TMI Blog1988 (2) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... d a classification list No. 1/85-86 effective from 1-3-1986 claiming classification of the Industrial Laminates (Electrical Insulators) under Heading 8546.00 chargeable to duty @ 15% ad valorem. The Assistant Collector of Central Excise classified the Industrial Laminates (Electrical Insulators) under Heading 3920.31 chargeable to duty @ 35% ad valorem and approved the aforesaid classification list after making modification to the above effect. The respondents challenged the order of the Assistant Collector by filing an appeal before the Collector of Central Excise (Appeals), Bombay, who has held that the product is classifiable under Tariff Heading 8546.00 Electrical Insulators of any material and not under Heading 3920.31 which stands for rigid plates, films, foils and strips of plastics. Being aggrieved by the order of the Collector (Appeals), the Collector of Central Excise, Ahmedabad has filed the present appeal before us mainly on the ground that the Industrial Laminates produced by the respondent No. 1 are raw materials for insulators and not the finished insulators. According to him, the same are correctly classifiable @ 35% ad valorem under Tariff Heading 3920.31 and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lators falling under Central Excise Tariff Heading 8546.00 attracting duty at 15% ad valorem w.e.f. 1-3-1986. The classification list was approved by the Assistant Collector of Central Excise, Hyderabad II-Division, vide his order dated 21-7-1986. The Assistant Collector of Central Excise, Anti-evasion, Headquarters Office, Hyderabad and his staff visited the factory of the respondent on 18-8-1986 and 19-8-1986 and examined the process of manufacture of the aforesaid products. On 28-8-1986 a show cause notice was issued to the Respondent No. 3 asking them to show cause to the Assistant Collector of Central Excise, Hyderabad II-Division as to why the aforesaid products should not be re-classified under Tariff Heading 3920.31 w.e.f. 1-3-1986 and Central Excise duty charged @ 35% ad valorem in terms of Notification No. 132/86-C.E., dated 1-3-1986 and why the differential duty amounting to Rs. 81,47,323.62 on the Industrial Laminates removed from their factory during the period from 1-3-1986 to 31-7-1986 should not be paid by them under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11-A of the Central Excises and Salt Act, 1944. Considering the respondent s reply to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad, (ii) 1988 (37) E.L.T. 253 (Tri.); 1988 (18) E.C.R. 507 (Cegat B-C); 1988 (17) ECC (T-225) in the case of Chetna Polycoats (P) Ltd. v. Collector of Central Excise, Jaipur and (iii) 1988 (36) E.L.T. 139 (T) in the case of Collector of Central Excise, Ahamedabad v. Melamine Fibre Board Limited and Others, which are against the Revenue. He has argued that the Tribunal s decisions are under the old Tariff and the said decisions were in view of the fact that the Explanation II (b) to the old Tariff Item 15-A(2) excluded Electrical Insulators from the purview of the said Tariff Item. In the decisions reported in 1985 (6) ETR 407 (T) and 1988 (36) E.L.T. 139 (T), it has been held by the Tribunal that Industrial Laminates are classifiable under Tariff Item 68 and not under Item 15-A(2). In the decision reported in 1987 (17) ECC (T-225), it has been held by the Tribunal that Electrical Insulating Tapes are classifiable under Heading 8546.00 of Central Excise Tariff Act,. 1985. Shri Sunder Rajan has stated that the Revenue has filed appeal in the Supreme Court against the decision of the Tribunal. He, however, has argued that under the new Tariff introduced w.e.f. 1-3-1986, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to the definition of Insulators as given in the BTN and the Chamber s Dictionary, photo-copies of which have been filed by the Respondent No. 1 at pages 8-9 and 22 respectively of the paper book filed by them. He has also drawn our attention to pages 28 to 29 of the respondent s paper-book, which are the photo-copies of relevant pages of the book Plastic Materials by Brydson. He has argued that the laminates have been shown as Insulators in this book. He has also drawn our attention to page 7 of the respondent s paper-book, which is a photo-copy from page 214 of the Interpretation of Sales Tax Commodities by Agarwal. The term insulator has been defined in this page by the author of the book. Shri Parekh has argued that the Tribunal in its earlier decision, reported in 1985 (22) E.L.T. 879 in the case of M/s. Bekalite Hylam Limited (supra) has held that the Industrial Laminates are Electrical Insulators and are classifiable under Item 68 and not under Item 15-A(2) of the old Tariff. He has argued that the said decision should hold good under the new Tariff also. He has also argued that this Industrial Laminates are used as Electrical Insulators and as such they shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent. It has been stated therein that resin impregnated paper or paper board is insulating materials. Insulators have also been defined at page 1406. He has, therefore, argued that the respondent s Industrial Laminates are correctly classifiable under Heading 8546 which covers Electrical Insulators of any material. He has relied on this Tribunal s decision, reported in 1985 (22) E.L.T. 879 (T) in the respondent s own case, in which this Tribunal has classified their Industrial Laminates under Item 68 and not under Item 15-A(2) of the old Tariff. As there was no separate Tariff Item for Electrical Insulators under the Central Excise Tariff prior to 1-3-1986, the Tribunal classified the goods under the residuary Item 68 by virtue of Explanation II (b) to Tariff Item 15-A (2). He has argued that the said decision should apply to the present new Tariff also. In support of his argument on classification, Shri Shankar has also relied on the earlier decision of this Tribunal in the case of Chetna Polycoats (P) Ltd. and the Supreme Court judgments in the case of Atul Glass Industries Limited and in the case of Khandelwal Metal and Engg. Co. Ltd. Regarding classification of Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *** **** - Of other plastics; Heading 8546.00 3920.31 - Rigid plates, sheets, film, foil and strips" Electrical Insulators of any material. As relied on by Shri Sunder Rajan, this Tribunal, in the case of Saurashtra Chemicals [1986 (23) E.L.T. 283 (Tribunal)], has held in paragraph 7 of the decision that : The relevant headings in the Tariff have to be interpreted and applied in the light of Section Notes and Chapter Notes which are statutory and bindings like the headings themselves. These Section Notes and Chapter Notes sometimes expand and sometimes restrict the Scope of certain headings. In other words, the scheme of Customs Tariff Act is to determine the coverage of the respective headings in the light of the Section Notes and Chapter Notes. In this sense, the Section Notes and Chapter Notes have an over-riding force on the respective headings. We are in full agreement with the law as enunciated in the aforesaid case decided by the Larger Bench. The Revenue and the respondents have relied on certain Chapter and Section Notes in support of their respective arguments for classification of the Industrial Laminates (Electrica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue that these Industrial Laminates are raw materials for the electrical insulators and not finished insulators was also argued before the Tribunal in the aforesaid case. The Tribunal considered the question with reference to the definition of insulators in technical books, dictionaries and the I.S.I. specification and then rejected the contention of the Revenue, and held that those laminates were insulators and were excluded from the purview of Tariff Item 15-A(2). The Tribunal has observed that some minor fabrication such as punching or drilling of holes to be undertaken on the sheets would not detract from the position that these sheets are insulators. In this connection, we reproduce below paragraphs 18 to 25 of the said decision of the Tribunal :- 18. We have carefully considered the submissions of both sides. There is no dispute on certain basic features of the goods. First, they are composite goods comprised of plastic material falling under Item 15-A(1) and other materials such as glass, paper. Second, the laminated sheets have electrical insulating properties. The Respondent s contention is that the goods are plastic laminated sheets falling under Item 15- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other insulators as composites. See also dielectric; transformer oil. Thermal insulators comprise an equally broad ranges of materials. Such in-organics as mineral fibres, magnesia, aluminium silicate, cellulose and glass fibres are widely used for steam and hot-water pipes, furnaces, and blown-in home insulation. Organic products that are effective include plastic foams (polyurethane, polyvinyl chloride, polystyrene) and cellular rubber. There are a number of materials that may be called double insulators, since they have both electrical and thermal insulating properties, e.g., polystyrene, PVC, cellulose, glass, magnesia and aluminium silicate." The following is extracted from pages 397-398 of the Materials Hand-book, 11th edition, by George S. Brady and Henry R. Clauser : Any materials that retard the flow of electricity, used to prevent the passage or escape of electric current from conductors. No materials are absolute non-conductors; those rating lowest on the scale of conductivity are therefore the best insulators. An important requirement of a good insulator is that it not absorb moisture which would lower its resistivity. Glass and porcelain are the most common lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a support. Plastics Dictionary by Thomas A. Dickinson says :-"Insulator - a material or substance that interrupts the communication of heat or electricity to surrounding objects." We do not see anything in the above definitions which militates against the view we have expressed earlier. 25. The extracts from technical literature produced by Smt. Zutshi do not in our view, advance the case of the Respondent. They describe the process of lamination, different types of laminated sheets, etc. But they do not contain anything which would help us to distinguish between insulators and insulating fittings". Perhaps, it may be possible to say in the light of the above-cited definitions that insulating fittings should be ready-to-fit articles. That, however, does not seem to be the case with insulators. Both could not have been used synonymously We do not see why rigid plastic laminated sheets made out of electrically insulating material, viz. plastics, paper, glass, etc., should not be said to be insulators , if not insulating fittings ." 9. The above decision was followed by this Tribunal in the case of Collector of Central Excise, Ahmedabad v. Malamine Fibre Board Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 39 of the Tariff in view of Chapter Note 2(n) to Chapter 39 as the Electrical Insulators of any material classifiable under Heading 8546.00 falls within Section XVI of the new Tariff. The fact that in the I.S. 1885 (Part I) -1961, insulating material and insulator have been shown separately will not affect this position. Insulating material has been defined therein as A substance or body, the conductivity of which is zero, or, in practice, very small ; and Insulator has been defined as An element used to insulate a conductor of apparatus and generally as a support. In 1985 (22) E.L.T. 879 the Tribunal rejected the department s contention that these Industrial Laminates are raw materials for insulators and not the insulators. It has been argued before us that the process of cutting and making holes only is required to be applied to these Industrial Laminates. Rule 2(a) of the Rules for Interpretation of the new Tariff lays down that Any reference in a heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that, the incomplete or unfinished goods have the essential character of the complete or finished goods . These la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 3), it is stated that sheets of phenol - formaldehyde resin, bonded on one or both surfaces with refined copper sheet or foil, used for the manufacture of printed circuits. Since these goods are designed for use as electrical conductors, the copper sheet or foil was considered as giving them this essential character . The impugned order says that the use of the respondent s product is exclusively for the manufacture of electrical circuit board. It is not the case of the Revenue that it should be classified as paper or an article of plastic. The Revenue has contended for its classification under Tariff Heading 7413.90 as indicated above. Thus, the competing entries as contended by the respondent and the Revenue are Headings 74.06 as copper foil and 7413.90 as other article of copper - Other. As per definition in Chapter Note 1(viii) to Chapter 74 of the new Tariff the product is copper foil. Tariff Heading 7406 is a specific entry for copper foil. According to Rule 3(a) of the Rules for Interpretation, it should, therefore, be classified under this specific Heading in preference to the general Heading 7413.90. Rule, 3(a) says: The Heading which provides the most speci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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