2009 (5) TMI 335 - AT - Central Excise

Insulating paper - assessee is seeking classification of the impugned goods as insulating paper falling under Sub-Heading No. 4823.90, whereas the Department is seeking to classify the same as electrical insulators falling under Heading No. 85.46 of Central Excise Tariff Act, 1985. - It has been clarified on behalf of the appellant-assessee that the impugned paper in question is indeed used for insulation purposes and for making insulators. In our view, a distinction has to be made between insulating material and insulators. Just because special papers in question have insulating properties and are capable of being used as insulating material, these cannot be classified as insulators. We also find that only insulators are excluded from being classified under Chapter 48 as per the Explanatory Notes to the HSN but not insulating material. Moreover, the cited Notification No. 64/88-C.E., dated 1-3-88 and Notification No. 204/88-C.E., dated 13-12-88 - both issued by the Government of India earlier, have classified such paper under Chapter 48. As pointed out by the learned Senior Counsel, the subsequent 8-digit tariff also has a special entry under Sub-Heading 4810 39 10 for such insulating paper under Chapter 48. - Hence, we have no doubt in our mind that the impugned insulating paper of electrical grade is a kind of special paper which merits classification under Chapter 48, as claimed by the appellant-assessee and not as insulator under Chapter 85.

Summary

Issues: Classification of goods as insulating paper under Sub-Heading No. 4823.90 vs. electrical insulators under Heading No. 85.46

In this case, the appellant-assessee sought classification of the goods as insulating paper under Sub-Heading No. 4823.90, while the Department argued for classification as electrical insulators under Heading No. 85.46 of the Central Excise Tariff Act, 1985. The appellant contended that the goods were special papers meeting Indian Standards for electrical purposes, historically classified under Chapter 48. They emphasized the use of deionized water in manufacturing for higher insulating properties and commercial recognition as insulating paper. On the other hand, the Department asserted the goods' insulation use, citing legal precedents and decisions classifying similar goods under Chapter 85 as insulators.

Upon review, the Tribunal found the impugned goods to be a type of special paper distinct from paper-based products like insulators. They differentiated the case at hand from previous decisions involving paper-based insulating products, emphasizing the unique nature of the goods in question. The Tribunal noted that the relevant Indian Standard Specification described the goods as special paper, influencing their classification. They highlighted the distinction between insulating material and insulators, noting that while the goods could be used for insulation, they did not qualify as insulators under Chapter 85. The Tribunal referenced past government notifications and tariff entries classifying similar goods under Chapter 48, supporting the appellant's position.

Ultimately, the Tribunal concluded that the impugned electrical grade insulating paper qualified as a special paper under Chapter 48, aligning with the appellant's classification argument. Consequently, the Tribunal set aside the impugned Order, allowing the appellant's appeal and granting them the associated benefits. As a result of classifying the goods under Chapter 48, the Department's appeal challenging the relief granted by the Appellate Authority was dismissed. The operative part of the Order was pronounced on 21-5-2009, finalizing the decision in favor of the appellant-assessee.