Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Eastern Chemical And Industries on 12 October, 1990
Equivalent citations: 1991(52)ELT290(TRI-DEL)
ORDER V. Rajamanickam, Member (T)
1. The appeals have arisen on the classification of identical products under the erstwhile tariff and the new tariff of Central Excise. Hence both these appeals were heard together.
2. In the appeal filed by the Revenue against the order of the Collector (Appeals) in No. 311/Pat/88 dated 26-10-1988 is dealt with in Appeal No. E/929/89-B and Order-in-Appeal No. 327/Pat/88, dated 13-12-1988 is dealt with the Appeal No. E/1596/89-B and both the appeals are disposed off by a common order.
3. The Respondents M/s. Eastern Chemical & Industries, Tupudana Industrial Area, Ranchi, filed a classification list showing 'PVC Insulated Galvanised Tinned Steel Wire' with Neoprene Rubber Plug for use in detonator component, under Tariff Item 68 of the erstwhile tariff and Heading 36.01 and 36.03 of the Central Excise Tariff 1985 which was classified by the Assistant Collector under Tariff Item 33-B(ii) of the Central Excise Tariff. In appeal before the Collector of Central Excise (Appeals), the Collector has ordered classification under T.I. 68 of the erstwhile tariff and Heading 36.03 of the Tariff 1985. Revenue has come in appeal maintaining that the article in question is classifiable under T.I. 33B of the erstwhile tariff and Chapter 85.44 now under the Central Excise Tariff 1985.
4. The appellants submit that the PVC. insulated galvanised/tin wire is covered under T.I. 33B, as it covers insulated wires and cables of copper aluminium or other metals and alloys and all others which fully conforms to the tariff description under T.I. 33B - Electric wires and cables. That the tariff description does not prescribe any specification and the use of the term all sorts in the tariff conveys the scope of the term to cover all types of electric wires. Similarly in respect of the classification under the Central Excise Tariff 1985, the Heading 85.44 covers insulated wires, cables and insulated electric conductors - and what is important for a wire being classified as electric wire, is its capability of being used for passing electric current. That for assessment under Heading No. 36.03, the heading covers safety fuses and detonating fuses etc. etc. and not electric wires and cables. Eventually, therefore, insulated galvanised/tinned steel wires are not covered under Heading 36.03 and get classified under sub-heading 8544.00.
5 The respondents have filed cross-objections, stating that a product to be covered under T.I. 33-B, its conductor must be either copper or aluminium. The West Bengal Collectorate had issued a circular for assessing PVC insulated steel wires of 24 SWG under T.I. 68, that the product has no commercial or general application and is for the exclusive use by an explosive factory for using it as a component of detonator and since detonator is to be classified under Chapter 3601.00/3603.00, it has to be classified under that chapter heading.
6. Arguing for the department, Shri M.S. Sawhney, Ld. SDR has reiterated the contentions put forth in the appeal for classification under Chapter Heading 85.44, he draws attention to the HSN Explanatory Notes: "Wire, cable, etc. remain classified in this heading if cut to length or fitted with connectors (e.g. plugs, sockets, lugs, jacks, sleeves or terminals) at one or both ends. The Heading also includes wire, etc. of the types described above made up in sets (e.g. multiple cables for connecting motor vehicle sparking plugs to the distributor)" and also the explanation under the Heading 85.44 - "Provided they are insulated this heading covers electric wire, cable and other conductors (e.g., braids, strip, bars) used as conductors in electrical machinery, apparatus or installations. Subject to this condition, the heading includes wiring for interior work or for exterior use(e.g.underground, submarine or aerial wires or cables.) These goods very from very fine insulated wire to thick cables or more complex types".
That it exactly covers the description as cited above, and Heading 36.03 is not applicable in view of the fact that the Heading as per the HSN excludes articles not containing any explosive or inflammable charge (small caps, tubes, electrical apparatus, etc.) which are classified according to their nature under their respective headings. The following case laws were cited :-
(i) 1984 (18) ELT 527 (Tribunal) - M/s. Indian Tool Manufacturers, Bombay v. C.C.E., Poone.
"Indian Standard Institute specifications - Not significant and decisions of distinct nature and character of goods in classification matters".
(ii) 1982 E.L.T. 467 M/s. Indian Aluminium Cables Ltd. v. Union of India and Others.
"Indian Standards Institution - Significance - The ISI specifications are relevant only for the quality of goods but do not change the name of the goods".
7. Shri Sridharan, Ld. Advocate for the respondent stressed the plea that the Assistant Collector was bound by the Tariff advice issued by the Collectorate and the product PVC quoted steel wire 24 SWG was as per the list circulated for assessment under T.I. 68 by the Collector of Central Excise Patna, which should have been followed. He has cited the CEGAT's decision in Rayalaseema Cable Corporation 1983 ELT 2358 (CEGAT) on the binding effect of Tariff advice on the department, and 1986 (25) ELT 473 (SC) - M/s. Anil Glass Industries Ltd. And Others v. Collr. of Central Excise and Others - goods to be classified as they are known by those who deal or use them.
He further emphasised that Heading 36.03 of the Central Excise was applicable as it will fall under the Item "Igniter" which has been explained in the HSN:
"An electric fuse head consists of two insulated conductors to the ends of which a conducting metal filament is soldered to form an electrically resistant bridge; this filament is embedded in an igniter bead. It is used to ignite a powder charge or to initiate a primary explosive".
and solely the wire is used with the detonator and should fall under the Heading 36.03, that Heading 85.44 will not apply as that Heading envisages electric conductor having a continuous flow of current, and the product under reference is not used for the purpose of an electric wire normally and its conductivity is very low.
8. The submissions have been considered. The sample of the product has been tested and has been found to be single cored tinned steel wire sheathed with plastic polyvinyle chloride tape. The Collector (Appeals) has gone by the fact that the Board's circular clarified the classification of such products under T.I. 68 and since conductors should be of metal either aluminium or copper, the product will be classifiable under T.I. 68 and Heading 36.03 is preferable to Heading 85.44 as Heading 3603.00 is very specific for safety fuses, detonatory fuses, etc. and since the product is a component for detonators, its appropriate classification will be under 3603.00.
In respect of T.I. 33B, the same reads as follows:-
"Electric wires and cables, all sorts not otherwise Rate of Duty specified.
(i) Insulated wires and cables or copper, aluminium or Twenty per cent other metals and alloys, whether sheathed or unsheathed, ad-valorem.
the conductor of any core of which, note being one specially designed as a pilot core has a sectional area not exceeding 1.5 square millimetres in the case of copper, or not exceeding 2.5 square millimetres in the case of aluminium or of not more than equivalent conductivity as of copper in the case of other metals.
(ii) All others. Ten per cent ad-valorem Explanation : The expression "Electric wires and cables, all sorts used in this item shall not include square or rectangular conductors, whether insulated or not".
As seen from the above, the tariff heading includes insulated wires and cables of copper, aluminium or other metals or alloys etc. Since the Electric wires and cables is for all sorts not otherwise specified any insulated or sheathed wire will fall under T.I. 33B. The usage has not been specified in the Tariff Item 68 has to be resorted to only when there is no other tariff item applicable. It is a residuary item. The Supreme Court's decision in M/s.Bharat Forge and Press Industries (P) Ltd. v. Collr. of Central Excise - 1990 (45) ELT 525 (SC): "Classification of goods under residuary Entry - Criteria - Under a residuary entry only such goods are covered which cannot be brought under the various specific entries in the tariff. In other words unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item" - para-3 is relevant. Therefore only where there is no specific item that resort should be had to a residuary item. The classification of the product under T.I. 33B is appropriate.
9. As for the classification under Heading 85.44 the description is as:
"Insulated (including enamelled or anodised) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors: optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors".
The product is an insulated wire, and the Heading is broad enough to include those fitted with connectors also under its scope. The HSN notes rejied upon by the Revenue is relevant (page 1403) that the conductor may be a single strand or multiple, and may be of one metal or several metals and the purpose of the covering is to prevent leakage of electric current from the conductor...The wires cut to size and fitted with connectors are also includible under this heading. Therefore, this being the most appropriate heading, the plea of the respondent that Heading 36.03 will apply will not sustain. The safety fuses are said to be devices designed to transmit a flame towards an ordinary igniter or detonator as per the HSN. The respondents have not provided any proof that the fuse is the same as the wire. They state it is a component of a detonator after adding some more operations and rubber plugs, making it into special shape. As it is, being an insulated wire it is not a component of "detonator". The plea that the conductivity of current is very low does not appear to be a determining factor in the assessment of wire meant as conductors. Therefore, the Heading 85.44 being more specific and covers all types of insulated wires is appropriate. As such therefore, the appeal is maintainable and is allowed. The Cross Objections filed by the respondents are also disposed of.
S.K. Bhatnagar, Member (T)
10. With due respects to Hon'ble Member (T) Smt. Varalakshmi Rajamanickam and Hon'ble Member(Judicial) Shri. D.M. Vasavada my views and orders in the matter are as follows :-
11. I find that the contentions of the learned counsel have strong force.
12. The item in question is PVC insulated galvanised/tinned wires used in detonators. The learned counsel while explaining the process of manufacture of detonators drew our attention to the pamphlet issued by IEL Limited Explosives Division and citing it stated that "the main detonating charge (ASA and PETN) is duly packed in aluminium or copper tubes. Two tinned iron wire leads are soldered to the fuse head of electric detonators while plain detonators have an open end where the safety fuse can be inserted before use in the field". He also drew our attention to the photographic description of long delay and short delay detonators of various colours to show how the insulated wires are used and contended that they constitute a part of electric detonators. It is noteworthy that the fact that the wires in question are used in detonators has not been contradicted or controverted although it is in dispute whether they could be considered as parts of electric detonators. According to the department they are insulated conductors classifiable under Tariff Item 33(B) of the old tariff and 85.44 of the new tariff. Whereas according to the respondent they were classifiable under Tariff Item 68 of the old Tariff and TI 68.03 of the new tariff.
13. With reference to this context let us examine the position first with reference to the old tariff.
14. Under the old tariff the competing entries being 33(B) and TI 68 we find as follows :- That 33(B) covers electric wires and cables, all sorts not otherwise specified. The emphasis obviously being on the use of wires and cables as electric conductors. This is apparent from the language of 33(B)(i) itself. Infact the department itself has repeatedly held, at the Boards level, that such wires which are not used as electric conductors but for other purposes would not fall under Tariff Item 33(B) as evident from the Board's circular No.l0/Wires and Cables/63; Boards F.No.l3/7/64-CX-VII; Boards F.No. 13/9/65-CX-VII Boards Circular No.10/Wires and Cables/65; Board's circular No. 2/Wires and Cables/68; Board's tariff advice No. 24/75 etc.
15. The CEGAT has also held in the case of Royalaseema Cable Corporation reported in 1983 ELT 3258 that "Bear aluminium wires of 10 SWG and less cannot be called electric wires and cables so as to fall within Tariff Item 33B" It has also been observed that though a tariff advice may not be binding on the Tribunal it would be binding on the respondent department. Even otherwise insulated wires and cables cannot be considered as electrical conductors merely because they were made of metals. But it was necessary to show in view of the clear language of Tariff Item 33B (1) that they were ordinarily used as electric conductors in the normal course or were considered as electric wires or cable by the Trade and Industry.
16. The learned SDR's reference to the harmonised system for the CCCN is of no avail. It does not help the cause of the department, as the entries in the harmonised code as well as in the CCCN, were not relevant for classifying goods under erstwhile excise tariff being differently patterned and differently worded as apparent from the Hon'ble Supreme Court's judgement in the case of Atul Glass Industries reported in 1986 (25) ELT 473 (Para 10).
17. In the instant case the department has not been able to show that the wires in question are normally and commonly used as electrical conductors or considered as such by the industry in normal trade parlance. On the contrary the appellants have been able to show their use as a part of the detonator system as evident from the technical pamphlet containing the photographs and indicating manufacture and use.
18. In the circumstances the item was rightly classifiable under the residual entry of TI 68 as rightly held by the Collector (Appeals).
19. In so far as the classification under the new tariff is concerned, we find that the department has referred to TI 85.44 and the learned SDR explained that this heading covers "insulated wires, cables and other insulated electric conductors". He also pointed out that "Wire, cable, etc., remain classified in this heading if cut to length or fitted with connectors (e.g. plugs sockets, lugs jacks, sleeves or terminals) at one or both ends. The heading also includes wire etc. of the types described above made up in sets (e.g. multiple cables for connecting motor vehicle sparking plugs to the distributor).
20. He emphasised that this heading covers electric wire, cable and other conductors (e.g. briads, strips, bars) used as conductors in electrical machinery, apparatus or installations. Subject to this condition the heading includes wiring for interior work or for exterior use (e.g. underground, submarine or aerial wires or cables). These goods vary from very fine insulated wire to thick cables of more complex types".
21. I find that Chapter 85 deals with electrical machinery, equipment and parts thereof; And 85,44 covers basically insulated electric conductors. Again therefore, it was required to be shown that the item in question was primarily or principally used as electric conductor in the normal course. In the case of Atul Glass Industries (supra) it has been observed by the Hon'ble Supreme Court that "the test commonly applied to such cases is how the product is identified by the class or section dealing with or using them i.e. a test which is attracted whenever the statute does not contain any definition". Hon'ble Supreme Court has further observed that it is generally by its functional character that a product is so identified and stated that "it is a matter of common experience that the identify of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind".
22. The above judgement had been passed in case of classification of glass mirrors under the old tariff but the general principle enunciated here would hold good in the case of new tariff also unless it could be shown in a particular case that the general principles of interpretation or section notes or chapter notes included therein enjoin otherwise.
23. In the instant case while the department has not been able to satisfy the above criteria the respondent has shown that this item is required to perform the function of the 'lead wire' or 'wire-leads' for detonators. And it is noticed that 36.03 covers "safety fuses; Detonating fuses; Percussion or Detonating caps; igniters; Electric Detonators" i.e. Item 36.03 specifically mentions electric detonators by name. In other words in the BTN also, on which the new tariff is broadly based, Item 36.03 covers electric detonators and igniters. In respect of igniters it has been mentioned that this group includes (i) Electric igniters consisting of electric fuse head and small charge of igniting powder generally black powder. An electric fuse head consists of two insulated conductors to the ends of which a conducting metal filament is soldered to form an electrically resistant bridge; this filament is embedded in an igniter bead. It is used to ignite a powder charge or to initiate a primary explosive".
24. In respect of detonators it is mentioned that "Electric detonators consist of an electric fuse head as described in item (C) (i) above in a tube of metal (or possibly plastics), a small charge of primary explosive (50 to 500 mg of a composition based usually on lead azide) and a somewhat larger charge on another explosive (e.g. pentrite, hexogen or tetryl)".
"This group also includes certain electric detonators known as electric primers. These are often miniaturised, and the fuse head may be replaced by the incorporation, in the primary composition, of additives to make the composition conductive and enable it to be fired by induction."
25. To sum up I find that on the one hand the department has not shown that the item was used as electric conductors or known as such in trade and industry, on the other hand the respondent has shown that they were used as parts of electric igniters/detonators. Therefore, in my view they would merit classification under 36.03 as rightly held by the learned Collector.
26. In view of the above position, I reject the appeals.
27. In view of the majority opinion the appeal is allowed.