ORDER
C. Satapathy, Member (T)
1. Heard Shri F. Sorabjee, learned Advocate appearing for the appellants and Shri Hitesh Shah, learned S.D.R. appearing for the Revenue at length. The issue in this appeal is whether the impugned goods manufactured and cleared by the appellants are to be classified as articles of mica under Heading 68.07 as claimed by the appellants or as insulators under Heading 85.46 as determined by the lower authorities.
2. It has been forcefully contended on behalf of the appellants that the mica products manufactured and cleared by the appellants are not composite products and that in view of Explanatory Note to Heading No. 68.14 of the HSN, the impugned goods are classifiable under the corresponding Heading 68.07 of the Central Excise Tariff. It has also been contended on behalf of the appellants that the decisions of the Tribunal in the case of C.C.E. v. Isovolta (I) Pvt. Ltd. – 2001 (135) E.L.T. 462 and C.C.E. v. Isovolta (I) Pvt. Ltd. – 2001 (129) E.L.T. 642 (T) followed by the Commissioner (Appeals) in the impugned order are not applicable to the facts of the appellants’ case since their products are of pure mica. They have also contended that end, use of the product is not a valid criterion to determine classification as classification has to be determined in terms of the General Interpretative Rules taking into consideration characteristics of the goods to be determined at the time of clearance.
3. The learned S.D.R on the other hand states that the impugned goods are nothing but insulators and these need to be classified under Heading 8546 and not as mica articles under Heading 68.07. In support of his arguments he cites the following decisions:-
1) Bakelite Hylam Ltd. v. C.C.E. Hyderabad – 1985 (22) E.L.T. 879 (Tribunal),
2) C.C.E. Hyderabad v. Bakelite Hylam Ltd. – 1997 (91) E.L.T. 13 (S.C.),
3) Densons Pultretaknik v. C.C.E. – 2003 (155) E.L.T. 211 (S.C.)
He further shows with the help of several invoices that at the time of removal itself, the part/drawing number of the impugned goods are indicated on the invoices, which goes to show that the impugned goods are insulating parts of commutators used in railway track system. To a question from the Bench, he agrees that the entry under Heading 68.07 under the Central Excise Tariff is somewhat different from the Heading 68.14 under the HSN in as much as the entry 68.07 is restricted, since it only includes articles and materials which are not elsewhere specified or included. He further refers to Chapter Note (g) to Chapter 68 which excludes electrical insulators or fittings of insulating material of Chapter 85 from the scope of Chapter 68. The learned S.D.R. also shows us print outs from the internet site of the appellants indicating that the appellants are manufacturing mica based insulators only.
4. After hearing rival submissions and perusal of case records including the case laws cited before us, we find that basically the issue involved is that of classification of various mica products being manufactured and cleared by the appellants. For the purpose of classification of a product two stages are involved. The first task is to identify the goods for what they are, which is an objective task. The second task, once the goods have been objectively identified, to classify the goods by deciding which tariff heading describes the goods and applying the relevant interpretative rules and notes. Normally the characteristics of the goods at the time of clearance is to be taken as the determining factor and not the subsequent use to which the goods may be put to. However, when the goods are put to a single use, then there cannot be any dispute regarding different classification on the basis of use and therefore the use of the product can definitely be of assistance in determining the classification of the product. In the instant case, the learned S.D.R. has very strongly argued with the help of sample invoices that the impugned goods are nothing but insulators and insulating parts bearing part and drawing numbers. The appellants, on the other hand, have not been able to show whether the impugned products have been put to any other use except stating that use cannot determine the classification. We note that the learned S.D.R. has shown us only a few sample invoices and the lower authorities do not seem to have examined all the goods under dispute so as to come to a finding whether the documents relating to all goods under clearance bore a distinctive part/drawing number.
5. Similarly, the lower authorities have also not come to a finding as to whether the impugned goods are composite goods or are pure mica products. We find that the Explanatory Note under HSN Heading 68.14 reads as under:-
“This heading covers natural mica, further worked than merely rifted and trimmed (e.g., cut to shape), and also products consisting of agglomerated (bonded) mica or pulped (reconstituted) mica, and articles made from any of these materials.
Thin sheets and splitting obtained by merely rifting and trimming mica books as mined fall in heading 25.25.
The heading covers products obtained by cutting such sheets and splittings. Since they are obtained with a die-punch, their edges are clean cut.
Natural mica is often used as such in the form of sheets or splittings. However, since the small size of the crystals and their poor flexibility, high cost, etc., render natural mica unsuitable for many uses, it is frequently replaced by agglomerated (built-up) mica (e.g., micanite, micafolium), which is obtained by bonding mica splittings one above the other or side by side using shellac, natural resins, plastics, asphalt, etc. Agglomerated mica is made in sheet, plate or strip form, in all thicknesses, often with a fairly large surface area; the sheets, etc., are generally backed on one or (usually) both surfaces with textile fabric, glass fibre fabric, paper or asbestos.
Thin sheets of mica may also be obtained, without employing a binding agent, by submitting powdered and pulped mica waste to a thermal, chemical and mechanical process similar to that used for making paper (reconstituted mica).
These thin sheets are then mounted on to a paper or textile backing using a flexible bonding material, alternatively, they may be used for the manufacture of plates and strip of specified thicknesses by superimposing several thin sheets and bonding them with an organic binder.
The heading covers sheets, strips and rolls in the length; pieces cut to shape for special uses in the form of rectangles (including squares), discs, etc.; moulded articles such as tubes, conduits, etc. All these goods may be coloured in the mass, painted, drilled, milled or otherwise worked.
Owing to its high resistance to heat and its relative translucency, mica is used, inter alia, for the manufacture of windows for ovens, stoves, furnaces, etc., of unbreakable lamp “glasses”, and of “glasses,” for goggles, etc. But mica is mainly used in the electrical industry because of its excellent dielectric properties (in the manufacture of motors, generators, transformers, capacitors, resistors, etc.). It should, however, be noted that mica insulators and other mica insulating parts of electrical apparatus, even unmounted, fall in headings 85.46 to 85.48, and that mica dielectric condensers (capacitors) fall in heading 85.32.”
6. It is clear from the above that heading 68.14 covers mica products including sheets, strips and rolls in the length, pieces cut to shape for special uses in the form of rectangle (including squares), discs etc. At the same time it does not cover mica insulator and other mica insulating parts of electrical apparatus, even unmounted, which fall in headings 85.46 to 85.48. The coverage under Central Excise Tariff 68.07 is identical to coverage under HS heading 68.14 with the added restriction that heading 68.07 includes only such articles of mica which are not elsewhere specified or included. It will, therefore, be very relevant to determine whether the impugned goods are composite products or are identifiable as insulators/insulating parts bearing part/drawing numbers as claimed by the department during the hearing or are pure mica products meriting classification under heading 68.07 as contended by the appellants. Since we have only been shown a few invoices and there is no finding in this regard in respect of all the goods cleared during the relevant period in the orders passed by the lower authorities, we think it fit to set aside the impugned order and remand the matter to the Adjudicating authority to examine the clearance documents as well as other available evidence to come to a clear finding regarding the identity of the goods in question. Once it is verified as to whether the impugned goods are composite goods or not and once the clearance/purchase documents are verified to ascertain whether the related consignments can be identified by specific part/drawing number, on that basis the Adjudicating Authority can determine whether the same can be classified as insulators under heading 85.46 or as mica products under heading No. 68.07. We do not rule out the possibility of some of the consignments being classified under one of the two disputed headings while some of the other consignments being classified under the other heading depending on the result of an objective examination of the clearance/purchase documents as well as other available evidence.
7. For the reasons stated above, we set aside the impugned orders and remand the matter for fresh adjudication by the original Authority with the direction that the appellants shall be afforded a reasonable opportunity of hearing before passing a fresh order.
8. Appeal is allowed by way of remand.
(Pronounced in court on 10/6/04).