2000 (9) TMI 174 - AT - Central Excise

Classification of Mica Paper as Electrical Insulators: Tribunal Decision

The Tribunal held that Nomex Mica Paper and Mica Paper based products should be classified under sub-heading No. 8546.00 of the Central Excise Tariff as ... Paper - Precedent Issues Involved:1. Classification of Nomex Mica Paper and Mica Paper based products.2. Applicability of exemption under Notification No. 59/90-C.E.3. Correct classification under sub-heading No. 8546.00.4. Implications of the manufacturing process and post-manufacture treatments.5. Interpretation of composite products under the Central Excise Tariff.Detailed Analysis:1. Classification of Nomex Mica Paper and Mica Paper based products:The primary issue is the classification of Nomex Mica Paper and Mica Paper based products. The assessee classified these products under sub-heading No. 6807.00 of the Central Excise Tariff (CET), which covers articles of Mica, and claimed exemption under Notification No. 59/90-C.E. The Revenue proposed classification under sub-heading No. 8546.00, which pertains to electrical insulators of any material. The Tribunal held that these products are composite materials designed for insulation purposes and not merely articles of Mica. Therefore, they could not be classified under Heading No. 68.07.2. Applicability of exemption under Notification No. 59/90-C.E.:The assessee claimed the benefit of exemption under Notification No. 59/90-C.E., which applies to articles of Mica under sub-heading No. 6807.00. However, the Tribunal found that since the products are composite materials and not solely articles of Mica, they do not qualify for this exemption. The correct classification under sub-heading No. 8546.00 does not allow for the claimed exemption.3. Correct classification under sub-heading No. 8546.00:The Tribunal concluded that the products should be classified under sub-heading No. 8546.00, which covers electrical insulators of any material. This conclusion was based on the fact that the products have insulating properties and are used as electrical insulators, aligning with the Supreme Court's decision in the case of Bakelite Hylam Ltd., Hyderabad v. Collector of Central Excise, Hyderabad. The products are finished goods supplied to users like BHEL and act as insulators when wound on electrical cables.4. Implications of the manufacturing process and post-manufacture treatments:The manufacturing process involved cutting Mica Paper and insulating paper (Nomex Aramid), applying adhesives, natural drying, bonding, and pressing to create a composite product. Post-manufacture treatments like heating, pressing, and curing were for better adherence and attaining required electrical properties. The Tribunal noted that these processes do not alter the fundamental character of the products as insulators.5. Interpretation of composite products under the Central Excise Tariff:The Tribunal emphasized that composite products, which include materials like Mica Paper combined with other materials such as adhesives, cannot be classified under Heading No. 68.07. The Explanatory Notes to the Harmonised Commodity Description and Coding System (HSN) and relevant case law support the classification of such composite products under Heading No. 85.46. The Tribunal referred to several decisions, including those in the cases of Chetna Poly Coats Pvt. Ltd. and Kirloskar Electric Co. Ltd., which reinforced that products with insulating properties should be classified as electrical insulators.Conclusion:The Tribunal set aside the order of the Collector of Central Excise (Appeals) and restored the order-in-original passed by the Asstt. Collector of Central Excise, Nasik, classifying the products under sub-heading No. 8546.00. The demands were restricted to the normal period of limitation. The appeal filed by the Revenue was allowed accordingly.