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               REPORTABLE  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.4462      OF     2003      

COMMNR. OF CENTRAL EXCISE, NOIDA .....Appellant.

        Versus

M/S. KITPLY INDUSTRIES LTD.         …..Respondent

WITH

CIVIL     APPEAL     NO.9736     OF     2003   

J     U     D     G     M     E     N     T   

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 Delhi and the Customs, Excise & Service Tax Appellate  

Tribunal, dismissing the appeals filed by the appellant- Revenue

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Department. By this judgment, we dispose of  Civil Appeal Nos. 4462/2003  

and 9736/2003 as they involve similar questions of law.  

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 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:-

"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 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 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.

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4406.10- Plain particle boards.  

4406.20- Insulation board and hardboard

4406.30- Veneered particle board,  not having decorative veneers on any  

face

4406.90-Other.  

44.07 – Fiber board of wood or other ligneous materials, whether or not  

bonded with resins or other organic substances.

4407.10-Insulation board and hardboard

4407.90- Other.  

44.08-Plywood, veneered panels and similar laminated wood.  

4408.10 – Marine plywood and aircraft plywood.

4408.30- Decorative plywood

4408.40- Cuttings and trimmings of plywood of width not exceeding 5  

centimeters

4408.90 – Other”.  

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:

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The respondent asessee, who is engaged in the manufacture 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)  

Laminated Particle Board and (2) Laminated Medium Density Fibre Board  

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 the Commissioner of Central Excise,  

Meerut-II vide 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.  

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.  

5. Aggrieved by the orders of the Tribunal, the Reveue has filed the  

present appeals.

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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-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 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 Chapter Note  

44.08 specifically speaks of plywood, 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 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

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chapter headings, then Rule 3 (c) 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 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, M/S  

SAUSASHTRA     CHEMICALS      v. COLLECTOR     OF     CUSTOMS,    

BOMBAY 1986 (23) ELT 283, DECORATIVE     LAMINATED     (INDIA)    

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 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 continue to fall under heading  

4406.

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11. The learned counsel also submitted that the decision 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-

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.  

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 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 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

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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 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 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 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  M/S Wood Craft  

Products Ltd. (supra) wherein  a similar issue with 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 paras 5 and 6

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“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  meaning  of  the  expression  “similar laminated wood” as under:-

“similar laminated wood.  This group can be divided  into two categories:

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.”

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 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”.

16. Heading  44.08  in  the  instant  case  covers   “plywood",   "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".

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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.

17. Therefore, for the product to be classified under the 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 B.V. Rao  

admitted the  facts with regard to lamination.  At this point we may again  

refer to the case of  M/s. Wood Craft Products Ltd. (supra).  It has been  

mentioned  therein  that  “The  meaning  of  the  significant  words  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 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”.

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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 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 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  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  the  original  one.  This  conclusion  is  further  

substantiated by the fact that Shri B.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 accepted.

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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 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  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 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 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

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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.  

 ………………................................J.

(Dr. MUKUNDAKAM SHARMA)

 ….……...........................................J.  (ANIL R. DAVE)

New Delhi

September  7, 2011.

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CORRIGENDUM DATED 17.02.2012

Page No. 3, Line no. 9 from bottom For 44.08-Polywood, veneered panels  

read 44.08-Plywood veneered panels.

Page no. 5, Line no. 9 for Rule 173 B of the  Act, read Rule 173 B of the  

Central Excise Rules, 1944.

Page no. 6, Line no. 12, for with outer piles, read with outer plies.