Non Destructive Testing (NDT) methods that are capable of detecting the wall thinning and defects through insulation and cladding sheets are necessary. In this study we developed a Pulsed Eddy Current (PEC) system to detect wall thinning of ferro magnetic steel pipes covered with 95 mm thick fiber glass thermal insulator and shielded with aluminum plate of thickness 0.4 mm. In order to confirm the thickness change due to wall thinning, two different sensors, a hall sensor and a search coil sensor were used as a detecting element. In both the cases, the experimental data indicates a considerable change in the detected pulse corresponding to the change in sample thickness. The thickness of the tube was made to change such as 2.5 mm, 5 mm and 8 mm from the inner surface to simulate wall thinning. Fast Fourier Transform (FFT) was calculated using window approach and the results were summarized which shows a clear identification of thickness change in the test specimen by comparing the magnitude spectra.