referred to.
                                                                 E
     1.3. Further, in the instant case, the core layer is made
up of the particle board or MDF board (referred to as
"mother boards") and joined together with the help of
resins and then laminated with plasticised paper (paper
impregnated with melamine formaldehyde resin). Hence             F
it is also clearly seen that the laminated panels
manufactured by the respondent are covered under
Chapter Note 5 to Chapter 44 of the schedule to the Act.
The product need not be same as plywood or veneered
panels but mere similarity with them is enough for
chapter note 5 to apply. [Para 18) [229-G-H; 230-A]              G
    1.4. The respondent's plea that the product is
classifiable under chapter heading 44.06 cannot be
accepted. In the proviso to the said heading, it has been
mentioned that if the manufacturing process gives the            H
    222      SUPREME COURT REPORTS            [2011] 11 S.C.R.


A product the essential character of articles of another
    heading, then chapter heading 44.12 will not apply. In the
    instant case, going by the statement of the respondent's
    own officer, the product after lamination assumes a
    distinct marketability and brings about a change in the
B · product. This change, after lamination makes the
    product fall outside the purview of chapter heading 44.06
    and that would place the product under chapter heading
    44.08 as the word used under chapter heading 44.08 are
    "similar laminated wood". [Para 20] [230-E-G]
c      1.5. Further, recourse may .also be taken to rule 3 (c)
  of the Rules for interpretation of the Act which envisages
  that if the products are capable of classification under
  two chapter headings, then as per the said rule, the
  classification must be under the heading which occurs
D last in the numerical order. Therefore, sub-heading
  4408.90 would be the appropriate sub heading for
  classification of the product in question. [Para 20] [230-
  G-H; 231-A]

E      1.6. The Tribunal has erred in holding that as "particle
  board" is specifically covered under heading 44.06,
  laminated particle board will come under the scope of
  "similar board of wood" under the said heading. The
  impugned judgments and orders passed by the Tribunal
F in both the appeals are, therefore, set aside and it would
  be open to the appellant to assess the respondent as per
  the findings of this Court. (Para 19 and 21] (230-B-C; 231-
  B-C]
                        Case Law Reference:
G
          1995 (77) ELT 23        relied on          para 9
          1986 (23) ELT 283       relied on          para 9
          1996 (86) ELT 186 (SC.) relied on          para 9
H         2000(39) RLT 184        relied on          para 11
 COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY 223
             INDUSTRIES LTD.
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.                A
4462 of 2003.

    From the Judgment & Order dated 23.9.2002 of the
Customs Excise & Gold (Control) Appellate Tribunal, New
Delhi, in Appeal No. E/1582/02D.
                                                                   B
                             WITH

C.A. No. 9736 of 2003

     P.P. Malhotra, ASG, Harish Chander, Sunita Rani Singh,        C
Krishna Kumar, Kiran Bharadwaj, B. Krishna Prasad for the
Appellant.

    V. Lakshmi Kuniaran, Alok Yadav, M.P. Devanath for the
Respondent.
                                                                   D
    The Judgment of the Court was delivered by

     ANIL R. DAVE, J. 1. The present appeals arise out of the
judgments and orders passed on 23.9.2002 and 6.6.2003 by
the Customs, Excise & Gold (Control) Appellate Tribunal, New       E
Delhi and the Customs, Excise & Service Tax Appellate
Tribunal, dismissing the appeals filed by the appellant- Revenue
Department. By this judgment, we dispose of Civil Appeal Nos.
4462/2003 and 9736/2003 as they involve similar questions of
law.
                                                                   F
     2. The issue which falls for consideration in the present
appeals is whether laminated panels of particle and medium
density fiber board should be classified under sub- heading no.
4406.90 and 4407.90 or under sub-heading no. 4408.90. The
appellant alleged that the product manufactured by the             G
respondent herein was classifiable under sub heading
4408.90. For this purpose the appellant relied on Chapter Note
5 of Chapter 44 of the Central Excise Tariff Act, 1985
(hereinafter referred to as 'the Act') which reads as under:-
                                                                   H
    224       SUPREME COURT REPORTS               [2011] 11 S.C.R.


A         "For the purposes of heading No. 44.08, the expression
          "similar laminated wood" includes blockboard, laminboard
          and battenboard, in which the core is thick and composed
          of blocks, laths or battens of wood glued or otherwise
          joined together and surfaced with the outer plies and also
B         panels in which the wooden core is replaced by other
          materials such as a layer or layers of particle board,
          fiberboard, wood waste glued or otherwise joined together,
          asbestos or cork".

       For the sake of convenience, the relevant headings are
C also extracted below:

          "44.06 - Particle board and similar board of wood or other
          ligneous materials, whether or not agglomerated with
          resins or other organic binding substances.
D
          4406.10 - Plain particle boards.

          4406.20- Insulation board and hardboard

          4406.30- Veneered particle board, not having decorativr:
E         veneers on any face

          4406. 90-0the r.

          44.07 - Fiber board of wood or other ligneous materials,
          whether or not bonded with resins or other organic
F         substances.

          4407.10-lnsulation board and hardboard

          4407.90- Other.

G      44.08-Plywood, veneered panels and similar laminated
    wood. 4408.10 - Marine plywood and aircraft plywood. 44
        8.30- Decorative plywood

          4408.40- Cuttings and trimmings of plywood of width not
H         exceeding 5 centimeters
COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY 225
     INDUSTRIE.S LTD. [ANIL R. DAVE, J.]
    4408.90 - Other".                                                A
      3. In order to decide the issue arising in the present case
in its proper perspective, basic facts leading to filing of the
present appeals are being recapitulated hereunder:

The respondent asessee, who is engaged in the manufacture            B
of wood and articles of wood falling under Chapter 44. was
issued show cause notices dated 16.2.2000 and 27.12.2000
by the appellant authorities, inter alia. calling upon it to show
cause as to why classification of its products ( 1) Lam mated
Particle Board and (2) Laminated Medium Density Fibre Board          C
should not be changed to chapter Sub-heading no 4408.90 The
respondent replied to the said notices refuting the allegations
on merits as well as on limitation. The said show cause notices
were adjudicated and the demand proposed therein was
dropped by t!ie Commissioner of Central Excise, Meerut-11 vide       D
Orders dated 20.4.2001 and 31.10.2001 respectively. The
Commissioner, ultimately found that the pre requisites of
Chapter Note 5 of Chapter 44 were not satisfied and, therefore,
no further action was taken so far as the aforestated
classification was concerned.
                                                                     E
     4. Aggrieved by the orders, the Revenue filed appeals
before the Tribunal. The Tribunal dismissed the said appeals
vide orders dated 23.9.2002 and 6.6.2003, upholding the
findings of the Commissioner.
                                                                     F
      5. Aggrieved by the orders of the Tribunal, the Reveue has
filed the present appeals.

     6. The learned counsel for the appellant submitted that the
Tribunal had erred in not appreciating that the manufacturing
process, as stated by the factory manager clarified that "pre-       G
laminated" meant already laminated and as a result of the
process, the surface of the panels become water resistant as
well as scratch resistant and due to melamine surface, it
resisted cigarette burns and also got an attractive look. In spite
of the above facts stated by the factory manager with regard         H
    226      SUPREME COURT REPORTS               [2011) 11 S.C.R

A to the process, the respondent-assessee never mentioned the
  word "Panel" in the manufacturing process submitted along with
  classification declared under Rule 173 B of the Central Excise
  Rules 1944.
       7. Learned counsel for the appellant further argued that
8 Chapter Note 44.08 specifically speaks of plywoo~. veneered
  panels and 'similar laminated wood'. He pointed out that in the
  instant case, it is an admitted fact that the goods in question,
  which are 'wood products' are laminated and they are covered
  under chapter heading 44.08 and not under chapter heading
C 44.06 as there is no mention of lamination in the latter chapter
  sub heading.
       8. The learned counsel for the appellant also submitted that
  the Tribunal failed to appreciate that if a product is capable of
  being classified under two chapter headings, then Rule 3 (c)
0
  of the Rules for interpretation of the Act envisages that
  classification under the heading, which occurs last in the
  numerical order. Therefore. chapter sub-heading 4408.90
  would be the appropriate sub heading for classification of the
E products in question.
      9. To substantiate his claim, he relied on the cases of
  CCE, SHILLONG v. WOOD CRAFT PRODUCTS LTD. 1995
  (77) ELT 23. MIS SAUSASHTRA CHEMICALS                    v.
  COLLECTOR OF CUSTOMS, BOMBAY 1986 (23) ELT 283,
F DECORATIVE LAMINA TED (/NOIA) PVT LTD v. COLLR.
  OF C. EX., BANGALORE 1996 (86) ELT 186 (S.C.).
       10. On the other hand, the learned counsel for the
  respondent submitted that for Chapter Note 5 of Chapter 44
  to apply, an essential pre-requisite is that the similar laminated
G wood must be surfaced with outer plies. which is conspicuously
  absent in the present case and hence the said chapter note
  would not apply. He also submitted that the impregnation is only
  an additional process, which is done on the particle board to
  increase its strength and, therefore, the goods would still
H continue to fall under heading 4406.
COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY 227
     INDUSTRIES LTD. [ANIL R. DAVE, J.]
     11. The learned counsel also submitted that the decision A
in the case of Wood Craft Products Ltd. (supra) would not be
applicable to the instant case as it was with respect to_
classification of block board. The respondent relied on the case
of CCE, INDORE v. BOMBAY BURMAH TRADING CORPN.
LTD. 2000(39) RLT 184 to substantiate its claim that pre- B
laminated particle board is classifiable under heading 44.06
and not under heading 44 08.

    12. We have heard the learned counsel for the parties and
perused the records.
                                                                       c
     13. It is not in dispute that the product before the lamination
is not classifiable under tariff heading 44.08. However, it is the
case of the appellant that after the lamination, the panels so
obtained become a distinct product falling outside the purview
of 44.06. Hence, what needs to be determined by us is whether          D
even after the lamination, the products falls under sub-heading
4406.90 and 4407.90 or would it fall under sub- heading
4408.90.

      14. For this purpose, it is important to refer to the            E
statement of the factory manager Shri B.V Rao, who stated that
in the process of manufacture of the panels, plain panels of the
mother boards (plain particle/MDF fiber) are used. Papers are
passed through the impregnating unit wherein the resin and
other required chemicals are spread on the paper and the
paper gets impregnated. The impregnated paper is further               F
dried and cut into required length. These paper sheets are
assembled with the mother boards in such a way that the
impregnated paper is placed on the upper side and one layer
of impregnated design paper is placed over one layer of
impregnated tissue paper. This assembly is put for pressing            G
under the required heat and pressure. The above assembly is
taken out as pre-laminated boards and is ready for dispatch.

    15. From the above process, it is clear that the products
are pre-laminated wood, most aptly falling under chapter               H
    228       SUPREME COURT REPORTS                 [2011) 11 S.C.R.


A   heading 44.08 as the said chapter heading specifically speaks
    of plywood, veneered panels and similar laminated wood. The
    word "similar" discussed in the above para has been
    discussed by this court in the case of CCE, Shilling v MIS
    Wood Craft Products Ltd. (supra) wherein a similar issue with
B   regard to "Block board" had arisen. For sound reasons
    recorded, this Court held that 'Block board' should be
    classified under heading No. 44.08. The logic applied in the
    case of 'Block board' can very well be applied in the instant
    case. In the said judgment, this Court observed as under in
c   paras 5 and 6
          "5. It is significant that Heading No. 44.12 of the HSN is
          the same as Heading No. 44.08 of the Indian tariff and
          reads "Plywood, veneered panels and similar laminated
          wood." The explanatory notes on the HSN indicate the
D         meaning of the expression "similar laminated wood" as
          under:-
          "similar laminated wood. This group can be divided into
          two categories:
E         Block board, lamin board and batten board, in which the
          core is thick and composed of blocks, laths or battens of
          wood glued together and surfaced with the outer plies.
          Panels of this kind are very rigid and strong and can be
          used without framing or backing."
F         6. It is clear that if the expression "similar laminated wood"
          in the Indian Tariff is understood as it meant under the HSN
          on which pattern the Central Excise Tariff Act is based,
          then block boards of all kinds would fall within the
          expressionn "similar laminated wood". This is how the
G         amended Chapter Note reads expressly. The question
          is whether it can be so read even for the earlier periods
          particularly the first period before amendment of Chapter
          Note 5 to expressly include block board in the expression
          "similar laminated wood".
H
 COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY 229
      INDUSTRIES LTD. [ANIL R. DAVE. J]
     16. Heading 44.08 in the instant case covers "plywood'',       A
"veneered panels" together with all kinds of "similar laminated
wood". In other words, it is treating "plywood" or "veneered
panels" as "laminated wood". Therefore. it covers all kinds of
laminated wood bearing any resemblance to "plywood" or
"veneered panels". The word used is "similar" and not "same".       B
Thus, some resemblance to "plywood" or "veneered panels"
is enough, provided the article can be treated as "laminated
wood". The sweep of the heading is, therefore, ciuite wide.

     17. Therefore, for the product to be classified under the      C
above heading, it is enough if it is similar to laminated wood,
which in the instant case is proved beyond reasonable doubt.
Even factory manager, Shri 8.V. Rao admitted the facts with
regard to lamination. At this point we may again refer to the
case of Mis. Wood Craft Products Ltd. (supra). It has been
mentioned therein that "The meaning of the significant words        D
and description of the wood products as intermediate materials
meant for manufacture of final products clearly indicate that
"laminated wood" means a wood product prepared by placing
layer on layer and "block board" is a plywood board with a core
of wood. Any plywood board with a core of wood in which there       E
are layers, one above the other is, therefore, laminated wood
similar to plywood or, veneered panels. It is "similar laminated
wood" included in the heading "Plywood, veneered panels and
similar laminated wood". Similarity with, and not identity with
plywood or veneered panels is required".                            F

      18. From the above, it is clear that the product is similar
to plywood and veneered panels and hence tariff heading 44.08
is squarely applicable. Further, in the instant case, the core
layer is made up of the particle board or MDF board (referred       G
to as "mother boards" in the process mentioned above) and
joined together with the help of resins and then laminated with
plasticised paper (paper impregnated with melamine
formaldehyde resin). Hence it is also clearly seen that the
laminated panels manufactured by the respondent are covered
                                                                    H
    230      SUPREME COURT REPORTS                (2011] 11 S.C.R.


A   under Chapter Note 5 to Chapter 44 of the schedule to the Act.
    The product need not be same as plywood or veneered panels
    but mere similarity with them is enough for chapter note 5 to
    apply.

        19. The Tribunal has erred in holding that as "particle
8
  board" is specifically covered under heading 44.06, laminated
  particle board will come under the scope of "similar board of
  wood" under-the said heading. It is clear that the product after
  the lamination is a distinct marketable commodity different from
C the original one. This conclusion is further substantiated by the
  fact that Shri 8.V. Rao said in his statement that the panels after
  lamination, become water resistant and look attractive due to
  printed paper and brings about a change in the name, usage
  etc. Therefore, the Tribunal's conclusion that the laminated
  board is similar to 'particle board' is incorrect and cannot be
D accepted.

        20. The respondent has placed reliance on the pari materia
  heading in the HSN 44.10 to contend that the product is
  classifiable under chapter heading 44.06. We cannot accept
E this argument. In the proviso to the said heading, it has been
  mentioned that if the manufacturing process gives the product
  the essential character of articles of another heading, then
  chapter heading 44.12 will not apply. In the instant case, going
  by the statement of the respondent's own officer, the product
F after lamination assumes a distinct marketability and brings
  about a change in the product. This change, after lamination
  makes the product fall outside the purview of chapter heading
  44.06 and that would place the product under chapter heading
  44.08 as the word used under chapter heading 44.08 is "similar
  laminated wood" (emphasis supplied). Further recourse may
G also be taken to rule 3 (c) of the Rules for interpretation of the
  Act which envisages that if the products are capable of
  classification under two chapter headings, then as per the said
  rule, the classification must be under the heading which occurs
  last in the numerical order. Therefore, heading 4408.90 would
H
 COMMNR. OF CENTRAL EXCISE, NOIDA v. KITPLY                    231
      INDUSTRIES LTD. [ANIL R. DAVE, J.]

be the appropriate sub heading for classification of the product
in question.

        21. In terms of the above conclusions arrived at and on
  appreciation of the materials on record, we are of the view that
  the findings arrived at by the Tribunal are unjustified and cannot
. be accepted. The impugned judgments and orders passed by
  the Tribunal in both the appeals are, therefore, set aside and it
  would be open to the appellant to assess the respondent as
  per the above findings. Accordingly, the appeals are allowed
  but leaving the parties to bear their own costs.

 R.P.                                            Appeals allowed