Customs, Excise and Gold Tribunal - Delhi
Shriram Refrigeration Industries Ltd. vs Collector Of Customs on 17 August, 1992
Equivalent citations: 1993(63)ELT593(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. This is an appeal against the orders of the Collector of Customs (Appeals), Bombay, by which he has upheld the order of the Assistant Collector of Customs, Special Investigation and Intelligence Branch, Customs House, Bombay, deciding that "POLYESTER FILM - PLAIN (MELINEX-226)" should be classified under sub-heading 3920.69 as against the claim of the appellants for classification as "Electrical Insultaors - Other" under sub-heading No. 8546.90. The appellants have stated that upon classification under sub-heading 8546.90 the goods should be given the benefit of Notification 60/87-Cas., dated 1-3-1987 under Serial No. 14 of the Table annexed as "Insulators designed for use in electrical circuits of 400 volts or above".
2. In respect of their appeal, the appellants have referred to the Import Licensing Policy in which the description under 85.46, sub-heading 8546.20 is "electrical insulating material except impregnating varnishes and enamels". The appellants have also submitted that the insulating properties of the Polyester Film imported by them have not been denied by the authorities. They have also placed reliance on the decision of the Tribunal in the case of Collector of Central Excise v. Metro Wood Engineering Works, 1989 (43) E.L.T. 660 (Tri.) in which it was decided that industrial laminates having insulation properties were electrical insulators falling under sub-heading 8546.00. In the case of Chetna Polycoats (P) Etd. v. Collector of Central Excise 1988 (17) ECC 225 the Tribunal has held that electrical insulation tapes are classifiable under Heading 85.46. The Department's appeal to the Supreme Court against this decision was dismissed at the admission stage itself.
3. It is claimed by the appellants that the main characteristics of MELINEX POLYESTER FILM, imported by them, is that of Insulator with high dielectric strength and in support of their claim they have referred to technical literature of M/s. I.C.I. according to which, for a thickness of 250 microns insulation upto 1300 volts and for 350 microns for still higher voltages, insulation is provided by the subject goods as against the requirement of Notification 60/87 that it should be more than 400 volts. The appellants have also submitted a specification of electric motor for SR-1622 compressor wherein the voltage is 415 volts in which, according to the appellants, the Melinex Polyester Film is used for insulation purposes. In view of the two judgments cited by them and in view of the Import Licensing Policy, the appellants have claimed that the subject goods should be classified as electrical insulators. What has been imported is Polyester Film intended for and used as an insulator in the manufacture of electric motors.
4. We have heard Shri Lakshmikumaran, the learned counsel for the appellants and Shri Ram Prakash, the learned SDR for the Department. Apart from reading the judgment of the Tribunal in Chetna Polycoats case (supra), Shri Lakshmikumaran also read out from the decision of the Tribunal in the case of Bakelite Hylam Ltd., Hyderabad v. Collector of Central Excise, Hyderabad 1985 (22) E.L.T. 879 (Tri.), in which it was held that rigid plastic laminated sheets (Hylam) having insulation properties were insulators classifiable under Item 68 and not Item 15A(2) of the erstwhile Central Excise Tariff. While reading these judgments, Shri Lakshmikumaran laid emphasis on that part of the description of the Polyester Film which referred to it as Melinex-226 and submitted that since the essential character of the product is its insulation properties, the goods were classifiable as electrical insulators.
5. While referring to the conclusion of Collector (Appeals) that the entry in the OGL against which the import of the subject goods was made related to Plain Polyester Film, the learned Counsel referred to sub-heading 8546.20 and submitted that as long as impregnating varnishes and enamels were not imported, they were covered by another entry, namely Serial No. 189 of Appendix 6A, List-8 of Part-I. This entry relates to -
"Electrical insulating materials - All types, but excluding condenser and capacitor tissue paper 34-0378-00-X".
6. By treating the import as covered by Entry 189 of the same List, the appellants had not violated any provision of the Import Policy.
7. Shri Ram Prakash, learned SDR referred to the publication "Plastics Materials" by J.A. Brydson (Fourth Edition-1982) in which Melinex (ICI) Polyester Film finds mention on page 650 and the principal uses are electrical, particularly in capacitors, as slot liners for motors and for recording tape; it is also a useful packaging material. Shri Ram Prakash submitted that the intended use of the polyester film was not material for determining its classification under the Customs Tariff. The condition in which the film was imported was what was relevant for the purpose of assessment of duty. In support of this contention, the learned SDR cited the decision of the Tribunal in the case of Miles India Ltd. v. Collector of Customs, Bombay, 1983 (14) E.L.T. 2457 (Tri.) which is that the classification of the goods has to be determined in the condition in which they are imported and not in the form in which they are marketed subsequent to their import. Since Polyester Films are imported in running length they cannot be used as electrical insulators in that state and have to be suitably cut and adjusted for use as insulators. Moreover, the films have multi-purpose use and this itself would debar their classification as insulating material. A reference to the decision of the Tribunal in the case of Dunlop India v. Collector of C. Excise 1989 (41) E.L.T. 504 would show that the judgment in respect of one product is not to be applied to a judgment in respect of another product, their process of manufacture, their characteristics and their uses being different. The learned SDR also distinguished the judgment of the Metro Wood case (supra) and submitted that being a decision relating to classification under the Central Exise Tariff the principles enunciated in it were not applicable to a case of classification under the Customs Tariff.
8. Shri Ram Prakash also invited attention to the description of the goods as given in different documents and brought out the following discrepancy :
(a) Invoice description - Polyester Film (Melinex-266)
(b) Bill of Entry - Polyester Film (Melinex-226)
(c) Technical Literature - Polyester Film (Melinex-226)
9. The learned SDR also referred to the decision of the Tribunal in the case of Bharat Heavy Electricals Ltd. v. Collector of Customs 1987 (28) E.L.T. 545, in which the principles for the application of Rule 2(a) of the Rules of Interpretation of the Customs Tariff have been decided.
10. These were as under :-
"8. It, therefore, appears that in order to apply the provisions of Rule 2 (a) it has to be seen (1) whether the imported product had attained the approximate shape or outline of the finished article : (2) whether the said imported article can only be used for completion into the finished article and (3) these would have to be determined with reference to the nature of the material, its bulk, quantity, weight or value. This very enumeration would therefore establish that no general principles can be laid down as to how and in what circumstances Rule 2(a) could be pressed into service for assessment of the imported unfinished article. In each case the factors enumerated above would have to be taken into consideration individually, and then collectively, to determine whether the imported article had attained the approximate shape or outline of the finished article and could be used only for completion into the finished article".
11. Referring to the decision of the Tribunal in Metro Woods case (supra), the learned SDR submitted that while plain Polyester Film was capable of multifarious use as indicated in Brydson's Book, the industrial laminates having insulation properties which were held classifiable as electrical insulators by the Tribunal did not possess such multi-purpose properties.
12. Replying, Shri Lakshmikumaran submitted that it would appear from a comparison of the Purchase Order, dated 30th March 1989 submitted by him during the hearing and the declaration in the Bill of Entry that a typographical error had occurred in the invoice, because of which the figure "226" had been typed as "266" in the invoice.
13. We have carefully considered the appeal and the submissions made at the hearing. We observe from the Purchase Order of the subject goods that the appellants had placed orders for supply of "Plain Polyester Film (Melinex-226)". No specifications of the grade, etc. have been indicated in the purchase order. The invoice for the goods gives the description as under :-
"1388 KGS of POLYESTER FILM (MELINEX-266) AGAINST ORDER NO. 1024, DTD. 30-3-1989 1125 x 150 M/REELS X 11 MM WIDE X 250 MICRON 1127 x 110 M/REELS X 11 MM WIDE X 350 MICRON LOADED ON 4 PALLETS"
14. Collector (Appeals) has drawn attention to the fact that in the Column for indicating particulars of ITC Licence/Part Serial No. of OGL in the Bill of the Entry, the appellants claimed its clearance against Serial No. 451 of OGL Appendix-6, List-8, Part-I of April-March 1991 Policy. This Serial No. covers Plain Polyester Films. Thus, from the Purchase Order, the invoice and the Bill of Entry, it is clear that the appellants imported Plain Polyester Films and although they appeared to have declared its classification under sub-heading 8546.90, the authorities did not accept this classification and assessed the goods under sub-heading 3920.69. Both the lower authorities have discussed the claim of the appellants in considerable detail and the relevant portion of the Assistant Collector's order which is based on Explanatory Notes of HSN is as under :-
"The goods as imported are in running length which need to be cut into shape and size or fabricated as per the requirements. As imported the goods are not an identifiable part of any machinery/equipment. As regards the importer's contention that the goods fall under Tariff Heading 8546.90 as electrical insulators of materials other than glass or ceramics, the same is not correct for the following reasons. The Chapter Heading 8546 covers electrical insulators which are of the type used on the electrical transmission towers and such similar applications. These insulators have got a specific function, shape and size. The Chapter Heading 8546 covers insulators which are used for fixing, supporting or guiding of electric current conductors, while at the same time insulating them electrically from each other, from earth etc. These insulators have an external surface which is very smooth in order to prevent the formation of deposit of non-insulating material such as water, salts, dust, oxides and smoke. These insulators are often given bell, accordian, petticoat, grooved cylinder or other shapes."
15. We agree with the findings extracted above. During the hearing the learned SDR had invited our attention to the following remarks appearing in the Product Information of Melinex Polyester Films placed with the Memorandum of Appeal and had submitted that according to the manufacturers' own literature, such films have a number of applications and could not, therefore, be classified as electrical insulators :-
"Melinex Ployester Film : Electrical SUMMARY Melinex is the trade mark for Id's range of polyester films. These films are used extensively for a number of applications including many in the electrical industry where the films have become established as major insulating materials.
The properties that make Melinex such a useful material for the electrical industry are listed and discussed and the major applications in which the film has been used to date are reviewed". (Emphasis added)
16. We also agree with the learned SDR that decisions of the Tribunal in Metro Wood Engineering Works case (supra) and Chetna Polycoats case (supra) are distinguishable inasmuch as they apply to cases under the Central Excise Tariff and refer to goods having the specific property of insulation and not with multi-purpose uses as in the present case. Moreover, the goods are known and described as Polyester Films. We can do no better than to cite the decision of the Supreme Court in the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and Ors. 1983 (13) E.L.T. 1566 (SC) in paragraph-36 :-
"36. We are however, unable to accept the submission. It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry".
Right from the time that an order for these goods was placed till they were cleared from the Customs, the goods have been described as Plain Polyester Film and they have also been cleared against Serial No. 451 of the OGL Appendix 6, List 8, Part I, which relates to Plain Polyester Film. This being the position, the condition of the goods at the time of their import is what has to be taken into account. We do not, therefore, consider any merit in the argument that even though the goods were so described and known, they should be classified as electrical insulators. In this view of the matter, the appeal fails and is dismissed.