Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Rotomac Electricals Pvt. Ltd. on 5 September, 2005
Equivalent citations: 2005(189)ELT29(TRI-DEL)
ORDER S.S. Kang, Vice-President 1. The issue regarding the classification of Mica Separator Sheets and Mica Moulding Sheet is referred to a Larger Bench. The Regular Bench while referring the matter to the Larger Bench noticed the decision of the Tribunal in the case of CCE, Aurangabad v. Isovolta (I) Pvt. Ltd. -2001 (129) E.L.T. 642. The Tribunal in that case held that Mica Strips are classifiable under Heading 85.46 of the Tariff. The matter was referred to the Larger Bench to reconsider the above decision of the Tribunal. 2. The respondent in the present case are manufacturing Mica Separator sheets/Mica moulding sheets and Mica Vee Cone and claimed the classification under Heading 6807.00 of the Central Excise Tariff. The adjudicating authority accepted the classification as claimed by the present respondent in respect of Mica separator sheets and Mica moulding sheets. However, Mica articles were classifiable under Heading 8546.00 of the Tariff. Revenue challenged the order passed by the adjudicating authority in respect of classification of Mica separator sheets and Mica moulding sheets. The Commissioner (Appeals) dismissed the appeal filed by the Revenue. Now Revenue is before us. The case of the Revenue is that Mica separator sheets and Mica Moulding sheets are insulator and these are cleared as such and further used by the respondent in their another unit. In the other unit, the respondent as per the affidavit filed before Tribunal are undertaking the following processes. 3. The Mica separator sheets and Mica moulding sheets are first cut to size, layered as required and consolidated through process of compaction by means of pressure and heat so as to eliminate voids in these structures and obtain a Rigid void-free material. 4. The contention of the Revenue is that these are insulating material and are used as insulator and Revenue had relied upon the decision of the Hon'ble Supreme Court in the case of CCE v. Bakelite Hylam Ltd. . The contention of the Revenue is that the Hon'ble Supreme Court held that laminated sheets having insulating properties which are used as electrical insulators are classifiable under Chapter 85 of Central Excise Tariff whereas the case of the Revenue was that these are sheets and cannot be considered as electrical insulator because the sheets are required to be cut in a requisite shape and holes may have to be punched in them before they could be fitted as insulator. The contention of the Revenue was rejected by the Hon'ble Supreme Court. The contention of the Revenue is also Mica Vee Cones are manufactured out of the Mica moulding sheets only by way of moulding of the sheets and these Mica Vee Cones are to be classifiable under Chapter 85 of the Tariff Act. This classification has been accepted by the respondent. 5. The contention of the respondent is that the ratio of the decision of the Hon'ble Supreme Court in the case of Bakelite Hylam Ltd. (supra) is not applicable to the facts of the present case. In the present case, the sheets in question Mica separator sheets/Mica moulding sheets are cleared as such in sheets form and subsequently they are cut to size and consolidated through process of compaction by means of pressure and heat so as to eliminate voids, therefore, the sheets as such cannot be considered as insulator classifiable under Heading 85 of the Tariff. The sheets are only on Mica products which can have various uses, therefore, they are classifiable under Chapter 68 of the Central Excise Tariff. The contention is that for making them as insulator, the important process such as the process of compaction by means of pressure and heat so as to eliminate voids in these structures are to be undertaken. Without this, they cannot be used as insulator. 6. We find that in this case the issue is regarding the classification of Mica separator sheets and Mica moulding sheets and other item which is manufactured by the respondent i.e. Mica Vee Cones which are obtained to moulding of Mica moulding sheets. Revenue classified the same under Tariff 85 and same is accepted by the respondent. 7. The other sheets are Mica Separator sheets and Mica moulding sheets. These sheets are used as such by cutting it to size and thereafter they are layered as per the requirement and heated. We find that Hon'ble Supreme Court in para 29 in the case of Bakelite Hylam Ltd. (supra) rejected the argument of the Revenue where Revenue wants classifiable sheets under Heading 39 of the Tariff. The contention of the revenue was that these are sheets and cleared as such, therefore, it cannot be considered as electrical insulators because these sheets are further cut into required size, shape and holes may have to be punched in them before they could be fitted as insulators. Hon'ble Supreme Court held that mere cutting or punching holes does not amount to manufacture. These sheets having insulating properties and are used as electrical insulator. It cannot be taken out of the electrical insulators only because they have to cut in the requisite shape or required to be punched in that. Further we find that this decision has been followed by the Hon'ble Supreme Court in the case of CCE v. Wood Polymers Ltd. -. The arguments raised before us are similar to the argument raised by the Revenue in the case of Bakelite Hylam Ltd. (supra) and the arguments were rejected by the Hon'ble Supreme Court on the ground that process undertaking on the sheets does not amount to manufacture. In the present case also is the same situation. In view of the above decision of the Hon'ble Supreme Court, we find that Mica separator sheets and Mica moulding sheets are classifiable under Chapter 85 of the Central Excise Tariff. In these circumstances, we find no reason to differ with view taken by the Tribunal in the case of Isovolta (I) Pvt. Ltd. (supra). The question of law referred to the Larger Bench is answered to the above terms. The appeal papers may be placed before the Regular Bench. Order dictated in the open Court. Sd/- Sd/- (P.S. Bajaj) (S.S. Kang) Member (Judicial) Vice-President I agree with the view of the Hon'ble Vice-President. Sd/- (P.S. Bajaj) Member (Judicial) C.N.B. Nair, Member (T)
8. I perceive the issue differently and am of the opinion that in the state in which they are removed from the factory of production, the 'mica separator sheets' and 'mica moulding sheets' would remain classified as 'other articles of mica' under Heading 6807 and not as 'electrical insulators' under Heading 85.46. Now, I may record my reasons.
9. It is not in doubt that mica sheets in question are required to be consolidated so as to eliminate voids in their structure and to obtain a rigid material. The case of the manufacturer-assessee all along was that mica sheets get stabilised only after they are subjected to dynamic heat and pressure cycles. It is the assessees' case that sheets are cut to size, layered as required and consolidated through process of compaction by means of pressure and heat so as to eliminate voids in the structure and obtain rigid void free material. This process is called seasoning. During this process, the material undergoes chemical change through chemical cross-linking that hardens it and makes it capable of moisture resistance. It imparts necessary electrical heat resistance property; Item is also coated with varnish by the vacuum pressure impregnation process and heat cured in high temperature oven. The appellants have emphasised that the stage at which they clear the sheets, mica is loosely held and only after undergoing multiple cycles of heat and pressure, cross-linking and thermo setting take place. It is also stated that di-electric examination would show the sheets to be unsuitable for electrical insulation.
10. Insulators are used for the fixing, supporting or guiding of electric current conductors, while at the same time insulating them electrically from earth other, from earth etc. Their external surface is very smooth in order to prevent the formation of deposit of non-insulating material such as water, salts, desk, oxide and smoke. It is well understood that insulators cannot have voids or gaps as they are to insulate electric current conductors from one another, from earth etc.
11. The evidence about direct use of the mica sheets as insulators or their sale as insulators is completely lacking. The sheets in question are cleared to another unit and they are converted there into insulators through several processes, including repeated cycles of heat and compression as noted in para 9. There is no evidence that the product is known to the consumers or in the commercial community as insulators. They do not have, in their present condition, distinctive name, character or use as electrical insulators. Electrical insulators have to satisfy the norms fixed for electrical grade insulators. The contention of the assessee is that these sheets would fail dielectric test. They are mica sheets awaiting to be converted into or manufactured into insulators.
12. Classification as electric insulators is being canvassed by Revenue based on the ratio of the judgment of the Apex Court the case of C.C.E., Hyderabad v. Bakelite Hylam Ltd. - . It is being contended that since the Apex 'Court had ordered the classification of laminated sheets having insulating properties as classifiable under Chapter 85, the mica sheets having insulating properties would also be so classifiable. I am afraid, no such broad rule of classification is to be read into the aforesaid judgment so as to treat all insulating materials as electrical insulators. That judgment was rendered upon a finding that after cutting to size and making holes for fixing, the sheets in question would be usable as insulators. No process of conversion of the laminated sheets into electrical insulators was required to be done. The difference was only about form. The Court observed that laminated sheet in question is a hard rigid sheet which has impregnable resistance and is unaffected by heat and moisture. It was also noticed that laminated sheet is used as electrical insulators. As against this, in the present case, the sheets have voids, they do not have properties required to function as electrical insulators. They reach homogeneity, hardness and other electrical grade insulator properties only after multi stage heating and compression. Therefore, analogy of laminated sheet is not appropriate to the mica sheets.