TMI Blog1989 (2) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under Heading 8546 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of Central Excise, Hyderabad,: 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, Ahmedabad v. Melamine Fibre Board Limited and Ors., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is not correct. He has drawn our 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 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 Laminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a photo-copy of which has been placed at pages 32 to 33 of the paper-book filed by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 9. 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 (Electrical Insulators). These Notes are as follows : Chapter Notes 2(n) and 10 to Chapter 39 : Chapter 39 Plastics and Articles thereof. * * * 2. This Chapter does not cover :- * * * * * * * * * (n) Articles of Section XVI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-A(2) while the appellants' contention is that they do not fall under Item 15-A(2) because they are not wholly made of the materials specified in Item 15-A(1) and further they, being insulators or insulating fittings, are excluded from the item by virtue of Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dely 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 line insulators because of low cost. Pure silica glass has an average dielectric strength of 500 volts per mil, and glass-bonded mica about 450 volts per mil, while ordinary porcelain may be as low as 200 volts per mil, and steat ..... 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