2002(03)LCX0193

BEFORE THE GOVERNMENT OF INDIA

[Department of Revenue - Revisionary Authority]

Shri Dinesh Kacker, Joint Secretary

IN RE : JAYDEE AGROCHEMICAL LTD.

Order No. 74/2002, dated 20-3-2002

DEPARTMENTAL CLARIFICATIONS CITED

C.B.E. & C. Circular No. 9/96-Cus., dated 13-2-1996 ....................................................... [Para 14]

C.B.E. & C. F. No. 600/29/97-DBK, dated 1-4-1998........................................................... [Para 3]

 [Order]. - This is a Show Cause Notice issued under Section 129DD(4) of the Customs Act, 1962.

2. M/s. Jaydee Agrochemical Ltd., Jaipur had exported “Dye stuff Intermediate 2:4 Dinitro Chloro Benzene”. They had claimed drawback on the goods under Heading 32.01 of the Drawback Schedule vide shipping Bill Numbers 2258, 2740, 2792, 2917, 2959, 3045 and 3130. The samples were drawn at the time of examination and sent to CRCL, New Delhi. Test results indicated the samples as “2:4 Dinitro Chloro Benzene in the form of yellow crystalline mass”.

3. The Assistant Commissioner of Customs, ICD, Jaipur vide Order-in-Original No. 4/98, dt. 21-3-98 held that drawback is inadmissible. This order was set aside by the Commissioner (A). The order passed by the Appellate Authority, prima facie appeared to be bad in law because of following reasons :

(1)     The item 2:4 Dinitro Chloro Benzene on which drawback was allowed by the Commissioner is not covered under Sl. No. 32.01 of the Drawback Schedule. It has been clarified by the Board vide F. No. 600/29/97-DBK, dt. 1-4-98 that the item is a well defined organic chemical and is therefore classifiable under Chapter 29. No All Industry Rate has been fixed for the item.

(2)     As per the general note 10 of the DBK schedule 97-98, the scope of specified export products against a serial/sub-serial No. in the said schedule will be same as such goods that would have fallen under the corresponding heading, sub-heading numbers of the First Schedule of the Customs Tariff Act, 1975. 2:4 Dinitro Chloro Benzene is classified in the Customs Tariff Act under heading 29.04.

(3)     The subject item is also being cleared by the Central Excise Authority under Heading No. 29.4.

(4)     As per the HSN explanatory notes to Chapter 29, 2:4 Dinitro Chloro Benzene falls under Heading 29.04.

4. The respondents M/s. Jaydee Agrochemicals Ltd. vide their letter dated 30th August, 2001 made the following submissions :

(a)     The Show Cause Notice issued was attested by a Senior Technical Officer and therefore is not legal.

(b)     The Show Cause Notice is hit by time bar.

(c)      They also requested for further time of 30 days to make additional submissions.

They made the following further submissions :

(a)     that the test report does not mention that 2:4 Dinitro Chloro Benzene is not a dye intermediate.

(b)     Since 2:4 Dinitro Chloro Benzene is a dye intermediate it is covered under Chapter 32.01 of the Drawback Schedule.

(c)      The inclusion of Dye Intermediates in Chapter 32.01 of the Drawback Schedule itself confirms that all dye intermediates are eligible for drawback claim.

(d)     That their product is a Dye-Intermediate which is covered by SH 3201.

(e)     In support of their contention that 2:4 Dinitro Chloro Benzene is a dye intermediate, they produced the following evidences :

(i)     N. 39/97-Cus. (N.T.)

(ii)    Letter dated 23-10-97 of M/s. Chemexcil

(iii)   Letter dated 23-4-98 of Rajasthan Dyes & Chemicals.

(iv)   Letter dated 28-4-98 of Dyekem India, Udaipur etc.

5. Personal Hearing was held on 17-10-01. Shri Sushil K. Dugar appeared and reiterated the written submissions.

6. Govt. has carefully considered the written and oral submissions made by M/s. Jaydee Agrochemical Ltd.

7. This is a Show Cause Notice under Section 129DD(4) of Customs Act, 1962, which is given below :

129DD(4) : The Central Government may, of its own motion, annul or modify any order referred to in sub-section (1). For this, no time limit has been prescribed. Show Cause Notice is only attested by a Senior Technical Officer. The decision to issue Show Cause Notice was taken by Government after careful consideration of records, and the original Show Cause Notice has been signed by the Joint Secretary. Only attestation was done by STO and therefore the Show Cause Notice will not become null on this account.

8. Coming to the merits of the issue, according to General Note No. 10, of Notification No. 22/97-Cus. (N.T.), the scope of the specified export products against a serial/sub-serial number in the said table will be same as such specified goods would have under the corresponding Heading/sub-heading numbers of the First Schedule to the Customs Tariff Act, 1975.

9. According to General Note No. 10, scope of Drawback Schedule Sl. No. 32.01 is same as the scope of corresponding Customs Tariff Headings 32.04 to 32.12.

Now, the issue to be determined is whether the impugned item 2:4 Dinitro Chloro Benzene is classifiable under customs TSH 32.04 to 32.12 or not. It is also pertinent to point out, that in the description of the goods, in column No. 3 of the above table, ‘dye intermediates not elsewhere specified’ only have been covered. Hence, harmonious interpretation would be, dye intermediates classifiable under customs TSH 32.04 to 32.12 will be eligible for drawback. Dye-Intermediates, not falling within 32.04 to 32.12 will not be covered by the description ‘dye intermediate not elsewhere specified’. They therefore will not be eligible for drawback.

10. Hence, the issue to be determined is, under which Customs Tariff Heading 2:4 Dinitro Chloro Benzene is classifiable. To be more elaborate, the question is not whether 2:4 Dinitro Chloro Benzene is a dye-intermediate or not, but whether it is a dye-intermediate falling within Customs Tariff Headings 32.04 to 32.12.

11. In the HSN explanatory Note under CTH 32.04, it is clearly mentioned that “This heading also excludes the intermediate products, which are not themselves dyes, obtained at different stages in the production of colouring matter. These intermediate products e.g. mono chloro acetic acid, chloro nitro benzene etc. are classified in Chapter 29.

12. Further, Chapter Note 1 of Chapter 32, states that Chapter 32 does not cover separate, chemically defined elements or compounds.

13. Because of the above reasons, 2:4 Dinitro Chloro Benzene is classifiable under Chapter 29 of Customs Tariff. Hence because of General Note 10 of Notification No. 22/97-Cus. (N.T.), the impugned item is not covered by Sl. No. 32.01 of Drawback Schedule.

14. CBEC also has clarified in Circular No. 9/96-Cus., dated 13-2-96 that where among the various tariff references that may be attracted by the broad description of goods in the Ntfn., only one or few tariff references have been mentioned, in such cases, mention of only selected tariff heading/references should be treated as deliberate restriction of the scope of the exemption.

15. The order No. : 12 (KDT) CUS/JPR/2000, dated 21-6-2000 passed by Commissioner of Customs (Appeals), Jaipur is, therefore, set aside.

_______

Equivalent 2002 (143) ELT 472 (G.O.I.)