Case: Collector of Central Excise, Hyderabad Vs. Fenoplast Private Limited (1)

y manufactures coate d fabrics, popularly known as "rexine cloth" in the market. The question in issue in this appeal is whether the said product falls within Tariff Item 19(III) of the Schedule to the Central Excises and Salt Act, 1944 as it obtained at the relevant time. The Original Authority held that it does but the Collector (Appeals) held to the contrary. The Revenues appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) was heard by a Bench of three Members. By majority, the Tribunal affirmed the judgment of the Collector (Appeals). The appeal preferred by the Revenue in this Court was heard in the first instance by a Bench comprising one of us (B.P. Jeevan Reddy, J. and B.L. Hansaria, J.)+ Inasm uch as the Bench entertained a doubt as to the correctness of an earlier decision of this Court in Collector of Central Excise, Calcutta v. Multiple Fabrics Pvt. Ltd.1 , [a judgment rendered by a Bench comprising Ranganath Misra, J. (as he then was) and G.L. Oza, J.] which constituted the sheetanchor of the respondent case, the matter was referred to a larger Bench. That is how the appeal is before this Bench.

Court's reasoning:
9. It is argued by Shri Sorabjee that after coating, the cotton fabric no longer retains its identity as cotton fabric and that a new distinct commodity emerges. It is submitted that if the degree and extent of lamination or coating of fabric is such that it ceases to retain its identity as cotton fabric and a new distinct commodity emerges as a result of such coating or lamination, the resultant product cannot be regarded as cotton fabric within the meaning of Tariff Item.This argument does not take into account the fact that Parliament has chosen to include the coated/laminated fabrics within the ambit and purview of "cotton fabrics" and Parliaments power to do so is not questioned and probably cannot be questioned. The fact remains that to start with it is a cotton cloth upon which certain coating material isExplanation 1, was noticed, its purport was not given effect to while holding that "in view of the higher percentage of PVC compound in commodity, it becomes difficult to treat the ultimate goods asfabrics for holding that it is covered by Item 22". Indeed, the above reason is the second of the two reasons given for holding in favour of theThe first reason is that since the manufacture o f fabric and application of PVC compound is simultaneous, there is no preexisting base fabric for the purposes of and within the meaning of Tariff Item 22. Be that as it may, since the proviso was not brought to the notice of this Court and f or that reason the significance of Explanation 1 escaped the Courts notice, it is difficult to hold that the said decision lays down the correct interpretation of Tariff Item 22 or that it helps the respondent before us in interpreting Tariff Item 19.The second category is plasticizers (13%), which is undoubtedly one of the basic materials of the plastics. (See Encyclopaedia Americana, Vol. 22 at p. 217). Even in the third category, there are plasticizers but we do not know to what extent. It thus appears ex facie that the coating material employed by the respondent is predominantly, if not wholly, "other artificial plastic materials".15. The majority opinion, of course, does not refer to this aspect at all.16. No reasons are shown and no material is placed before us to show that the said opinion of the Member of the Tribunal (Shri P.C. Jain) is not correct. The only submission has been that the matter be remitted to the Tribunal for a decision on this question. We are not inclined to do so, for if this were the case, the respondent ought to have put forward this argument at the forefront and not concern itself with the interpretation of the Tariff Item. It could have simply said, "my coating material is not one contemplated by the Tariff Item", and if it were so, no further question would have arisen. Instead, it concentrated upon the applicability of the clauses relating to predominance and percentages relying upon the decision of this Court in Multiple Fabrics1. Before the Col lector (Appeals) it relied upon Tariff Itemand submitted that since its coating material is not covered by Tariff Item 15A, Tariff Item 19 is also not attracted. For all the above reasons, we are not inclined to accede to the request for remand of the matters to the Tribunal for deciding the said question.