1999 (7) TMI 136 - AT - Central Excise

Summary

Issues:
Classification of product "Insomar XLM-35" under sub-heading 3208.10 or 3208.40 of the Central Excise Tariff Act.

Analysis:
The appeal filed by the Revenue questioned the classification of the product "Insomar XLM-35" under sub-heading 3208.10 as paint, as claimed by the Revenue, or under sub-heading 3208.40, as claimed by the Respondents and ordered by the Collector (Appeals). The Respondents had previously classified the product under sub-heading 3208.40 but later claimed it under sub-heading 3208.10. The Department issued a show cause notice to reclassify the product, leading to a dispute over the classification based on the nature of the product. The Assistant Collector initially classified the product under sub-heading 3208.10, emphasizing the similarity of raw materials used and the market perception of the product as "wire enamel based on Polyester." However, on appeal, the Collector (Appeals) classified the product under sub-heading 3208.40, highlighting the distinction between enamel and insulating varnish, and the absence of pigments or paints in the product.

The Respondents argued that regardless of trade nomenclature, the product was technically known as insulating varnish, supported by various international trade names. They contended that the product did not contain pigments or colorants, distinguishing it from enamel. They referred to expert certificates and specifications to support their claim. The Respondents also mentioned an export order from Russia where the product was labeled as "Polyester wire enamel," further reinforcing their position. The Department reiterated the classification based on trade nomenclature and market perception, citing a previous Tribunal ruling to support their stance.

Upon review, the Tribunal observed the conflicting arguments regarding the composition of the product, particularly the presence or absence of pigments or colorants. Noting the lack of a chemical report to ascertain the composition definitively, the Tribunal decided to remand the matter to the Assistant Commissioner for further examination. The Tribunal emphasized the need for a detailed analysis of the product's composition to determine its correct classification under the Central Excise Tariff Act, ensuring a fair opportunity for the Respondents to present their case. The Tribunal's decision aimed to resolve the classification dispute based on a thorough understanding of the product's composition, thereby upholding the principles of justice and proper classification under the tariff act.