V.P. Gulati, Member (T)

1. The four appeals under consideration were earlier subject matter of proceedings before the Government of India, in one case by way of revision application and in other three cases by way of review proceedings under Section 36(2) of the Central Excises and Salt Act as applicable at the relevant time. These now stand transferred as if these were appeals before the Tribunal.

2. The issues involved in these appeals are common and relate to the classification of goods, namely (i) cotton fabric; (ii) paper; and (iii) glass fabric, each impregnated with phenol formaldehyde and described as 'Prepreg' 'C' or 'P' or 'G' respectively. These are intended for making laminated sheets, tubes etc.

3. For the sake of easy reference relevant particulars in regard to these appeals are listed as under :

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In the three appeals allowed by the Appellate Collector, Central Excise and against which the appeal of Revenue is before us, the Appellate Collector took note of the three thermosetting stages of resin during the process of setting and definition of the same as given in the book "Dictionary of Plastics" by JA Wordingham and P. Reboul : 1964 Edition and reproduced below for reference :

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He has also referred to the following abstract from the book titled "Plastics Laminate Materials" by Norman E. Beach : 1967 Edition :

"The phenolics are capable of being partly cured (B-Stage) so that they be used in the industrially convenient 'Prepreg' form of resin/reinforcement. These Prepregs are cured by heat and pressure without the need for further catalytic additives."

Based on the above and also for the reason that cotton fabrics etc., are used for imparting certain properties to the resin, he held that impregnated paper or impregnated fabrics constitute nothing except other forms of phenol resin with reinforcement of the resin by other materials only added to reduce mechanical shortcomings of plastics. In conclusion, he held that impregnated material should be classified as merely form of resin and the impregnated products therefrom did not constitute articles of plastics.

4. In the case where M/s. Bakelite Hylam have come up in appeal, the Appellate Collector has held that the cotton fabrics impregnated with phenol formaldehyde fell within the scope of Item 19-III of Central Excise Tariff as this item is specific for cotton fabric impregnated or coated with cellulose derivatives or other materials of plastics. He has further observed that Tariff Item 19-III does not make any distinction between thermosetting and thermoplastics. The Appellate orders under which appeals of M/s. Bakelite Hylam were allowed were taken up for review by the Government of India under Section 36(2) of the Central Excises and Salt Act as it then existed and in the Review Show Cause Notice, issued by the Government of India, reliance has been placed on the following definition of synthetic resin as given in the Condensed Chemical Dictionary : Ninth Edition Revised by Gessner G. Hawley :

"A man-made high polymer resulting from chemical reaction between two or more substances usually with heat or catalyst."

Keeping this definition in view among other reasons given in the Show Cause Notice, the Government of India have opined that the orders of the Appellate Collector are not proper and legal.

5. The Government of India in the review notices while calling upon the party to show cause have also required it to state as to why the order of the Appellate Collector be not set aside and the order of the original authority passed by the Assistant Collector be restored or any other order which is deemed fit should not be passed.

6. In the preliminary submissions made by both the sides before us, it has been pleaded that what they were interested in is correct classification of the goods and submitted that the examination of the issues need not be confined to the pleadings on record and the pleas made before the lower authorities. Both the sides have