Customs, Excise and Gold Tribunal - Delhi
Kutty Flush And Furniture Co. Ltd. vs Collector Of Central Excise on 8 April, 1988
Equivalent citations: 1988(16)ECC189
ORDER
K. Prakash Anand, Member
1. The issue in the present matter arises as a result of change in tariff item 16-B of the central excise tariff.
2. Prior to the change, tariff entry 16-B read as below:
16-B: Plywood, blockboard, laminboard, batten board, hard or soft wall boards or insulating board and veneered panels, whether or not containing any material other than wood; cellullar wood panels, building boards of wood pulp or of vegetable fibre, whether or not bonded with natural or artificial resins or with similar binders; and artificial or reconstituted wood being wood shavings, wood chips, saw dust, wood flour or other ligneous waste agglomerated with natural or artificial resins or other organic binding substances, in sheets, blocks, boards or the like.
As a result of the changes made in the 1982 Budget, the tariff entry was reworded as below:
16-B: Plywood, blockboard (including flush doors), laminboard, batten board, hard or soft wall boards or insulating board and veneered panels, whether or not containing any material other than wood; cellular wood panels; building boards of wood pulp or of vegetable fibre, whether or not bonded with natural or artificial resins or with similar binders; artificial or reconstituted wood being wood shavings, wood chips, saw dust, wood flour or other ligneous waste agglomerated with natural or artificial resins or other organic binding substances, in sheets, blocks, boards or the like, whether or not face covered with textile fabrics, artificial plastic material, paint, paper or metal and improved wood, all sorts, whether in sheets, blocks or in any other form, including articles of improved wood.
3. The issue for decision is, as to whether flush doors manufactured by the appellants would be covered by the newly worded item 16-B of the central excise tariff.
4. Heard Shri V. Sridharan, Chartered Accountant on behalf of the appellant and Shri Vineet Kumar, SDR for the department.
5. Shri Sridharan submits that as a result of the change made by the 1982 Budget, only such flush doors were brought within the purview of the tariff entry which answer the definition of blockboard. It is urged that the new tariff entry certainly does not cover all flush doors, but only block boards used as flush doors.
6. In order to make the point that all flush doors are not necessarily the same as block boards, Shri Sridharan has referred to the following technical literature:
1. IS: 707--1976
2. IS: 2202 (Part I)--1980
3. Glossary or Terms relating to Timber and Woodwork--British Standards Institution.
4. Wood in Building--edited by Ezra Levin Ariba.
7. It is also urged that even if the impugned goods are covered by the new tariff entry, then, so far as fully manufactured pre-budget stocks are concerned, they would be liable to duty as per classification/rates applicable before the changes were made in the tariff item and not as per the classification/rates that became applicable after the change.
8. As regards flush doors admittedly manufactured prior to the Budget, it is submitted that these will have to be considered as not falling under tariff item 16-B. In this connection, appellant has relied on the decision of the Government of India Order No. 429-430/81 dated the 5th June, 1981 which followed the judgment of the Delhi High Court in the case of M/s. Woodcraft Products Ltd., holding that flush doors are excisable under item 68 of the Central Excise Tariff.
9. Shri Vineet Kumar strongly reiterates the view taken in the orders passed by the lower authority. He emphasises that the order of the Government of India dated the 5th June, 1981 (supra) is not applicable since it is related to interpretation of the tariff prior to the changes made by the 1982 Budget. It is emphasized that there can hardly be any doubt as regards inclusion of all flush doors in the new item 16-B in view of the fact that they are specifically mentioned in the tariff entry. Anything marketed as flush doors, it is urged, would be covered by tariff item 16-B.
10. The facts of the case and the submissions made before us have been carefully considered. The first argument that has to be dealt with is related to the wording of tariff entry 16-B. Appellants have stated that only such flush doors can be deemed to be included under the new newly worded tariff item which can answer the description of blockboard. It was for appellants to show that there are two kinds of flush doors; one which answer the description of blockboard and the other which do not. It was also for them to show, with reference to the specifications of their product that they do not come within the broad description of blockboards.
11. In fact, the arguments of Shri Sridharan are contradictory. On the one hand, he submits that he relies on the decision of the Delhi High Court in the case of M/s. Woodcraft Products Ltd. in which it was held that flush door is not the same as a board or plywood, but a definite arrangement of the board being the core of the door encased in a frame and covered on sides with plywood panels which transforms the materials like plywood and board into a totally different product; and on the other hand, it is contended that flush doors referred to in the newly worded tariff item 16-B would be limited to only such flush doors which come within the broad category of blockboard.
12. We have also gone through the technical literature submitted by the appellants. Indian Standard 2202 (Part I) 1980 is having specifications for Wooden Flush Door Shutters (Solid Core Type) Part-I, Plywood face panels. In Table 1, Page 9 of the Standard dealing with nature of construction of Wooden Flush Door Shutters (Solid Core Type), it is stated that such flush doors may have a core of blockboard or particle board with or without blockboard.
Dealing with the coustruction of such boards, the Indian Standard gives the following specifications:
Construction--Blockboard type core--The blockboard core shall conform to the requirements specified in 6.1.1. A frame constructed of stiles and rails shall be provided for holding the core. The width of the frame including lipping, where provided, shall not be less than-50 mm and not more than 100 mm.
6.1.1 The wooden strips for core shall be cut from the timbers and seasoned to a moisture content not exceeding 12 per cent. The width of each strip of wood shall not exceed 25 mm. These strips may consist of pieces of small lengths placed end to end and the end joints shall be staggered. In any one blockboard, the core strips shall be of one species of timber only. The strips of wood may be laid separately or spot glued or otherwise jointed to form a slab which is glued between two or more outer veneers with the direction of the grain of core blocks running at right angles to that of the adjacent veneers.
Particle board core with or without blockboard: The core shall be either particle board or a combination of blockboard and particle board. In a combined construction, the width of blockboard construction shall extend at least 150 mm from inner edge of the stile, on either side, and the rest shall be particle board. Blockboard shall conform to the requirements specified in 6.1.1 and the particle board shall be as specified in 5.7. The frame for holding the core, including lipping where it occurs, shall be not less than 50 mm and not more than 100 mm in width.
13. In the book "Wood in Building" edited by Ariba, (Page 73), it is observed that generally blockboard is used for panelling, partitions, doors and other interior fitments and it can be finished by painting, veneering or left in the natural state. Blockboard, it is stated, is particularly suited for covering large areas where depth of section and stability are important. In this respect, it is held to be superior to plywood and can be obtained in longer standard lengths.
14. We have also seen the British Standards Institution publication on "Glossary of terms relating to Timber and Woodwork". This publication describes blockboard as a composite board having a core made up of strips of wood each not more than 30 mm wide, laid separately or glued or otherwise joined together to form a slab to each side of which is glued one or more outer veneers with the direction of the grain of the core strips running at right angles to that of the adjacent veneers. Flush door is described as "a door having two plain faces which entirely cover and conceal its structure".
15. From the above extracts from various technical publications referred to by the appellants it would appear that it can be held that flush doors can fall within the broad category of blockboards except in those cases where flush doors are manufactured out of particle board core without blockboard, but we have, in construing the entry, to keep in mind the position that the term "flush doors" is not used therein synonymously with blockboard. It is contended for the appellants that flush doors are alien, and not generic, to boards and so the words "(including flush doors)" in item No. 16B (as amended by the 1982 Finance Bill), are ultra vires of the item. This Tribunal, being a creature of the statute, is not the proper forum to challenge the vires of entries in the tariff schedule.
16. The alternative contention is that the reference to flush doors is to such blockboards as are used as flush doors. In other words, only those flush doors which have the quality or characteristics of blockboard and are in the nature of blockboard are liable to be charged to duty. It is further contended that the goods manufactured by the appellants fall outside this description. It is also the contention that flush door is an article of plywood as generally understood, the layers of veneers pressed on each side constituting the plywood. Since the tariff entry does not cover articles of plywood, the levy of duty on the subject goods is not correct. The tariff entry, as amended by the 1982 Finance Bill, has been set out earlier. The words "including flush doors" appearing within a bracket immediately following the term "blockbard" do not, in our view, lend themselves to the construction sought to be put on them by the appellants, that is, only such flush doors as are made of blockboard or are in the nature of blockboard, can be taxed under the entry. It is well settled that the word "include" is a word of enlargement. When it is so used, words or phrases must be construed as comprehending not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. It, therefore, appears to us that the phrase "(including flush doors)" succeeding, and qualifying, the term "blockboard" in the tariff entry has the effect of enlarging the natural scope of the term "blockboard" and comprehending flush doors within its scope even though they may not, in the natural course, be covered by the expression "blockboard". In this view, it is not necessary that, to be covered by the tariff entry, a flush door must be made of, or in the nature of, blockboard only. In fact, as the Indian Standard specification for wooden flush door shutters IS: 2202 (Part I)--1980 'shows' flush doors could be of blockboard type core or of particle board core with or without blockboard. In other words, the tariff entry would take within its sweep flush doors having blockboard core or particle board core with blockboard. Flush doors need not be made only of blockboard. In fact flush doors have face panels, that is, two plain faces which entirely cover and conceal its structure (see Glossary of terms relating to Timber and Woodwork--British Standards Institution 565: 1972).
17. The record does not clearly show the construction and composition of the goods which are in dispute. It is necessary, therefore, to remand the matter to the Assistant Collector for fresh adjudication.
18. We have also considered the plea of the appellants that flush doors lying in a completely manufactured condition on the eve of the Budget day 1982 should be held to be classifiable and liable to duty under item 68 and not item 16-B. It is now well established that except for goods which, prior to changes in the tariff were completely exempt, in all other cases, classification and liability to duty is to be determined at the time of the clearance of goods. Accordingly, in this case also the goods would be classifiable and liable to duty under the new tariff item 16-B if, on re-adjudication, the goods are found to be flush doors having blockboard core or particle board core with blockboard.
19. In the result, the appeal is allowed, the orders of the lower authorities are set aside and the matter remanded to the Assistant Collector for denovo adjudication.
V.T. Raghavachari, Member
20. I have carefully perused the order prepared by brother Shri K. Prakash Anand and concurred with by the Senior Vice President. Since I am unable to persuade myself into agreeing with the said order, I am recording this separate order.
21. The issue is whether all flush doors cleared by the appellants during the relevant period were liable to pay duty under Item 16-B, CET as it stood after the amendment in 1982 or whether a particular type of flush door only was liable to duty as claimed by the appellants.
22. It would therefore be necessary to consider what are the different types of flush doors and, with reference to that information, construe the entry as it stood after the amendment. The amendment was apparently in view of the decision of the Delhi High Court in the case of M/s. Woodcraft Products Ltd. 1980 ELT 684. The entry as it stood before the amendment, as well as after the amendment, has been extracted in the order of Shri Anand. The contention of the appellants is that even after the amendment such flush doors as have been fabricated directly from blockboards would alone be liable for duty and not any other type of flush door. That is why it is necessary to consider what would be the various types of flush doors and the construction thereof. The information given in the next paragraph gives these details. These have been extracted from the several books mentioned below.
23. I. Building Construction by S.K. Ghosh and R.D. Verma (Second Edition 1985-86) published by New Heights, 1367/21, Hari Singh Nalwa, Karolbagh, Delhi, Page 66 Flush Doors:
These doors have better appearance and now they are extensively used. Flush doors are manufactured in standard sizes to facilitate mass production. Two varieties of flush doors are in common use, viz, framed flush door and laminated flush door.
A framed flush door consists of a skeleton or hollow wood frame comprising stiles, top, bottom, and intermediate rails and this frame is covered on both sides by sheets of plywood. Sometimes the hollow woodframe is filled with granulated cork or any light material instead of being left hollow. The top and bottom rails are tenonned to the stiles and the thin intermediate rails are stubtenonned to the stiles. The joints of the framing are invariably glued and cramped and the sheets of plywood are glued to the framing under great pressure.
A solid or laminated flush door consists of a core or strip of wood glued together under great pressure and faced on each side by plywood sheets. These sheets of ply wood are also glued under great pressure to the laminated core. The laminated core usually consists of 15 mm wide strips of wood which (sic) arranged with the gain (sic) alternately. A laminated flush door is normally heavy and requires much material.
II. IS; 1291 (Part I)--1983; Specification for Wooden Flush Door Shutters (Cellular and Hollow Core type) Part I--Plywood Face Panels 6.1 Cellular Core--Timber frame for holding the core shall be constructed from stiles, and top and bottom rails, each not less than 75 mm wide including internal lipping where provided. The cellular core shall be of any of the following types of construction as specified by the purchaser:
Type A--Particle board conforming to IS: 3087-1965, hardboard conforming to IS: 1658-1977, wooden or plywood battens, tubulars, strips of blocks or batten strips of not less than 25 mm width so fixed that each of the voids formed does not exceed 25cm2 in area and the volumetric contents of the voids do not exceed 50 percent of the total core volume, that is, when measured from edge to edge.
Type B--Rolls, strips, coils or corrugations of veneers not less than 1 mm thick and not less than 100 mm in length (when fully flat), so fixed that the distance between any two faces of the rolls," strips, coils or corrugations, at any place is such that at least one strip is intercepted by a square of side 200 mm in any position.
6.1. 1 The voids shall be uniformly distributed throughout the core.
6. 2 Hollow Core--Timber frame for holding the core shall be constructed from stiles and top, bottom and minimum two intermediate rails, each not less than 75 mm wide including internal lipping where provided. In each segment, battens not less than 25 mm wide shall be fixed in such a way that the voids are equally distributed and the void area in any segment is less than 500 cm2. Battens may also be replaced by suitable rolls or strips of veneers.
III IS: 2191 (Part 2)--1983 Specification for Wooden Flush Door Shutters (Celluar and Hollow Core Type) Part 2--particle board and hardboard face panels.
5. CONSTRUCTION 5.1 The construction of flush doors shall be in accordnance with the relevant requirements laid down in IS--2191 (Part I)-1983 with modifications as in 5.2.
5. 2 Face Panel--The particle board or veneered particle board for the face panel shall be not less than 6 mm thick in the case of cellular core flush doors and not less than 9 mm thick in the case of hollow core flush doors. Hardboard, if used, for the face panel shall be not less than 4 mm in thickness in the case of cellular core flush doors and not less than 6 mm in thickness in the case of hollow core flush doors. The panel shall be glued under pressure on both faces of the core by the hot press process.
IV IS: 2202 (Part I--1980 Specification for Wooden Flush Door Shutters (Solid core type) Part I--Plywood face panels:
Extract in order of brother Anand.
V IS: 2202 (Part 2)--1983 Particle Board and Hardboard Face Panels
5. CONSTRUCTION 5.1 The construction of flush doors shall be in accordance with the relevant requirements laid down in IS: 2202 (Part I)--1983 with modification as given in 5.1.1 and 5.2 5.1.1 Face Panel--The face panel shall be formed by gluing by the hot press process on both faces of the core particle boards or veneered particle boards or hardboard. The thickness of each of the face panels of particle board shall be not less than 4 mm and or hardboard not less than 3 mm.
5.2 Flush door shutters with particle board beaded type core shall be manufactured with core of particle boards of Types PSI of FPTH conforming to IS: 3087-1965 or veneered particle board of Types EXSOD or EXSOGP conforming to IS: 3097-1980. The beading shall be of solid timber of any of the species mentioned in Appendix A of IS: 2202 (Part I)--1983. The beading shall be to the full thickness of the door. The depth of beading all round shall be not less than 25 mm excluding the tongue for the joint. The beading shall be provided all round and shall be fixed by tongue and brew joint using BWP type adhesives conforming to IS: 848--1974, and the beading shall be further secured by additional screws of adequate length. The tongue shall not be less than 12 mm deep, and its width shall not be less than 1/3 of the finished thickness of the shutter. The timber used for beading for flush doors with decorative face shall preferably be of the same species as the face veneers unless otherwise agreed to between the purchaser and the supplier.
24. It is therefore apparent that as extracted at I above a solid or laminated flush door would be just a blockboard straightway converted into flush door by attachment thereto of the necessary fittings, plus lipping, if felt necessary. Extracts at II and III establish that flush doors could be with a hollow core, inserted inside a timber frame of rails and stiles. These flush doors would not have any solid blockboard or particle board core, though the inner hollow core may have been constructed with strips of either particle board or other boards. The extracts at IV and V show that if the core within the wooden frame is to be solid it may be of either blockboard or particle board, the further distinction being that the face panels may also be of either plywood or particle board or hard board.
25. The argument for the department is that after the amendment of item 16-B in 1982 all types of flush doors would be covered by the entry. Though in paragraph 16 of the order prepared by Shri Anand it appears to be stated that in view of the use of the words "including flush doors" the tariff entry has been enlarged to cover thereunder all types of flush doors, the subsequent part of the order proceeds on the basis that not all flush doors would be covered and hence it was necessary to order a remand to enable the lower authorities to look into the nature of the construction of the flush doors before taxing the same. It would therefore appear that the argument for the department (that all flush doors, irrespective of the nature of the construction thereof, would be covered by Item 16-B after the amendment) has not been accepted in the order of Shri Anand.
26. The Delhi High Court had held that the flush doors concerned in the said case, manufactured with a solid core of blockboard, fixed within a wooden frame of rails and stiles, would not be blockboard only and hence would fall outside item 16-B as it stood before the amendment in 1982. If the intention in making the amendment in 1982 was to tax all flush doors (as appears to be suggested in the early part of paragraph 16 of the order of Shri Anand), the amendment should have been by inserting words "flush doors" in the entry separately. On the other hand, the amendment made was to make the entry read "Blockboard (including flush doors)". As earlier stated, flush doors need not necessarily have a solid core and, when they do have a solid core, the same may be of either blockboard or particle board or a combination of both. When the words "including flush doors" have been added to that part of the entry which dealt with blockboards only it is difficult to conceive that the intention was to cover all flush doors, whether of blockboard core or particle board core or a combination of both, leave alone flush doors without any solid core at all. Normally one will have to read and interpret the entry as it stands and unless there is any ambiguity or absurdity due to such a plain reading, we need not to go into the question of intention. The entry as it stood before the amendment did not cover flush doors even if they had been by conversion of a blockboard into a flush door, by addition of suitable fittings. These fittings would be of a lock, a handle, lipping if necessary, and glazing as well as Venetian if required. The Delhi High Court held that as the entry then stood it could not cover any type of flush door. If, as earlier noted, the intention was to rectify this omission in order to make the entry cover all flush doors, the amendment should have been by inclusion of the words "flush doors" as a separate part of the entry and not by insertion of the word "including flush doors" within bracket after the word "blockboards". The nature of the amendment would therefore indicate the intention was to cover only such flush doors as had been directly fabricated from blockboard by addition of suitable fittings as mentioned above.
27. It therefore appears to me that even after the amendment in 1982 the entry would cover only such flush doors as had been directly fabricated from blockboards by the addition of suitable fittings and not cover the other types of flush doors, such as flush doors with solid cores (of blockboard or particle board or both) or flush doors of cellular or hollow core types.
28. The contention of the appellants is that they manufactured and cleared, during the relevant period (1) flush doors of solid core (blockboard type) and (2) flush doors directly fabricated from blockboards by addition of suitable fittings only. In view of my earlier conclusion I am of opinion that duty could be collected only with reference to the removal of flush doors of the type 2 mentioned above and not on flush doors of the type 1 mentioned above. Insofar as there is no information on this aspect it would therefore be necessary to allow the appeal, set aside the orders of the lower authorities and remand the matter to the Assistant Collector to have this aspect looked into for quantifying the duty payable.
29. I would therefore propose an order in the manner mentioned above.
30. In accordance with the majority opinion, the appeal is allowed, the orders of the lower authorities are set aside and the matter remanded to the Assistant Collector for de novo adjudication in the light of the findings in paras. 16-18 of the majority opinion.