NETLON INDIA LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this appeal, filed by M/s. Netlon India, the issue involved is whether the product manufactured by them is 'Extruded Plastic Meshes/Nets' classifiable under sub -heading 3926.90 of the Schedule to the Central Excise Tariff Act, as declared by them or the product is 'Plastic Insect Screen'/Interior Screen and Fencing/Barriers classifiable under sub -headings 3925.30 and 3925.99 of the Tariff respectively.

(2.) SHRI V. Lakshmikumaran, ld. Advocate, submitted that the Appellants manufacture plastic extruded nets/meshes which are commercially known as extruded plastics; that the net is obtained by the process of extrusion, having the perforation referred to as mesh sizes; that the size of the mesh can be increased to any size; that the diameter of the net can also be changed by changing the mandrel; that the extruded nets are mostly in roll form consisting of a length of 25 metres and can be put to various applications, such as a sieve or a screen, for decorative purposes, for covering a gutter hole; that the impugned products are used by Railways, manufacturer of fridges, in road making, in Green House, etc.; that however, for the purpose of fixing it on to window, further additional features are required like wooden frames, fixing and clamping mechanism, etc.; that they are clearing the goods in running length of 25 metres. The ld. Advocate, further, mentioned that the impugned goods were exempted from payment of duty under Tariff Item 15A(2) of the erstwhile Central Excise Tariff; that after introduction of New Tariff, these goods were classified under sub -heading 3922.90 and were exempted under Notification No. 132/86 -C.E., dated 1 -3 -1986; that after amendment of Chapter 39 of the Tariff, the impugned goods were classified under sub -heading 3926.90 with effect from 10 -2 -1987 and were exempted under Notification Nos. 132/86, 53/86, etc.; that the Collector, Central Excise, under the impugned Order No. 5/94, dated 17 -1 -1994, has ordered that these products are 'Insect Screens and Interior Screens', classifiable under sub -heading 3925.30 and 'fencing and similar barriers', classifiable under sub -heading 3925.99 of the Tariff, has confirmed demand of excise duty of Rs. l,01,32,722.37P for the period March 1988 to 1990 -91, imposed a penalty of Rs. 40 lakhs and confiscated land, building, etc., with an option to redeem the same on payment of fine of Rs. 10 lakhs.

(3.) THE ld. Counsel submitted that the meshes are basic material out of which different articles can be manufactured depending on the requirements of the Customers; that the basic material cannot be considered as or compared with builders' ware; that the extruded plastic meshes supplied in running length is subsequently cut into sizes and fabricated into insect screen, bags, etc., that even after such fabrication, it would remain only as a screen and is not part of structural element of Construction to be considered as a builders' ware; that a curtain is never considered as a builders' ware and accordingly the extruded plastic meshes either in roll form or after fabrication into insect screen cannot be considered as a shutter or blind. He also mentioned that Heading No. 39.25 of the Tariff read with Note 11 to Chapter 39 demonstrates that Heading No. 39.25 does not cover basic materials which are capable of being converted into any article; that Note 11 to Chapter 39 specifically provides that Heading 39.25 applies only to the 'articles'; that it means that it does not cover a sheet of plastics or extruded mesh in running length, etc., which can be used to make any of articles listed in Note 11 . The ld. Counsel also submitted that the Collector, by applying Rule 2(a) of the Interpretative Rules, has held that extruded plastic meshes possess the essential characteristics of the article concerned; that Rule 2(a) is applicable only when the goods are unfinished and as extruded plastic meshes are complete and fully finished goods, Rule 2(a) cannot apply; that if such a reasoning is accepted, every raw material which is made into a finished product after necessary adaptation, fabrication, etc. could be classified as the final product itself; that as held in Rajasthan Synthetic Industries Ltd. v. CCE, 1989 (42) E.L.T. 24 (T), if the headings read in the light of the Section or Chapter Notes, are clearly determinative of the classification, the Rules for Interpretation cannot be invoked; that it was held in this case that hollow tubular HDPE fabrics, cut into desired lengths, with no further operation carried out thereon, cannot be equated to make up textile articles'. Reliance was also placed on the decision in Hindustan Packaging Co. Ltd. v. CCE, Vadodara, 1995 (75) E.L.T. 313 (T -LB). He contended that when Heading speaks of Article, Rule 2(a) of the Interpretative Rules cannot be applied; that a basic material which can be put to various uses cannot be classified with reference to anyone of the end uses.