2000 (7) TMI 326 - AT - Central Excise

Issues Involved:
1. Classification of the product as "screw driver special with neon bulb."
2. Whether the product should be classified under sub-heading No. 8205.00 (hand tools) or sub-heading No. 8543.00 (electrical apparatus having individual functions) of the Central Excise Tariff.

Issue-wise Detailed Analysis:

1. Classification of the product as "screw driver special with neon bulb":

The respondents, M/s. Lohotwo Tools (P) Ltd., described their product as a "screw driver special with neon bulb" and sought classification under sub-heading No. 8205.00 of the Central Excise Tariff as hand tools. The Department contended that the product should be classified under sub-heading No. 8543.00 as electrical apparatus having individual functions. The Collector of Central Excise (Appeals), Pune, ruled that the product, being an electric line tester in the form of a screw driver, was correctly classifiable under sub-heading No. 8205.00 as a hand tool and not as an electrical machine or appliance under Heading No. 85.43, sub-heading No. 8543.00.

2. Whether the product should be classified under sub-heading No. 8205.00 (hand tools) or sub-heading No. 8543.00 (electrical apparatus having individual functions):

The Revenue argued that the product was an electrically operated apparatus used to determine the presence of electric current, thus fitting the classification under sub-heading No. 8543.00. In contrast, the respondents maintained that the line tester was commonly treated as a tool, not a machine or appliance, and was not used in the production or processing of any goods. They also noted that their previous classification lists had been approved without issue.

The Tribunal considered whether the product, referred to as a "screw driver special with neon bulb" and popularly known as an electrical line tester, could be classified as an electrical apparatus. The product could function both as a normal screw driver and an electric line tester, used by electricians and common users to test circuit continuity and electrical live wires.

Sub-heading No. 8543.00 covers electrical machines and apparatus with individual functions not specified elsewhere in Chapter 85. The Tribunal examined the definitions and interpretations of "apparatus" and "electrical goods" from various sources, including the McGraw Hill Dictionary of Scientific and Technical Terms, Words and Phrases Permanent Edition, and relevant case law. They concluded that an apparatus is a compound instrument designed for a specific function, and electrical goods are those that cannot be used without the application of electric energy.

The Tribunal found that the line tester only indicates the presence or absence of electric current and does not have a purpose related to electricity beyond this indication. The screw driver works manually without the aid of electrical power, and thus, the product does not fit the definition of electrical apparatus. The Tribunal referenced several judicial decisions to support their conclusion that the product should not be classified as electrical goods.

Furthermore, the Tribunal noted that in trade parlance, the line tester is categorized as a hand tool. The respondents provided catalogues from various manufacturers showing that screw drivers with electricity testers are considered hand tools. The Tribunal also considered the Explanatory Notes to Heading No. 85.43, which state that electrical appliances must consist of an assembly of electrical goods and be usable only with electric energy. The goods in question did not meet these criteria.

Finally, the Tribunal observed that Heading No. 82.05 of the HSN specifically mentions screw drivers, indicating that the product should be classified under this heading. The Tribunal concluded that the correct classification was under sub-heading No. 8205.00 as hand tools, supporting the decision of the Collector of Central Excise (Appeals), Pune, and rejected the Revenue's appeal.

Conclusion: The appeal filed by the Revenue was rejected, and the product was correctly classified under sub-heading No. 8205.00 as hand tools.

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