ORDER
G. Sankaran, Sr. Vice-President
1. This appeal is directed against order-in-appeal No. 280/CE/JPR/87 dated 30.10.1987 passed by the Collector of Central Excise (Appeals), New Delhi.
2. The issue arising for determination is whether the electrical insulation tapes manufactured by the appellants are classifiable under Heading No. 85.46. sub-heading 8546.00, of the schedule to the Central Excise Tariff Act, 1985 (CET, 1985, for short) as claimed by the appellants or under Heading No. 39.19, sub-heading 3919.00, of the schedule as held by the lower authorities.
3. The two headings are reproduced below :-
Heading 39.19, sub-heading 3919.00
“Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, whether or not in rolls.”
Heading 85.46, sub-heading 8546.00
“Electrical Insulators of any material.”
4. We have heard Shri V. Sridharan, Advocate, for the appellants and Shri C.V. Durghayya, Departmental representative, for the respondent.
5. The dispute arose in relation to classification list No. 774/86, effective from 24.4.1986, filed by the appellants. The goods were described herein as “Electrical Insulator made of plastic PVC insulation (commonly known as insulation tape)”. In classifying the goods under Heading 39.19, sub-heading 3919.00, the Assistant Collector, in his order dated 8.1.1987, has placed reliance on the explanatory notes to the “Harmonised Commodity Description and Coding System” (hereinafter referred to as the “Harmonised System”) which forms the basis of the schedule to the Central Excise Tariff Act, 1985. He has relied on the notes under Heading 85.46 which state that the insulators of this heading 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. The notes further state that the heading excludes insulating fittings (other than insulators) for electrical machinery, appliances or equipments, that usually there is a relation between the size of insulator arid voltage and further that the shape of the various types of insulators is influenced by electric, thermic and mechanical considerations. Insulators are often given bell, accordion, petticoat, grooved, cylinder or other shapes. As example of insulators covered by the heading are shown Suspension Insulators, Rigid Insulators, and Leading-in Insulators. The Assistant Collector has observed that the goods in dispute do not conform to the characteristics set out in the explanatory notes and hence the heading would not apply. On the other hand, sub-heading 3919.00, squarely covers the goods. The fact that the product has, apart from self-adhesive properties, also electrical insulation properties does not alter the classification under Chapter 39 of the Schedule. Several authorities cited by the appellants in support of their claim were, according to the Assistant Collector, not applicable since they were in the context of the Central Excise Tariff Schedule obtaining prior to the introduction of the C.E.T. 1985. The previous schedule was not based on the Harmonised system. In appeal, this order was upheld by the Collector of Central Excise (Appeals) by his impugned order dated 30.10.1987.
6. it is no doubt true that the schedule to Central Excise Tariff Act, 1985, is a far more detailed and sophisticated tariff nomenclature than its predecessor schedule. It is also based on the “Harmonised Commodity description and coding system” evolved by the Customs Cooperation Council, Brussels. The new schedule has many in-built aids to the interpretation of its headings and sub-headings. These are the section notes and chapter notes which have got statutory force and rules for the interpretation of the schedule, which also have statutory force. The explanatory notes which are not part of the schedule have no statutory force and are only of persuasive value. These notes, drawn up by experts in the field, are a valuable aid to the understanding of the scope of the headings and the sub-headings but if the interpretation of the entries in the schedule (C.E.T. 1985), in the light of the aforesaid legal aids and In the light of case law, point to a conclusion contrary to, or different from that indicated by the explanatory notes, the former shall prevail. Therefore, reliance on the explanatory notes has to be tempered with with due regard to the aforesaid considerations.
7. Even prior to the introduction of the new schedule of 1985, the Central Excise Tariff schedule had a specific entry for adhesive tapes. Item 60 of the schedule read thus:
“Adhesive tapes, all sorts, not elsewhere specified, including cellulose adhesive tapes and paper backed adhesive tapes, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.”
Till Its deletion by the Finance (No. 2) Act of 1977, the previous schedule had another entry – item No. 59 – specifically for electric Insulation tapes. The entry read thus:
“Electric insulating tapes, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.”
The Central Board of Excise and Custom had occasion to go into the question of classification of electric insulating tapes consequent on deletion of item 59. The Board issued a tariff advice No. 70/81 dated 28.7.1981 to the effect that electrical insulating tape would be classifiable under the residual entry – item No. 68 – and not under Tariff Item No. 60 for adhesive tapes. This reflects the understanding of the Board itself of the position that electric insulating tapes, though having adhesive properties, were not property classifiable as adhesive tapes evidently, for the reason that electric insulating tapes were not known in commerce and trade as adhesive tapes.
8. This Tribunal had occasion to go into the classification of electrical insulating tapes in Bharat Heavy Electricals Ltd. v. Collector of Customs, Bombay 1983 ELT1160. The Tribunal took note of several circumstances including the Board’s Tariff advice referred to earlier and came to the view that the intention after deletion of item 59 specifically dealing with electrical insulating tapes, was to treat such tapes as falling under the residuary item No. 68 and not item No. 60. Another decision of the Tribunal relevant to the issue is the one in Collector of Central Excise, Rajkot v. Surgichem 1987 (27) ELT 548. The goods involved in that case were “Adhesive Plastic BPC’ used as surgical dressing. The Tribunal held that since the goods were known in pharmaceutical and commercial parlance as surgical dressing, they are properly classifiable under the residual item No. 68 and not under item No. 60 for adhesive tapes.
9. The words falling for interpretation in heading 39.19, sub-heading 3919.00, are “Sett-adhesive tape, – of plastics, whether or not in rolls”. The previous entry, item No. 60, (reproduced earlier) covered adhesive tapes, all sorts. The relevant words are almost the same insofar as the material description of the goods goes. In our opinion, having regard to the words employed then and now, the interpretation put on item 60 CET would be applicable to the present heading also unless, as noted earlier, the section notes, chapter notes, and the rules of interpretation dictate otherwise.
10. Statutory note 2(a) to Chapter 39 provides that the chapter does not cover articles of section XVI (machines and mechanical or electrical appliances). If, therefore, electrical insulating tapes fall within the scope of section XVI (under which chapter 85 falls), they would not fall under Chapter 39. And, as already noted, the decision of this Tribunal, as also the understanding of the Board (though with reference to the previous schedule), was that electrical insulating tapes could not be appropriately described as adhesive tapes.
11. We may now consider Heading 85.46, sub-heading 8546.00, which covers electrical insulators of any material. The lower authorities have relied on the explanatory notes to the Harmonised System in ruling out classification of electrical insulating tapes under this heading. The expression “electrical insulators” occurring in explanation II to item 15A of the previous tariff schedule came up for consideration before this Tribunal In Bakelite Hylam Ltd., Hyderabad v. Collector of Central Excise, Hyderabad 1985 (22) ELT 879, The Tribunal went at length into the question and, after considering technical authorities as also Board’s understanding as reflected in its tariff advice No. 123/81 dated 23.11.1981, came to the conclusion that articles made from materials which have electrically insulating properties (examples – mineral fibre, cellulose, glass fibre, certain plastics, glass, porcelain etc.) can be appropriately described as insulators. The goods in that case were rigid plastic laminated sheets and boards having electrical insulating properties. The goods in the present case are electric insulating tapes having adhesive properties. Following the reasoning of this Tribunal in the Bakelite Hylam case, we see no reason why the present goods cannot be described as electrical insulators.
12. We have also to take note of the fact that the appellants had produced before the lower authorities two affidavits in support of their contentions. One was that of Shri B.K. Khanna, the factory manager of the appellant company, which inter alia stated that customers do not buy the subject goods for use as ordinary adhesive tapes but exclusively for use as electrical insulation tapes. It further stated that electrical insulating tapes can be purchased only from dealers in electrical items. They would not be available from stationery or grocery shops. The second affidavit is that of Shri J.P. Kaushik, the appellants’ technical manager testifying to the fact that the subject goods were used only for electrical insulation purposes and not for any other purpose. The department has not placed on record any material contradicting these averments and supporting its own stand. If electrical insulating tapes are not known in commerce and trade as adhesive tapes, they cannot be classified as self-adhesive tapes for the purpose of levy of Central Excise duty so long as there is no statutory guideline in the shape of section notes, chapter notes and rules of interpretation to the contrary. And, none of this nature has been pointed out to us by the Revenue.
13. In the result, we hold that the subject electrical insulating tapes, covered by classification list No. 774/86 were correctly classifiable under Heading No. 85.46, subheading 8546.00. Accordingly, we set aside the orders of the lower authorities and allow the present appeal.
