Holding

The product is to be classified under Heading 39.20 as a plastic article because the essential character is the stiffness imparted by the impregnating plastic resin.

Summary

The appellant, Kemrock Industries & Exports Ltd., manufactured glass fibre reinforced plastics and sought classification of the product under Heading 70.14 of the Central Excise Tariff Act, 1985, arguing that the essential character remained that of glass fibre. The Revenue contended that the product should be classified under Heading 39.20 as a plastic article because the impregnation with resin imparts stiffness, which is the essential character for its use in roofing sheets and partitions. The Court examined the test of essentiality and Rule 3(b) of the Rules for the Interpretation of Tariff Entries, which require classification based on the component giving the product its essential character. It held that the stiffness provided by the plastic resin is the essential attribute, making the product a plastic article. Consequently, the Court dismissed the appellant's appeal and upheld the classification under Heading 39.20, finding no infirmity in the Tribunal's order.

Issues considered

Whether glass fibre reinforced plastics should be classified under Heading 70.14 (glass and glassware) or Heading 39.20 (plastics and articles thereof).
Whether the test of essentiality applies to the composite product in question.
Whether Rule 3(b) of the Rules for the Interpretation of Tariff Entries mandates classification based on the component imparting essential character.

Legislation cited

Central Excise Tariff Act, 1985

Subjects

classificationcentral excisetariffcomposite goodsessential charactertest of essentialityRule 3(b)glass fibre reinforced plastics

Judgment

>- MIS. KEMROCKINDUSTRIES & EXPORTS LTD. A
v.
COMMISSIONER OF CENTRAL EXCISE, VADODARA

MARCH 29, 2007

[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] B

~ ..... Central Excise Tariff Act, 1985; Headings 39.01; 39.20 and 70.14:
"
Classification-Glass Fibre Reinforced Plastics-Sub-heading 39.01
and 39.20 or 70.14-Applicability of-Held: Fibre Glass Mat being used as c
raw material in manufacturing the product in question, which is not article
of glass ware to fall under Heading 70.14 of the Act-Since the product in
question is a composite item, the test of essentiality in terms of Rule 3(b) of
the Rules for interpretation of tariff entry would apply-Taking into
consideration essentiality aspect, and applying the test of essentiality, the D
product in question falls under the Heading 39.01-Hence, no infirmity
-;
_J
found in the order of the Tribunal classifYing the goods under the Heading
39.01.

Test of essentiality-Application in the context of classification of
composite product-Discussed E
The question which arose for determination in this appeal was as to
whether the Glass Fibre Reinforced Plastics manufactured by the assessee-
company would fall under the Heading 70.14 of the Schedule to the Central
Excise Tariff Act, 1985 as claimed by the assessee-manufacturer or
i> F
classifiable under Heading 39.20 of the Act as classified by the Revenue.
)'--.

Dismissing the appeal filed by the assessee and allowing the appeal
filed by the Revenue, the Court

HELD: 1.The assessee makes use of Fibre Glass Mat of suitable
specification and thereafter impregnates the said Mat with a suitable resin, G
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,

--,I
547 H
548 SUPREME COURT REPORTS [2007] 4 S.C.R.

A 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
B under Heading 70.14 of the Central Excise Tariff Act. [Para 5) [551-A-B-C)

2.1. Under Heading 39.20 of the Act, sheets of plastic, 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'. The item in question is a composite
C item. However, as found by the Revenue, the glass fibre mat when impregnated
with plastic gains certain amount of stiffness which helps manufacture of roofs
and partitions. In the present case, since the article in question is a composite
article, the test of essentiality shall apply. [551-E-F]

2.2. The test of essentiality refers to "essential character". The test
D 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. [Para 6) (551-F]

2.3. In the present case, Rule 3(b) of the Rules for the interpretation of
tariff entries would apply. The said Rule require that composite goods,
E 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. If the manufacture of roofs, partitions etc. are kept in mind, 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,
F partitions etc. e.g., the item will fall under Heading 39.01/06 of the previous
Customs Tariff Act since plastic gives higher degree of insulation quality.
(Para 6) [551-F-H; 552-A]

3. No infirmity is found in the impugned judgment of the CEGAT.
[Para 7) (552-B)
G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 527 of2002

From the final Order No.185/2001-D dated 11.09.2001 in Appeal No.
1994-R/97mum. Passed by the Customs, Excise and Gold (Control) Appellate
Tribunal, New Delhi)
H
KEM!tOCK 1NOUSTRIES & EXPORTS LTD. v. COMMNR. OF CENTRAL EXCISE, VADODARA [KAPADIA, J.J549

Ramesh Singh, Bina Gupta, Shweta Verma and Amrita Swarup, for the A
Appellants.

R. Venkataramani, Shalini Kumar and B. K. Prasad, for the Respondents.

The Judgment of the Court was delivered by:
B
KAPADIA, J. Civil Appeal No. 527 of2002

l. This is a statutory appeal filed by the assessee against the final Order
.....
JI no. 18512001-Ddated l L9.2001 passed by Customs, Excise and Gold (Control)
I
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 c
with resins/plastics.

2. 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 Central Excise Tariff Act, D
1985.
-\
d
3. To resolve the above controversy, we quote hereinbelow the above
two headings.
"Heading Sub- Description of goods Rate E
No. heading of
No. duty

3920 Other plates, sheets,film, foil and
strip, of plastics, non-cellular,
lo,. whether lacquered or metallised F
or laminated, supported or similarly
'f-
combined with other materials or not

--Of polymers of vinyl chloride
3920.11 --Rigid, plain 300/o
G
3920.12 --Flexible, plain 300/o
3920.13 --Rigid, lacquered 300/o
3920.14 -Flexible, lacquered 300/o
3920.15 --Rigid, metallised 30%
3920.16 --Flexible, metallised 300/o
H
/.-
550 SUPREME COURT REPORTS [2007) 4 S.C.R.

A 3920.17 --Rigid, laminated 300/o /

3920.18 --Flexible, laminated 300/o '
3920.19 --Other 300/o

--Of regenerated cellulose:
392021 --Film, plain 300/o
B 3920.22 --Film, lacquered 300/o
392023 --Film, metallised 300/o
392024 --Film, laminated · 300/o
392025 --Sheet, plain 300/o .,. ~.

392026 --Sheet, lacquered 30%
c 392027 --Sheet, metallised 300/o
392028 --Sheet, laminated 300/o
392029 --Other 300/o

--Of other plastics:
3920.31 --Rigid, plain 300/o
D 3920.32 --Flexible, plain 300/o
3920.33 --Rigid, lacquered 300/o I-
3920.34 --Flexible, lacquered 300/o ;>..

3920.35 --Rigid, metallised 300/o
3920.36 --Flexible, metallised 300/o
E 3920.37 --Rigid, laminated 300/o
3920.38 --Flexible, laminated 300/o
3920.39 --Other 300/o
XXXXXXlOOOOOO<X
70.14 7014.00 Glass fibres (including glass wool and glass
filaments) and articles thereof (for example, yarn,
F woven fabrics) whether or not impregnated, coated, <

covered or laminated with plastics or varnish." ~
KEMROCK INDUSTRIES & EXPORTS LTD. v. COMMNR OF CENTRAL EXCISE, VADODARA [KAPADIA, I.] 55}

4. We do not find any merit in this civil appeal for the following reasons. A
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 B
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 C
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 glass ware per se under heading 70.14
of CETA. According to the assessee, even after impregnation the essential
character of the product remaining a fibre glass ·mat and, therefore, it is
classifiable as a glass fibre under Heading 70.14 of Central Excise Tariff Act,
1985. We do not find merit in the said contention. D
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 E
'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 manufacturers 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 F
states that, if the manufactured goods has the essential character, mainly of
stiffness, required for the manufacturer 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 require that composite goods, mixtures and goods put up in sets have G
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
stiffuess 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 H
552 SUPREME COURT REPORTS [2D07J; 4' S.C.R.

A item will fall under Heading 39.01/06 of the previous Customs Tariff Act since --<.
plastic gives higher degree of insulation quality. Rule J(b) requires classitfaation
based on the material' which gives it the essential characterist~cs. T:his· is the
test of essentiality. The effect of the tariff schedule is to classify the pwducts
under different heads according to the characte·r of the product In, intey;preting
B a tariff entry, Rules for the Interpretation are helpfol, particoiarly in Gases of
composite goods.

7. For the aforesaid reasons, we do not find any infirmity in the irrrpugrre<l
judgment dated l l. 9.200 l of the CEGAT and accordingly this civil app-eal filed
by the assessee is dismissed with no order as to costs.

c Civil Appeal No, 3321of1998

Commnr. Of Central Excise v. Mis S.S.B. Industries ltd.

8. In view of our judgment in Civil' Appeal No. 527 of2002 (supra); this
civil appeal stands allowed with no order as to costs.
D
S.K.S. Appeal 527/02 dismi·ssed'
App·eat 33:Zl/9S: allowed.