Commissioner of Customs Vs. Elcham - Court Judgment

Excerpt:
1. a common issue is involved in all these appeals and they are therefore taken up for disposal together. the lower appellate authority has assessed the goods which have been invoiced with description "cable sealing system (heat shrinkage sleeves - insulating material)". the cce (a) has held the goods to be assessable under heading 8547.90. the revenue however, seeks the goods to be assessable under heading 3926.90. the lower appellate authority in para 2 of his order has held as under: "2. the description of the imported goods in the invoices is as follows: "cable sealing system (heat shrinkage sleeves - insulating material)". the invoices also give the quantity and the fact that these are supplied with sealant tapes. as for illustration i give below one such entry "tsf - 5 with sealant tape xaga 250 -122/38-965 a210". similarly, the invoices describe other varieties with corresponding description of the sealant tapes. in the impugned order the assistant collector has not given the reasons based on which he has found that the goods are not entires cable sealing system. the order also does not explain what further manufacturing process is required to be undertaken on these goods, nor the reasons as to why the assistant collector has found the goods as not identifiable parts of heading 8547.90. on the other hand, the imported goods are cut to the required size folded at the ends along the length of the cut material and then placed around the material to be insulated. when heated, they shrink and with the help of the sealant they are sealed. they then act as insulation material. insulation fittings for electrical machines, appliances or equipment, being fittings wholly of insulation material apart from any minor components of metal are classifiable under heading 85.47 of the customs tariff. the invoices describe the goods as insulating material. the impugned order has not disputed the same. similarly, the order also does not say that the imported goods are not made wholly of insulating material to consider them as falling outside the entry under heading 85.47. the appellant has produced a copy of order no. 676/91-c, dated 27-8-1991 passed by special bench c. ceg at, new delhi in the case of intech tapes (p) ltd., v. collector of central excise, bangalore wherein the tribunal relying upon an earlier decision in the case of chetna polycoats (p) ltd. v. collector of central excise, reported in 1988 (37) e.l.t. 253 (tribunal) have held that the insulation tapes manufactured from polyester film and pvc both fall under heading 8546.00. the decision of the tribunal in the case of chetna polycoats (p) ltd., referred supra has been affirmed by the supreme court as seen from court room highlights reported in 1991 (53) e.l.t. a28. in the said order, the tribunal have also referred to board's clarification as found in tariff advice 123/81, dated 23-11-1981 wherein the board have clarified that articles made from materials which have electrical insulating properties (examples: mineral fibre, cellulose, glass fibre, certain plastics, glass, porcelain etc.) can be appropriately described as insulators. as earlier mentioned, there is no finding in the impugned order that the imported goods are not made from wholly insulating material, nor that they are not made of materials having electrical insulation properties. on the other hand, the invoices describe them as insulating materials. the appellant has also produced a copy of an ex-bond bill of entry no. 002629 dated 11-1-1988 evidencing assessment of such goods under heading 8547.90 by the superintendent, customs, hyderabad. i, therefore uphold the contention of the appellant that the imported goods merit classification under chapter sub-heading 8547.90 of the customs tariff and set aside the classification under heading 3926.90 ibid." the order-in-appeal of the collector of customs (appeals) is not correct in so far as classification of the impugned goods under tariff sub-heading 8547.90 of customs tariff act, 1975, is concerned. in the bill of entry, the impugned goods are described as "insulating material - cable sealing system heat shrinkable sleeves". the goods in question are nothing but "insulating material" as obvious from suppliers remarks at the end of packing list annexure-e and also from the invoice of the supplier herewith produced as annexure-f. the impugned goods are neither electrical insulators (heading 85.46) nor insulating fittings of heading 85.47. 2. in view of the above, the order-in-appeal holding classification of the goods under sub-heading 8547.90 is not well founded and requires to be set aside. it is prayed that the tribunal may remand the matter to the assistant collector of customs, air cargo complex, bangalore, to redetermine the correct classification on merits after drawing samples and getting it analysed for composition.3. shri v. thyagaraj learned sdr for the department reiterates the grounds of appeal.5. we have perused the records and gone through the appeal grounds. we observe that tariff heading 8547 covers a limited range of electrical insulators and the same have to be such as are covered by description under tariff heading 8547. the description under this heading reads as under : "insulating fittings for electrical machines, appliances or equipment, being fittings wholly of insulating material apart from any minor components of metal (for example threaded sockets) incorporated during moulding solely for purposes of assembly, other than insulators of heading no. 85.46, electrical conduit tubing and joint therefore, of base metal lined with insulating material." this clearly goes to show that insulators have to be such as are used on equipments, electrical machines and appliances and it excludes insulators of tariff heading 85.46, electrical conduits, tubing and joint therefore of base metal lined with insulating material are also covered by this heading. the goods in question do not appear to be answering to the category of goods above. the use of the item as set out in the order of the cce(a) is to provide insulating sleeves at the necessary points in the cables and this use cannot be taken to be as used for electrical machines, appliances or equipment. the scope of this heading 8547 set out under hsn does not lend to the interpretation as placed by the lower appellate authority on the scope of tariff heading in the context of the use of the material in question. as against this, the description of the item under 8546 appears to be more broad and the tribunal also in the case of tapes in the judgment cited in the lower appellate authority's order portion cited supra held the same to be falling under this chapter heading. in our view the issue has not been examined in the correct perspective and in depth and the matter will have to be re-examined in the context of tariff headings 8546,8547 vis-a-vis chapter 39 after taking into consideration the scope of tariff heading as spelt out under hsn. we, therefore in the circumstances set aside the impugned order and remand the matter for de novo consideration and decision in the light of our observations above in accordance with law. the appeal is thus allowed by remand.

Judgment:
1. A common issue is involved in all these appeals and they are therefore taken up for disposal together. The lower appellate authority has assessed the goods which have been invoiced with description "Cable sealing system (heat shrinkage sleeves - insulating material)". The CCE (A) has held the goods to be assessable under Heading 8547.90. The Revenue however, seeks the goods to be assessable under Heading 3926.90. The lower appellate authority in para 2 of his order has held as under: "2. The description of the imported goods in the invoices is as follows: "Cable sealing system (heat shrinkage sleeves - insulating material)". The invoices also give the quantity and the fact that these are supplied with sealant tapes. As for illustration I give below one such entry "TSF - 5 WITH SEALANT TAPE XAGA 250 -122/38-965 A210". Similarly, the Invoices describe other varieties with corresponding description of the sealant tapes. In the impugned order the Assistant Collector has not given the reasons based on which he has found that the goods are not entires cable sealing system. The order also does not explain what further manufacturing process is required to be undertaken on these goods, nor the reasons as to why the Assistant Collector has found the goods as not identifiable parts of Heading 8547.90. On the other hand, the imported goods are cut to the required size folded at the ends along the length of the cut material and then placed around the material to be insulated. When heated, they shrink and with the help of the sealant they are sealed. They then act as insulation material.

Insulation fittings for electrical machines, appliances or equipment, being fittings wholly of insulation material apart from any minor components of metal are classifiable under Heading 85.47 of the Customs Tariff. The invoices describe the goods as insulating material. The impugned order has not disputed the same. Similarly, the order also does not say that the imported goods are not made wholly of insulating material to consider them as falling outside the entry under Heading 85.47. The appellant has produced a copy of Order No. 676/91-C, dated 27-8-1991 passed by Special Bench C. CEG AT, New Delhi in the case of INTECH Tapes (P) Ltd., v. Collector of Central Excise, Bangalore wherein the Tribunal relying upon an earlier decision in the case of Chetna Polycoats (P) Ltd. v. Collector of Central Excise, reported in 1988 (37) E.L.T. 253 (Tribunal) have held that the insulation tapes manufactured from polyester film and PVC both fall under Heading 8546.00. The decision of the Tribunal in the case of Chetna Polycoats (P) Ltd., referred supra has been affirmed by the Supreme Court as seen from Court room Highlights reported in 1991 (53) E.L.T. A28. In the said Order, the Tribunal have also referred to Board's clarification as found in Tariff Advice 123/81, dated 23-11-1981 wherein the Board have clarified that articles made from materials which have electrical insulating properties (examples: mineral fibre, cellulose, glass fibre, certain plastics, glass, porcelain etc.) can be appropriately described as insulators. As earlier mentioned, there is no finding in the impugned order that the imported goods are not made from wholly insulating material, nor that they are not made of materials having electrical insulation properties. On the other hand, the invoices describe them as insulating materials. The appellant has also produced a copy of an ex-bond Bill of Entry No. 002629 dated 11-1-1988 evidencing assessment of such goods under Heading 8547.90 by the Superintendent, Customs, Hyderabad. I, therefore uphold the contention of the appellant that the imported goods merit classification under chapter sub-heading 8547.90 of the Customs Tariff and set aside the classification under Heading 3926.90 ibid." The Order-in-Appeal of the Collector of Customs (Appeals) is not correct in so far as classification of the impugned goods under tariff sub-heading 8547.90 of Customs Tariff Act, 1975, is concerned. In the Bill of Entry, the impugned goods are described as "Insulating Material - Cable Sealing System Heat Shrinkable Sleeves". The goods in question are nothing but "Insulating Material" as obvious from Suppliers remarks at the end of Packing List Annexure-E and also from the Invoice of the Supplier herewith produced as Annexure-F. The impugned goods are neither electrical insulators (Heading 85.46) nor insulating fittings of Heading 85.47.

2. In view of the above, the Order-in-Appeal holding classification of the goods under sub-heading 8547.90 is not well founded and requires to be set aside. It is prayed that the Tribunal may remand the matter to the Assistant Collector of Customs, Air Cargo Complex, Bangalore, to redetermine the correct classification on merits after drawing samples and getting it analysed for composition.

3. Shri V. Thyagaraj learned SDR for the department reiterates the grounds of appeal.

5. We have perused the records and gone through the appeal grounds. We observe that Tariff Heading 8547 covers a limited range of electrical insulators and the same have to be such as are covered by description under Tariff Heading 8547. The description under this heading reads as under : "Insulating fittings for electrical machines, appliances or equipment, being fittings wholly of insulating material apart from any minor components of metal (for example threaded sockets) incorporated during moulding solely for purposes of assembly, other than insulators of Heading No. 85.46, electrical conduit tubing and joint therefore, of base metal lined with insulating material." This clearly goes to show that insulators have to be such as are used on equipments, electrical machines and appliances and it excludes insulators of Tariff Heading 85.46, electrical conduits, tubing and joint therefore of base metal lined with insulating material are also covered by this heading. The goods in question do not appear to be answering to the category of goods above. The use of the item as set out in the Order of the CCE(A) is to provide insulating sleeves at the necessary points in the cables and this use cannot be taken to be as used for electrical machines, appliances or equipment. The scope of this Heading 8547 set out under HSN does not lend to the interpretation as placed by the lower appellate authority on the scope of tariff heading in the context of the use of the material in question. As against this, the description of the item under 8546 appears to be more broad and the Tribunal also in the case of tapes in the judgment cited in the lower appellate authority's order portion cited supra held the same to be falling under this chapter heading. In our view the issue has not been examined in the correct perspective and in depth and the matter will have to be re-examined in the context of Tariff Headings 8546,8547 vis-a-vis Chapter 39 after taking into consideration the scope of tariff heading as spelt out under HSN. We, therefore in the circumstances set aside the impugned order and remand the matter for de novo consideration and decision in the light of our observations above in accordance with law. The appeal is thus allowed by remand.