1989(02)LCX0063

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

 S/Shri G. Sankaran, Sr. Vice-President, D.C. Mandal, Member (T) and G.P. Agarwal, Member (J)

COLLECTOR OF C. EX.

Versus

METROWOOD ENGINEERING WORKS

Order Nos. 52 to 54/89-C, dated 16-2-1989 in Appeal Nos. E/219/87-C, E/461/87-C, E/214/88-C

Cases Quoted

1984 ECR 2433 (CEGAT)..................................................................................................................................... [PARA 6]

ATUL GLASS INDUSTRIES & OTHERS v. COLLECTOR OF CENTRAL EXCISE & OTHERS — 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.)
......................................................................................................................................................................  [PARA 5]

BEKALITE HYLAM LTD. v. COLLECTOR OF CENTRAL EXCISE, HYDERABAD — 1985(08)LCX0053 Eq 1985 (022) ELT 0879 (TRIB.)
....................................................................................................................................................................... [PARA 4]

CHETNA POLYCOATS (P) LTD. v. COLLECTOR OF CENTRAL EXCISE, JAIPUR — 1988(07)LCX0042 Eq 1988 (037) ELT 0253 (TRI.)
....................................................................................................................................................................... [PARA 4]

COLLECTOR OF CENTRAL EXCISE, AHMEDABAD v. MELAMINE FIBRE BOARD LTD. & ORS. — 1988(04)LCX0038 Eq 1988 (036) ELT 0139 (TRIB.)
......................................................................................................................................................................  [PARA 4]

COMMISSIONER OF INCOME TAX, U.P. v. J.K. HOSIERY FACTORY -1986 (159) ITR 85 (S.C.)..................
..................................................................................................................................................................... [PARA 12]

DECAN SALES CORPORATION AND ANOTHER v. R. PARTHASARTHY & OTHERS -1982 ELT 0885 (BOM.)
..................................................................................................................................................................... [PARA 12]

SAURASHTRA CHEMICALS, PORBANDAR v. COLLECTOR OF CUSTOMS, BOMBAY — 1985(08)LCX0017 Eq 1986 (023) ELT 0283 (TRIB.)
....................................................................................................................................................................... [PARA 7]

Advocated By : Shri A.S. Sunder Rajan, J.D.R., for the Appellants.

S/Shri Devon Parekh, Willingdon Christian, Advocates B. Shankar, General Manager, for the Respondents 1, 2, 3 Respectively.

[Order per : D.C. Mandal, Member (T)]. - Brief facts in the cases in the above 3 appeals are as follows :-

(i) M/s. Metro Wood & Engineering Works Ltd., (Respondent No. 1) are engaged in the manufacture of Industrial Laminates (Electrical Insulators) and Decorative Laminates. Prior to 1-3-1986, they were paying Central Excise duty on these two products under Item 15-A(2) of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the old Tariff). It is stated in the impugned order-in-appeal dated 24-10-1986 of the Collector of Central Excise (Appeals) that after introduction of the new Central Excise Tariff under the Central Excise Tariff Act, 1985 w.e.f. 1-3-1986, they filed 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 under Heading 8546.00 of the Central Excise Tariff Act, 1985 (hereinafter referred to as the new Tariff).

(ii) After introduction of the new Central Excise Tariff Act, 1985 with  effect  from    1-3-1986, M/s. Miltex Laminates (P) Ltd. (Respondent No. 2) filed a classification list No. Vapi-II/338/86-87, effective from 1-3-1986, classifying (A) Industrial Laminated sheets and (B) Decorative Laminated sheets under Tariff Heading 3920.31, chargeable to Central Excise duty @ 35% ad valorem. The classification list was approved by the Assistant Collector. On 15-4-1986, they filed a revised classification list No. Vapi-II/86-87, effective from 15-4-1986, claiming classification of “Electrical Insulators of any material (A) Rigid insulator sheets (i.e. Paper, Fabric Base Extra in all grades and varieties)” under Tariff Heading 8546.00 at the rate of 15% ad valorem. The Assistant Collector of Central Excise vide his order dated 23-8-1986, rejected the request for re-classification and approved the revised classification list classifying the goods under Tariff Heading 3920.31 chargeable to duty at 35% ad valorem. The respondent No. 2 filed an appeal before the Collector of Central Excise (Appeals), Bombay against the order of the Assistant Collector. In paragraph 1 of the impugned order-in-appeal, the Collector (Appeals) has stated that in their revised classification list No. Vapi-II/86-87, the respondent No. 2 herein requested for re-classification of “Industrial Laminated sheets” under Heading 8546.00 on the ground that the same were Rigid Insulator Sheets. Following his earlier decision in the case of M/s. Metro Wood Engineering Works Private Limited (supra), the Collector (Appeals) has set aside the order dated 23-8-1986 of the Assistant Collector and has classified the “Industrial Laminated Sheets” under Heading 8546.00 as “Electrical Insulators of any material”. Aggrieved by the decision of the Collector (Appeals), the Collector of Central Excise, Vadodara has filed the present appeal on the grounds similar to those mentioned in sub-paragraph (i) above.

(iii) M/s. Bakelite Hylam Limited, Hyderabad (Respondent No. 3) are manufacturers of “Industrial Laminates of paper base without copper cladding” and “Industrial Laminates of paper base with copper cladding”. They filed a classification list claiming classification of the above products as Electrical Insulators 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 show cause notice and the submissions made at the time of personal hearing, the Assistant Collector, by his order dated 23-1-1987, re-classified the Industrial Laminates of paper base without copper cladding under Tariff Heading 3920.31 as rigid plastic laminated sheets other than PVC. The laminated sheets of paper base with copper cladding was re-classified by him under Tariff Heading 7413.90 as other articles of copper and charged the duty @ 15% ad valorem. As the respondent No. 3 already paid duty at 15% ad valorem on the Industrial Laminates of paper base with coper cladding under Tariff Heading 8546.00, the Assistant Collector held that no differential duty was involved so far as the said copper cladded laminates were concerned. The Asstt. Collector, therefore, directed the respondent No. 3 to pay differential duty of Rs. 28,25,417.94 on a quantity of 4,56,869.76 kgs. Industrial Laminates of paper base without copper cladding removed from the factory during the period from 1-3-1986 to 31-7-1986. The respondent No. 3 filed an appeal before the Collector of Central Excise (Appeals) against the said order dated 23-1-1987 of the Assistant Collector of Central Excise. By the impugned order-in-appeal No. 279/87(H) dated 31-10-1987 the Collector (Appeals) has held that the respondent’s Industrial laminates of paper base without copper cladding is assessable to Central Excise duty under Tariff Heading 8546.00 as “Electrical Insulator” and the Industrial Laminates of paper base with copper cladding under Tariff Heading 74.06 as “copper foils”. Hence, the present appeal by the Collector of Central Excise, Hyderabad before this Tribunal.

2. As these three appeals involve a common issue regarding classification of Industrial Laminates (Electrical Insulators), these have been heard together and are being disposed of by this common order.

3. During the hearing before us, Shri Sunder Rajan, JDR has argued for the Revenue. Shri Devan Parekh and Shri Willingdon Christian, Advocates have argued for respondent No. 1 and respondent No. 2 respectively. Shri B. Shankar, General Manager of M/s. Bekalite Hylam Limited has argued for the respondent No. 3.

4. Shri Sunder Rajan has drawn our attention to this Tribunal’s earlier decisions, reported in (i) 1985 (6) ETR 407 (T) = 1985(08)LCX0053 Eq 1985 (022) ELT 0879 (T) in the case of M/s. Bekalite Hylam Ltd. v. Collector of Central Excise, Hyderabad, (ii) 1988(07)LCX0042 Eq 1988 (037) ELT 0253 (Tri.); 1988 (018) ECR 0507 (Cegat B-C); 1988 (017) ECC (T-225) in the case of Chetna Polycoats (P) Ltd. v. Collector of Central Excise, Jaipur and (iii) 1988(04)LCX0038 Eq 1988 (036) ELT 0139 (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(04)LCX0038 Eq 1988 (036) ELT 0139 (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 (017) 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 classifications are to be decided on the basis of the descriptions in the Tariff entries, Chapter Notes, Section Notes and the Interpretative Rules of the new Tariff. There were no such Chapter Notes, Section Notes and Interpretative Rules in the old Tariff. He has, therefore, argued that the Tribuanl’s decisions under the old Tariff are not binding for classification under the new Tariff. He has stated that the Collector (Appeals) should not have blindly followed the earlier decisions of this Tribunal, which were under the Tariff inforce prior to 1-3-1986 and he should have examined the goods with reference to the new Tariff Headings, Section Notes, Chapter Notes and Interpretative Rules. As regards classification of the Industrial Laminates of paper base without copper cladding, Shri Sunder Rajan has argued that this product is covered by new Tariff Heading 3920.31 as held by the Assistant Collector of Central Excise. In support of this argument, he has drawn our attention to the description of the Tariff Heading, Notes 1 and 10 to Chapter 39 of the new Tariff and Explanatory Notes to Chapter 39 at page 554 under Heading 3920 in the Harmonized Commodity Description and Coding System. He has also drawn our attention to Note 2(n) to Chapter 39 of the new Tariff, which excludes articles of Section XVI (Machines and Mechanical or Electrical appliances) from the purview of Chapter 39. According to him, the Industrial Laminates do not fall under Section XVI of the new Tariff and accordingly, they are not excluded from Chapter 39. His argument is that laminated products with other materials are covered by Tariff Heading 3920.31. He has also argued that the Industrial Laminates are not insulators, but raw materials for insulators. Regarding the classification of Industrial Laminates with copper cladding, Shri Sunder Rajan has pleaded for the Tariff Item 7413.90 - other articles of copper - Other. He has argued that the Collector (Appeals) has classified this product under Heading 74.06 as copper foil ignoring the backing materials and his decision is absolutely incorrect.

5. Arguing for the Respondent No. 1 (Metro Wood & Engineering Works Ltd.), Shri Parekh has stated that the Department’s case is that the Industrial Laminates (Electrical Insulators) are not insulators, but materials for insulators. This contention of the revenue 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 (022) ELT 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 should be classified under Heading 8546 as “Electrical Insulators”. He has relied on the judgment in the case of Atul Glass Industries and Others v. Collector of Central Excise and Others, reported in 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.), in which it was held by the Supreme Court that it is the functional character of an article which determines the classification. He has also argued that only small cutting and holes are required to be made in the Industrial Laminates for the purpose of Insulation and such minor process of cutting and making holes would not make the material different from Insulators. In this connection, he has referred to Rule 2(a) of the Rules of Interpretation of the new Tariff. He has also argued that according to Interpretative Rule 3(a), classification under a specific heading is to be preferred to a heading having general description. Since Heading 8546 is specific for Electrical Insulators, he has argued that the respondent’s Industrial Laminates, which are Electrical Insulators, should be classified under that heading. He has argued that Chapter Note 10 to Chapter 39 has no relevance to the earlier Chapter Note 2(n). The purposes of Chapter Note 2(n) and Chapter Note 10 are quite different from each other. He has also stated that Notes 1(g) and 2(a) of Section XVI of the new Tariff relate to parts of articles. These two Section Notes do not apply to the present case as the goods in this case are not parts of Electrical Insulators.

6. Arguing for Respondent No. 2 (Miltex Laminates Private Limited), Shri Willingdon Christian has adopted the arguments advanced by Shri Parekh. He has, however added that the plastic materials lose identity in the Industrial Laminates (Electrical Insulators). Plastic sheets do not come into existence. In this connection he has cited this Tribunal’s decision, reported in 1984 ECR 2433 (Cegat), paragraphs 2 & 11. It was held in that case that glass did not emerge and hence the Tribunal did not decide classification on that basis.

7. Appearing for respondent No. 3 (Bekalite Hylam Limited), Shri B. Shankar has argued that the respondent’s paper based Industrial Laminates without copper cladding are Electrical Insulators. He has drawn our attention to page 1406 to 1407 of the Harmonized Commodity Description and Coding System nomenclature, 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(08)LCX0053 Eq 1985 (022) ELT 0879 (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 Industrial Laminates of paper base with copper cladding, Shri Shankar has drawn our attention to the definition of copper foil as given at Chapter Note l(viii) of Chapter 74 of the new Tariff, a photo-copy of which has been placed at page 21 of the paper-book filed by the respondent. According to this definition, copper foil backed with paper or other re-enforcing material is also included in the definition of foil. He has also argued that in the Compendium of Classification Opinions under the Harmonized Commodity Description and Coding System, copper sheet or foil was considered as giving them their essential character. He has also drawn our attention to the Central Excise Tariff as amended by the Finance Act, 1988. The earlier Tariff Heading 7406 - copper foil has been changed to new Tariff Heading 74.10 which reads as “copper foil (whether or not printed or backed with paper or paper board, plastic or similar backing materials) of a thickness (excluding any backing) not exceedingO.15 mm”. The amended heading includes the earlier Chapter Note l(viii) to Chapter 74 and the earlier Tariff Heading 7406. Shri Shankar has, therefore, argued that the respondent’s copper cladded paper based Industrial Laminates should be classified under Tariff Heading 7406 as held by the Collector of Central Excise (Appeals). In reply to these arguments Shri Sunder Rajan has stated that this Tribunal’s decision reported in 1985(08)LCX0017 Eq 1986 (023) ELT 0283 (T) in the case of Saurashtra Chemicals, Porbandar v. Collector of Customs, Bombay takes care of all the decisions relied on by Shri Shankar. He has not challenged the Compendium of Classification Opinions under the Harmonized Commodity Description and Coding System, relied on by Shri Shankar.

8. We have considered the records of the cases and the arguments advanced before us. One common issue involved in all the three appeals is whether the Industrial Laminates manufactured by the respondents are classifiable as articles of plastics under Tariff Heading 3920.31 as contended by the Revenue or under Heading 8546.00 as Electrical Insulators, as claimed by the respondents. The above Headings read as follows :

As relied on by Shri Sunder Rajan, this Tribunal, in the case of Saurashtra Chemicals [1985(08)LCX0017 Eq 1986 (023) ELT 0283 (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 (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 (machines and mechanical or electrical appliances);

** *** *** ****

*** ** ** ****

10.  In heading Nos. 39.20 and 39.21, the expression “plates, sheets, film, foil and strip” applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape- whether or not printed or otherwise surface - worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut, they become articles ready for use)."

Tariff Heading 3920.31 provides for classification of rigid plates, sheets, film, foil and strip of plastics. Heading 39.20 covers such rigid plates, sheets, film, foil and strip even if these are laminates, supported or similarly combined with other materials. But the Chapter Note 2(n) to Chapter 39 of the Tariff specifically excludes from this Chapter those articles which fall in Section XVI of the Tariff. “Electrical Insulators of any material” falls in Section XVI, Heading 8546. Therefore, if the Industrial Laminates of respondents No. 1 & 2 and the Industrial Laminates of paper base without copper cladding manufactured by the respondent No. 3 are electrical insulators, they will fall under Heading 8546.00 of Section XVI and will automatically be excluded from Chapter 39 in view of the Chapter Note 2(n) of Chapter 39 of the Tariff. The crucial point is whether these laminates are electrical insulators or not. This very question came for detailed examination before this Tribunal in 1985 in the case of M/s. Bekalite Hylam Limited, Hyderabad v. Collector of Central Excise, Hyderabad. After considering the materials placed before it and the detailed arguments of both the parties, the Tribunal, by its order No. C-564/85, dated 5-8-1985 [reported in 1985 (6) ETR 407 = 1985(08)LCX0053 Eq 1985 (022) ELT 0879 (Tribunal)], has held that the rigid plastic laminated sheets made out of electrically insulating material, viz. plastics, paper, glass etc. are “insulators”, classifiable under Item 68 of the old Tariff which was in force during the relevant period and not Item 15-A(2) ibid. Similar question, as raised now by 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-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 Explanation II(b).

19.  In the Geep Flashlight case before Allahabad High Court and later the Supreme Court, the goods under consideration were torch bodies which, following the commercial parlance test and the test that articles made of plastics meant articles made wholly of the commodity commercially known as plastics and not articles made from plastics along with other materials, the Court ruled was not an article of plastics. The goods in the case before us are plastic laminated sheets and boards according to the Department and insulators or insulating fittings according to the appellants. While the former has urged that the ratio of the Supreme Court decision does not apply to the present goods, the latter urges that it does. We, however, think the present dispute can be resolved without going into this debate. If the goods are insulators or insulator fittings, as contended by the appellants, they will be out of the scope of Item 15-A by virtue of the Explanation II(b). We shall, therefore, discuss this aspect of the dispute.

20.  The appellants have strenuously argued that the laminated plastic sheets manufactured by them are insulators or insulating fittings since they require only minor fabrication such as drilling of holes to make them fit into the electrical equipment. The Department, on the other hand, strenuously argues that these are nothing but sheets in length and not insulators cut to the required shapes and sizes. The Department has further tried to argue that the subject goods are only insulating material.

21.  The word “insulator” has been explained at page 563 of Hawley’s Condensed Chemical Dictionary as follows :

“Any substance or mixture that has an extremely low dielectric constant, low thermal conductivity, or both. Electrical insulators are either solid or liquid, the latter being used in transformers (askarel, mineral oils, silicone oils). A wide variety of solid types includes porcelains, glass, mica, alumina, various high polymers (epoxies, polyethylene, polystyrene, phenolics), cellulosic materials, nylon and silicone resins. All these may be used alone or combined with 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 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 steatite about 240 volts per mil. Slate, steatite, and stone slabs are still used for panel-boards, but there is now a great variety of insulating boards made by compressing glass fibres, quartz, or minerals with binders, or standard laminated plastics of good dielectric strength may be used .....Synthetic rubbers and plastics have now replaced natural rubber for wire insulation, but some aluminium conductors are insulated only with an anodized coating of aluminium oxide. Wires to be coated with an organic insulator may first be treated with hydrogen fluoride, giving a coating of copper fluoride on copper wire and aluminium fluoride on aluminium wire. The thin film of fluoride has high dielectric strength and heat resistance.”............

22.  It follows from the above definitions that an article made from materials which have electrically insulating properties can be appropriately described as an insulator. There is no dispute about the fact that the laminated plastic sheets under consideration in the present appeal are such that can be used for their insulating property in electrical equipment. There does not seem to be any good reason why these sheets cannot be said to be insulators. The fact that some minor fabrication such as punching or drilling of holes has to be undertaken on the sheets would not detract from this position. As such, these sheets should qualify to be called insulators and, therefore, would go out of the purview of Item 15-A by virtue of the Explanation II (b).

23.  That this is the Board’s understanding also is shown by its Tariff Advice No. 123/81, dated 23-11-1981 (copy at page 46 of the appellants’ paper-book) which says that industrial laminated sheets which have electrical properties only are covered by Explanation II(b) to Item 15-A.

24.  IS : 1885 (Part I) - 1961 (Second re-print 1980) (“Electrotechnical Vocabulary - Fundamental Definitions”) defines “insulating material” and ‘insulator" thus :

“7.33 Insulating Material - Insulant - A substance or body, the conductivity of which is zero, or, in practice, very small.”

“16.10 Insulator - An element used to insulate a conductor or apparatus and generally 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 Limited and Another, reported in 1988(04)LCX0038 Eq 1988 (036) ELT 0139 (T) and held that paper based laminated sheets manufactured from paper by weight over 70%, and resol were classifiable under Tariff Item 68 and not under Item 15-A(2). The same view was taken by this Tribunal in Order No 467/87-C dated 30-6-1987 in Appeal No. ED/SB/1217/83-C (M/s. Formica India Ltd. v. Collector of Central Excise, Pune). It was held by the Tribunal therein that the Industrial Laminates (insulating grade) would not fall under Tariff Item 15-A(2), but only under Item 68.

10.  In the cases before us, the industrial laminates are similar to the laminates considered by this Tribunal in 1985 (022) ELT 879 = 1985 (6) ETR 407 (Tribunal). In the said decision, the Tribunal has given the extracts from Hawley’s Condensed Chemical Dictionary (Page 563), Materials Handbook - 11th Edition by George S. Brady and Henry R. Clauser (P. 397-398), Plastics Dictionary by Thomas A. Dickinson and I.s.1885 (Part I) -1961 (Second re-print 1980) to show the definition and meaning of the expression “Insulator”. From these definitions the Tribunal observed that an article made from materials which have electrically insulating properties can be appropriately discried as an insulator. In none of these definitions, it is stated that an insulator moust invariably be in a cut to shape and size and ready for fitment condition. It has been argued before us on behalf of the respondents that the industrial laminates manufactured by them are used as electrical insulator and this contention has not been rebutted by the Revenue. In the case of Atul Glass Industries Ltd. and Others v. Collector of Central Excise and Others [1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.)], it was held by the Hon’ble Supreme Court in paragraph 8 of the judgment that “It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so.” In the circumstances following this Tribunal’s earlier decision reported in 1985 (6) ETR 407 = 1985 (022) ELT 879, we hold that the Industrial Laminates of the Respondents No. 1 and 2 and the Industrial Laminates of paper base without copper cladding manufactured by Respondent No. 3 are “Electrical insulators”. Accordingly, these are correctly classifiable under Heading 8546.00 of the new Tariff. These are automatically excluded from the. purview of Chapter 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 (022) ELT 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 laminates have electrical insulating property and they have attained the essential character of insulators. Mere cutting and making holes will not make these goods different from insulators.

11.  The learned Departmental Representative has argued that the Tribunal’s earlier decisions (supra) were under the old Tariff and the same are not applicable under the new Tariff. We are unable to accept this contention as change in Tariff does not change the nature of the goods. We have already held that these industrial laminates are electrical insulators. Tariff Heading 8546.00 is a specific entry for “Electrical Insulators of any material”. Rule 3(a) of the Rules for Interpretation says that the heading which provides the most specific description shall be preferred to headings providing a more general description. Tariff Heading 3920.31 - - - Rigid plates, sheets, film, foil and strips of “other plastics” provides a more general description. Further, these goods have been identified as electrical insulators. Identity of the goods has not changed with the introduction of the new Tariff. It is only the Tariff description which has changed with effect from 1-3-1986. The argument of the learned Departmental Representative is, therefore, found to be untenable.

12.  The laminated sheets of paper base with copper cladding manufactured by the Respondent No. 3 have been classified by the Collector (Appeals) under Heading 7406 as copper foil, as against the Assistant Collector’s classification under Heading 7413.90 as other articles of copper - - Other. In Chapter Note 1(viii), copper foil has been defined as “A flat product of thickness (excluding any backing) not exceeding 0.15 mm, of any width, generally not cut to length and usually in coil, whether or not embossed, cut to shape, perforated, coated, printed or backed with paper or other reinforcing matter”. Definition given in a taxing statute should be followed. Paragraph 4.2 of the order-in-appeal No. 279/87(H) dated 30-10-1987 shows that one side of the product is copper and the other side is paper based re-inforced material. The thickness of the copper does not exceed 0.15 mm. (excluding the banking). The product, therefore, squarely falls within the above definition of copper foil. In the Compendium of Classification Opinions under the Harmonized Commodity Description and Coding System (photo-copy filed by the Respondent 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 specific description shall be preferred to headings providing a more general description”. Even otherwise, in a taxing statute where two interpretations are possible, the interpretation which is favourable to the assessee, should be taken. This ratio was laid down by the Hon’ble Supreme Court in the case of Commissioner of Income Tax, U.P. v. J.K. Hosiery Factory - (1986) 159 ITR 85 (S.C.). A similar view was taken by Bombay High Court in the case of Decan Sales Corporation and Another v. R. Parthasarthy and Others [1982 ELT 0885 (Bombay)].

13.  In the light of the foregoing discussions, we uphold the decision of the Collectors of Central Excise (Appeals), Bombay and Madras, and dismiss all the three appeals filed by the Revenue.

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Equivalent 1989 (43) ELT 660 (Tribunal)