1998 (9) TMI 594 - AT - Central Excise

Issues Involved:
1. Classification of decorative laminated sheets manufactured by the respondents.

Issue-wise Detailed Analysis:

1. Classification of Decorative Laminated Sheets:

The primary issue in this departmental appeal is the classification of decorative laminated sheets manufactured by the respondents. The Assistant Collector classified the item under Chapter sub-Heading 3920.31, while the respondents proposed classification under 8546.00. The Collector (Appeals) set aside the Assistant Collector's order, holding that the goods were classifiable as electric insulators under Heading 8546.00. Dissatisfied with this decision, the Department appealed.

Department's Argument:
The Department argued that the product, described as "paper-based plastic laminated sheets - electrical insulator," should be classified under sub-heading 3920.31 as plastic laminated sheets, not as electrical insulators. The Department contended that insulators are used to insulate conductors from earth or other conductors and must offer high resistance to the passage of electric current. They emphasized that the product required further fabrication before use, indicating it was not a fully finished insulator. The Department referenced the Apex Court judgment in Dunlop India Limited and Madras Rubber Factory Ltd. v. Collector of Central Excise, which emphasized the test of nomenclature in commercial parlance for classification under the CETA. They also cited the Tribunal decision in Nevichem Synthetic Industries, Bombay v. Collector of Central Excise, Bombay, and Meghdoot Laminart Pvt. Ltd. v. Collector of Central Excise to support their argument for classification under sub-heading 3920.31.

Respondents' Argument:
The respondents argued that the impugned order correctly classified the product as electrical insulators under Heading 8546.00. They relied on the Tribunal decision in Collector of Central Excise v. Metrowood Engineering Works, which held that industrial laminates with insulating properties are classifiable under Heading 8546.00. The Tribunal had also noted that minor fabrication like punching or drilling holes on the sheets would not alter their character as insulators. The respondents emphasized that Chapter Note 2(n) to Chapter 39 excluded electrical insulators from the said chapter.

Tribunal's Decision:
The Tribunal considered the submissions from both sides. They found that the decision in Collector of Central Excise v. Metrowood Engineering Works covered the issue. The Tribunal referred to authoritative technical literature, noting that an article with electrically insulating properties can be described as an insulator, even if it is not cut to shape and size. They also cited the Apex Court decision in Atul Glass Industries and Others v. Collector of Central Excise and Others, which associated the identity of an article with its primary function. The Tribunal concluded that the laminates had electrical insulating properties and attained the essential character of insulators, making them classifiable under Heading 8546.00.

Vice President's Dissenting Opinion:
The Vice President disagreed with the majority view, arguing that the product should be classified under Chapter 39.20 as plastic laminated sheets. He emphasized that Chapter 85 covers articles identifiable as electrical machinery and equipment, while Chapter 39 deals with plastics and articles thereof. He noted that the product was described as "paper laminated plastic sheets" and required further processing before use. He argued that the product could only be considered as material for manufacturing insulators, not as insulators themselves. He recommended referring the matter to a Larger Bench due to the conflicting views.

Third Member's Decision:
The Third Member reviewed the difference of opinion and noted the Supreme Court decisions in Collector of Central Excise v. Bakelite Hylam Ltd. and Collector of Central Excise v. Wood Polymers Ltd. These decisions held that industrial laminated sheets used in electrical insulation are covered by sub-heading 8546.00 and excluded from Chapter 39. The Third Member agreed with the view expressed by the Member (Judicial) and recommended dismissing the Department's appeal.

Final Decision:
In view of the majority opinion, the appeal was dismissed, upholding the classification of the product under Heading 8546.00 as electrical insulators.

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