1993 (12) TMI 131 - AT - Central Excise

Summary

Issues Involved:
1. Classification of soft ferrites.
2. Applicability of Note 2(a) of Section XVI.
3. Relevance of HSN Explanatory Notes.
4. Technical literature and expert evidence.

Issue-wise Detailed Analysis:

1. Classification of Soft Ferrites:
The primary issue was whether soft ferrites should be classified under Heading 8505.00 as parts of electromagnetics or under Heading 8529.00 as parts suitable for use solely or principally with apparatus falling under Headings 85.25 to 85.28. The Collector (Appeals) held that soft ferrites are more appropriately classifiable as parts suitable for use with apparatus of Heading No. 85.25 and 85.29, rather than parts of electromagnetics.

2. Applicability of Note 2(a) of Section XVI:
The Revenue argued that the items in question should be classified under sub-heading 8505.00 based on Note 2(a) of Section XVI, which pertains to the classification of parts of machinery. Note 2(a) states that parts which are goods included in any of the headings of Chapter 84 or Chapter 85 are to be classified in their respective headings. The Assistant Collector had relied on this note to classify the items as parts of electromagnetics.

3. Relevance of HSN Explanatory Notes:
The Revenue also relied on the HSN Explanatory Notes under Heading 8505, which describe electromagnetics as consisting essentially of a coil or wire wound around a core of soft ferrite. The passing of current in the coil confers magnetic property in the coil, which can be used for attraction or repulsion. The Assistant Collector had used these notes to support the classification under Heading 8505.00.

4. Technical Literature and Expert Evidence:
The assessee provided substantial technical literature and certificates from experts to support their claim that the soft ferrites are not used for attraction or repulsion and hence are not electromagnetics. The literature indicated that soft ferrites are used in high-frequency applications such as TV, computer, and defense equipment, and are not designed to function as electromagnets. The certificates from experts like Shri N.R. Nair and companies such as Philips India and JCT Electronics Ltd. confirmed that the soft ferrites are used in TV deflection components and high-frequency transformers, not as parts of electromagnetics.

Conclusion:
After considering the submissions from both sides, the Tribunal concluded that the components in question are not parts of electromagnetics as they do not possess the capability to attract or repulse, which is a defining property of electromagnets. The Tribunal upheld the classification under Tariff sub-heading 8529.00 as more appropriate, rejecting the Revenue's reliance on Note 2(a) of Section XVI and the HSN Explanatory Notes. The appeal was thus rejected, affirming the decision of the Collector (Appeals).