TMI Blog2001 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the appellants, they noticed that GFN Lines were being manufactured and cleared without payment of central excise duty and without observing the Central Excise procedures and formalities. They gathered information that the GFN Liners were being solely used in track-circuited section of Railway for electrically insulating the track circuits in order to prevent flow of electric current from one track circuit section for effective control of automatic signals. They, therefore, opined that the said GFN liners were nothing but electrical insulators and as such would merit classification u/s.h. 8546.00. As against this, the appellants had been under the impression that the said goods being "Other articles of plastics" fall u/s.h. 3926.90 and fully exempted from central excise duty under Notification Nos. 132/86-C.E., 53/88-C.E., 14/92-C.E. etc. issued from to time. A show cause notice dated 12-6-1995 was issued to M/s Interplas demanding central excise duty of Rs. 7,57,16,909/- for the period from June, 1990 to March, 1995 and a separate Show-cause Notice dated 19-5-1995 issued to M/s Calcutta Spring's demanding central excise duty of Rs. 90,35,793/- (modified to Rs. 75,52,339/- vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to the letter dated 28/29-11-1996 of the RDSO wherein it has been certified that the GFN lines cannot be treated as an insulator and that it is called "liner" due to the fact its primary function is to provide a medium between Rail and Electric Rail Clip for transfer of load and keeping the rail in position. It has further been certified that the GFN liner is a standard I.R. Track Fitting used as a joint between Rail and Electric Rail Clip on concrete sleepers for proper distribution of load and keeping the rail in position to the desired gauge. 4.2The learned Advocate refers to another letter dated 26-8-1987 from the Railway Board, Ministry of Railways which supports the position mentioned in para 4.1 supra and further evident that along with the GFN liners, Rubber pads are also used. Rubber pads have also got insulation properties but the same have never been treated or classified as electrical insulators. 4.3The contention of the learned Advocate is the experts on the subject, namely, S.K. Sinha, Chief Engineer (Rtd), Eastern Railways, Shri S.R. Venkataraman, Chief Engineer (Rtd), Southern Railways, Shri T.P. Ghosh, Deputy General Manager, Rail India Technical Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi for classifying the said liners u/s.h. 8546.00. According to him, the classification contained in the said Board's Circular related to the goods used in fabrication of "Insulated rail joints" to prevent flow of electric current from one railway track section to adjacent section. Insulated rail joints in respect whereof the said classification was given by the Board are totally different products. At this stage, he invites attention to "Maintenance Handbook on Insulated Rail Joints" issued by M/o Railways that such insulated rail joints are required at the end of track circuit and at points and crossings where the polarity of track circuit is to be changed. Such insulated rail joints are of three classes, namely, Class 'A', Class 'B' and Class 'C' and are made of wood, nylon and fibre respectively. He draws attention to para 2.2. of the Maintenance Handbook on Insulated Rail Joints which states: Since the Rail Insulated Joints are inserted to break electrical continuity of the Rail, the joints should offer infinity resistance. Practically it is not possible so that continuity test performs with the help of a multimeter. Multimeter should not show continuity across the joint, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was again reiterated by the Hon'ble Supreme Court in the judgments in the cases of C.C.E. v. Usha Martin Industries reported in 1997 (94) E.L.T. 460 and Paper Products Limited v. C.C.E. reported in 1999 (112) E.L.T. 765. These relevant aspects of the matter were ignored and lost sight of by the Commissioner. The learned Advocate pleads that in any event the said Board's Circular dated 26-3-1996 changing the well settled position as regards classification of the GFN liners will apply only prospectively and has no retrospective effect as has been clarified by the M/o Finance. This position of law is well settled by a number of decisions, some of which are - (i) H.M. Bags Manufacturer v. C.C.E. - 1997 (94) E.L.T. 3 (S.C.); (ii) Paper Products Ltd. v. C.C.E. - 1999 (112) E.L.T. 765 (S.C.); (iii) Eswaran Sons Engg. Ltd. v. C.C.E. - 1999 (112) E.L.T. 1011 (T); (iv) Print Pack Industries v. C.C.E. - 1998 (25) RLT 471 (CEGAT); (v) Packel Plastics (Nasik) Pvt. Ltd. v. C.C.E. - 1999 (35) RLT 33 (CEGAT); and (vi) R.N. Polysacks Pvt. Ltd. v. C.C.E. - 2000 (117) E.L.T. 790 (CEGAT). 4.10The other argument advanced by the learned Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available documents referred to by the learned Advocate, we find the GFN Liners are not exclusively used in track circuited areas. It has come on record that the same are found used in both track circuited areas as well as non-circuited areas. Moreover, the experts on the subject, who issued certificate which were adverted to by the learned Advocate, are categorical in their opinion that the impugned good are essential fitments of rail fastening system and the same are joints which are interposed between the rail and the elastic rail clips in order to obtain the required holding and gripping force to rails with the sleepers. Para 2 of the Certificate dated 10-10-1996 of Shri V. Gopalakrishnan, Chief Track Engineer (Rtd), Chennai throws enough light on this aspect in clear terms, which is reproduced below for ready reference : "2. Liners are made either from steel or from Glass Filled Nylon i.e., plastic and both are used in the above rail fastening system. Both the liners perform the same function - joints between the rail and elastic rail clip to provide the desired tow load to the rails on the sleepers. But the Glass Filled Nylon liners are mainly used in track circuited areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n also puts 'Insulated liner' under chapter 39. The Indian Railways Trade Group Code also seems to favour classification outside Heading 8546.00. To sum up the claims of both Chapters 85 and 39 seem equally strong. The goods, though not fully 'electrical insulators' (heading 85.46) but 'insulated liners', yet it cannot be denied that it does the work of insulation in circuited tracks. On the other hand, as per HSN notes (pages 575 volume 2) and also as mentioned in page 5 of the Show-cause Notice, while nuts, bolts, washers etc. of plastic are covered in sub-heading 3926.96, liners are not so specifically covered." Notwithstanding the above observation, the Adjudication authorities had tilted towards Heading 85.46 in deciding the classification of the impugned goods mainly on account of the Board's Circular No. 189/23/96-CX, dated 26-3-1996. As mentioned above, the learned Advocate vehemently argued that the impugned goods are totally different from the "insulated rail joints" in regard to which the Board had issued clarification about their classification. The main function of the "insulated rail joints" is to prevent flow of electric current from one railway track section to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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