1995(10)LCX0060

IN THE CEGAT, SOUTH REGIONAL BENCH, MADRAS

S/Shri S. Kalyanam, Vice President (J) and V.P. Gulati Member (T) Third Member on Reference : Shri K. Sankararaman, Member (T)

K.G. GLUCO BIOLS LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, BELGAUM

Misc. Order No. 131/95 and SB/Order No. 7/96, dated 8-10-1995 in Appeal No. E/SB/Stay//3255/94 and E/SB/5255/94/MAS

Cases Quoted

N.P. Venkataraman Iyer v. Collector — 1985(09)LCX0034 Eq 1986 (023) ELT 0471 (Tribunal)                                           [Para 2]

Stead Fast Paper Mills v. D. R. Kohli — 1979 (012) ELT 0744 (Guj.)                                                    [Para 2]

Kiran Overseas v. Collector — 1988(06)LCX0039 Eq 1988 (038) ELT 0362 (Tribunal)                                                            [Para 5]

Bharat Steel & Chemicals Order-in-Appeal No. 914-CE/DLH/91, dated 29-8-1991                   [Para 5]

Collector v. Sukhjit Starch & Chemicals Ltd. — 1994(06)LCX0048 Eq 1994 (072) ELT 0753 (Tribunal)                          [Para 12]

Maize Products v. Collector — 1994(11)LCX0053 Eq 1995 (075) ELT 0329 (Tribunal)                                                         [Para 12]

Advocated By : Shri K. Parameswaran, Advocate for the Appellant.

Shri R. Subramanian, DR, for the Respondent.

[Order per : S. Kalyanam, Member (J)]. - This is an application for waiver of pre-deposit of duty of Rs. 15,85,831.00 levied on the appellants for the period June, 1992 to April, 1993 under the original order of the Assistant Collector of Central Excise, Belgaum, dated 8-7-1993 and confirmed in appeal under the impugned order of the Collector of Central Excise, Bangalore dated 26-11-1993.

2. Shri Parameswaran, the learned Counsel for the appellants submitted that the appellants are manufacturing liquid Glucose and the issue for consideration in the appeal is with reference to the classification of liquid Glucose. It was urged that the classification list filed by the appellants for the goods in question classifying the goods under sub-heading 1702.30 of CET which was assessed provisionally was sought to be revised to classify the goods under the category of “Other sugars” falling under the sub-heading 1702.19 of the Central Excise Tariff Act, 1985, resulting in the differential duty under the impugned order. The learned Counsel contended at the outset that the impugned order is based on test reports of the Chief Chemist of the Central Research Control Laboratory (CRCL), New Delhi and that of the Deputy Chief Chemist, Customs House, Madras and the Chief Chemist instead of merely analysing and giving an analytical data of the composition of the goods in question has given an opinion that the goods would merit classification as “Commercial Glucose” coming within the mischief of the expression “Other Sugars” classifiable under the Tariff heading 1702.19. Even though in the impugned order the adjudicating authority would say that he decided the issue independently, the opinion of the Chemical Examiners has prejudiced the mind of the adjudicating authority and therefore the order is bad in law. It was further submitted that in spite of a specific request by the petitioners to cross-examin the Chief Chemist he was not made available for cross-examination and therefore, the impugned order is violative of the principles of natural justice and is not sustainable. It was further urged that in spite of request no re-testing of the samples was also allowed by the authorities. By denying the petitioners the right of cross-examination of the Chief Chemist, the petitioners have been deprived of the right to establish the correct chemical composition of the product which alone would enable the authorities to determine the right classification of the product. The revised classification is resorted to on the basis of instructions issued by the Central Board of Excise & Customs vide its Order No. 1/93, dated 11-3-1993 directing classification of liquid Glucose under sub-heading 1702.19 and even if the administrative instructions are binding on the quasi judiciary authorities like the Asstt. Collector, the same would be applicable only prospectively from 11-3-1993 onwards and not retrospectively. The learned Collector (Appeals), New Delhi has held that the goods are classifiable only under sub-heading 1702.30 and there cannot be inconsistant finding on classification in regard to an identical product in respect of similarly placed manufacturers by quasi judicial authorities. Even in the test conducted by the Deputy Chief Chemist varies with the opinion of the Chief Chemist, Delhi and the variation of the percentages would warrant re-testing of the samples and the same not having been done in spite of request, the impugned order stands vitiated. When the learned Collector (Appeals) has not disputed the fact that there is no definition of liquid Glucose for Central Excise Tariff, he should not have relied upon the opinion of the experts without considering and appreciating the essential difference between the chemically pure Glucose and liquid Glucose. The learned Counsel in support of his plea relied upon the ruling of the CEGAT in the case of N.P. Venkataraman Iyer v CCE reported in 1985(09)LCX0034 Eq 1986 (023) ELT 0471 (Tribunal) and also the ruling of the Gujarat High Court in the case of M/s. Stead Fast Paper Mills v. D.R. Kohli reported in 1979 (012) ELT 0744 (Guj.).

3. Shri Subramanian, the learned D.R. contended that cross-examination of the Chief Chemist cannot be allowed as a matter of right and the classification question has been decided by the authorities only on the basis of the chemical composition of the goods in question and the adjudicating authority has made it clear that he is not influenced in any way by the opinion of the Chief Chemist though he has gone out of his bounds in giving an opinion on the classification of the goods in question. The Board’s circular is statutory in nature and is binding on the departmental officials and it would be operative retrospectively as well.

4. We have considered the submissions made before us. After hearing the parties in extenso on the Stay Petition, since we find that the impugned order, by the denial of the right of cross-examination to the appellant of the Chief Chemist would be violative of the principles of natural justice, we are inclined to think that the matter will have to be remanded and in this view of the matter we grant waiver of pre-deposit of duty and dispose of the appeal itself today.

5.  The learned Collector (Appeals) in the impugned order has observed as under :

“......In order to appreciate the relevance of Tariff Entry on the subject goods, one has to necessarily base the classification on the chemical parameters as given in the HSN read with ISI, and the confirmation by the Chief Chemist, the Officer being technically qualified to ascertain the chemical composition of the impugned goods. The small variation in the percentage of reducing sugars as found out by the Chief Chemist and Deputy Chief Chemist, does not affect the classification in any way going by the parameter laid down in the HSN. The appellant was aware at the time of clearance of the goods that they were provisional, subject to the outcome of the Chemical Examiner’s report. The Chief Chemist’s report subsequent to the Chemical Examiner’s report, constitutes a re-test for the purpose of accuracy and the request for re-test in the said circumstances is not justified. Similarly, it is well settled that the cross-examination need not be granted as a matter of routine. The requirements of natural justice vary from case to case and they are not rigid or fixed rules.”

While not disputing the fact that the right of cross-examination is to be construed in the light of the facts and circumstances of each case we should also like to advert to the settled proposition of the law that whenever an adverse finding is sought to be given against a party on the basis of a report of the Chemical Examiner whose evidence is in the nature of an expert evidence, such expert should be tendered for cross-examination, if the aggrieved party makes a claim of the same. In the present case it is not as if the opinion of the Chief Chemist has not been taken into consideration at all. When the opinion of the Chemical Examiner has been taken into account as one of the circumstances in deciding the classification issue, when the appellants specifically challenged the opinion of the Chemical Examiner and wanted to probabilise their plea by cross-examination, such cross-examination should have been allowed. It is certainly within the rights of the appellants to elicit facts by cross-examination with reference to the mode of chemical analysis, the various compositions available in the goods in question, the possible variance etc. The original authority in his order dated 8-7-1993 has observed as under :

“.....The classification of liquid glucose has to be based on chemical parameters as given in the HSN and Chief Chemist has confirmed that the samples of liquid glucose from the assessee meet these parameters. Here it is important to note that HSN clarifies that glucose includes chemically pure glucose as well as commercial glucose which means that both will fall under Chapter Heading 1702.19. As per HSN, commercial glucose is obtained by hydrolysing starch with acids and/or enzymes. He being an expert in the field has also given an additional information that the samples also satisfy the composition for liquid glucose as per IS 873/1974. These factual information are all that has been relied upon for issuing the Show Cause Notice to finalise the provisional assessment. The Chief Chemist’s opinion was not called for regarding the tariff classification of the product and, therefore, if the Chief Chemist on his own gives the opinion regarding the tariff classification, that per se will not vitiate the entire chemical test report.” “.... The chemical examination report also confirms that the product is mainly composed of reducing sugars and water and that they are free from added flavouring and colouring matter. For a product to be considered as a preparation of other sugars, it should have some flavouring or chemical additives, but this product being composed only of reducing sugar and water can be regarded as commercial glucose falling under Chapter Heading 1702.19. These are sufficient evidence to confirm the classification of party’s product under Chapter Heading 1702.19.”

Dealing with the appellants’ request of cross-examination the original authority in the aforesaid order has observed as under :

“......The party’s request for cross-examining the Chief Chemist can also not be acceded to because the chemical examination report is very clear regarding the chemical composition of the product and I feel that no further purpose will be served by examining the Chief Chemical Examiner.”

The denial of the right of cross-examination on the ground that the Chemical Examiner’s report is very clear regarding the chemical composition of the product and “I feel that no further purpose will be served by examining the Chief Chemical Examiner” is clearly unsustainable in law and would run counter to the authoritative judicial pronouncement of the highest Courts. The contention or finding that notice need not be given because there can be no effective answer to it only betrays a misunderstanding of the Rule of Hearing which is an important element of the principles of Natural Justice. The decision to dispense with notice cannot be founded upon a presumed impregnability of the proposed action. After all justice must not only be done but manifestly seem to be done. The appearance of injustice is denial of justice. After all the right to be heard is intrinsic as well as instrumental and the intrinsic value consists in an effective opportunity being given. It is an indisputable pious legal platitude that no better instrument has been devised for arriving at truth than giving a person in jeo pardy of serious loss, notice of the case against him. It has also been emphasised by the Supreme Court in a number of cases that the principles of Natural Justice know of no exclusionary Rule dependent on whether it would have made any difference if natural justice had not been observed. The non-observance of Natural Justice is itself prejudice to any person and proof of prejudice independently on grounds of denial of natural justice has been considered unnecessary and not called for, because it ill becomes from a person who has denied justice, that the person who has been denied justice is not prejudiced.

The Bench of the Tribunal in the case of M/s. Kiran Overseas v. Collector of Customs reported in 1988 (038) ELT 362, in dealing with the right of cross-examination of the expert has held as under :

“....... The report of the CLRI cannot be taken as a conclusive piece of evidence when the same is challenged and sought to be disproved in cross-examination because the expert, however competent he might be cannot claim infalliability. Unless there is express provision in law about the conclusiveness of the report of the expert, one cannot presume the report of the expert as conclusive. The expert opinion is only a relevant piece of evidence and it is ultimately for the Quasi judicial authorities to adjudge the correctness of the same by application of their mind having regard to the facts and circumstances of each case.

5.  In the case of domestic inquiry by the employers for taking disciplinary action against their employees in the area of labour-management relations, and also in disciplinary proceedings initiated by the Government against Civil Servants or by a Statutory Corporation against its employees the right of cross-examination has been regarded as an essential content of natural justice. It is an elementary principle that person who is required to answer charge must know not only the accusation but also its testimony on which the accusation is supported. He must be given a fair chance to hear the evidence in support of the charge and put such relevant questions by way of cross-examination as he desires. This is the barest requirement of an inquiry in proceedings which are penal in nature where penal consequences are sought to be fastened on a person on the basis of the report of an expert which has been challenged by a party in whose favour right of cross-examination was also acceded to by the adjudicating authority and infraction of this requirement would tantamount to traversty of the principles of natural justice. It would be relevant to note that in regard to the certificate or opinion given by the CLRI in the instant case, no conclusiveness is attached to the same nor examination of such expert expressly excluded under any Statute. Reports of Government Scientific experts such as Chemical Examiner, Officers of the Mint or Indian Security Press, Public Analyst, Chief Inspector of Explosives, Director of Finger Print Bureau and Director of a Central or a State Forensic Science Laboratory and Serologist to the Government are normally used as evidence before Courts in inquiry or trial but if the Courts think it fit the Courts may summon and examine any such expert as to the subject matter of his report. Even if the report of the CLRI is admissible in evidence its probative value depends upon several circumstances, such as data available, the method of analysis, the fullness of the conclusion, and speaking generally, the vulnerability to which the expert’s premise is subject. In our opinion, if the right of cross-examination of the CLRI officer is denied to the appellants, it would amount to denial of natural justice.

6.  Unfortunately, in this case the finding of the adjudicating authority is mainly based on the test report of the expert as could be seen from the orders of the adjudicating authority referred to supra. Since the expert could not be made available for cross-examination in spite of summons having been sent by the Collector of Customs, the only course open to the adjudicating authority in such circumstances would be to proceed with the adjudication de hors the report of the expert. But in the present case notwithstanding the fact that the CLRI did not respond to the summons of the Collector of Customs, by sending any of its expert, the adjudicating authority has chosen to place reliance against the appellant, on the opinion of the expert body. Such a course apart from being violative of principles of natural justice, is not, permissible in law. Therefore, without expressing any opinion on the merits of the issue, on technical grounds, we hold that the impugned order appealed against is violative of principles of natural justice and cannot be sustained. Since already the matter has been remanded once we do not think it would be just and proper to remand the matter once over in the context of the case. We are, therefore, constrained to set aside the impugned order in the above circumstances. We accordingly set aside the impugned order appealed against and allow the appeal.

7.  We also direct that copy of the judgment be marked to the Ministry of Finance as well as the Administrative Ministry so that such issues which are likely to crop up in Customs adjudication could be considered and suitable instructions issued."

ln our view, in fairness, the plea of the appellants to cross-examine the Chief Chemist should have been allowed and also the plea for re-testing of the samples should have been acceded to. So far as the Board’s circular is concerned, even if it is constured to be statutory in nature under Section 37B of the Central Excise and Salt Act, 1944, it would be seen that a Trade Notice in this regard came to be issued only on 22-4-1993 and the Board’s circular, dated 11-3-1993 issued under Section 37B of the Act reads as under :

“.....There is no uniformity in the classification of ”Liquid Glucose" in the schedule to the Central Excise Tariff Act, 1985 (henceforth referred to as Tariff). The Central Excise Officers of different Collectorates have been classifying “Liquid Glucose” either under sub-heading No. 1702.19 or 1702.29 or 1702.30 of the Tariff. The trade has represented on the lack of uniform classification of this product under the Tariff as the incidence of duty varies depending on the sub-heading number.

Liquid Glucose is obtained by hydrolysing starch with acids and/or enzymes. It always contains, in addition to dextrose, a variable proportion of ditri and other polysaccharides (Maltose, maltotriose etc.) It is usually in the form of a colourless, more or less viscous liquid. It is extensively used in confectionery, biscuit and food canning industries.

The Central Board of Excise & Customs (henceforth referred to as Board) have examined the classification of “Liquid Glucose”. Keeping in view the process of manufacture, composition and analysis of the product manufactured by a few manufacturers, Board is of the view that this product is classifiable under sub-heading No 1702.19 of the Tariff.

Now therefore, in exercise of the powers conferred under Section 37B of the Central Excises and Salt Act, 1944 (1 of 1944) henceforth referred to as act and for the purpose of ensuring uniformity in classification, Board, hereby order that “Liquid Glucose” shall henceforth be classified under sub-heading No. 1702.19 of the Tariff. Board further directs that a copy of the order be sent to all Collectors who shall inform the trade and all other officers employed in execution of the provisions of the Act."

It would be seen that the Board has clarified that the classification of the product henceforth (emphasis applied) would be under sub-heading 1702.19 of the Tariff. It would be therefore obvious and clear that the classification of, the goods in question was not uniform and it is also well settled, when the issues are contentious and debatable, there is a prima facie case in favour of the party. The Collector of Central Excise (Appeals), New Delhi in the case of M/s. Bharat Steel and Chemicals in his Order-in-Appeal No. 914-CE/DLH/91, dated 29-8-1991 dealing with an identical issue has observed as under :

“I find that the contest is between Tariff sub-heading 1702.30 as claimed by the appellants and 1702.19 as held by the Astt. Collector. The Tariff Heading 17.02 reads as under :

“Other sugars, including chemically pure lactos, maltos, glucose and fructose in any form and preparations thereof; sugar syrups not containing added flavouring or colouring matter; artificial honey whether or not mixed with natural honey; caramel”.

Out of this main heading, three sub-headings have been carved out. The first one reads “other sugars, including chemically pure lactos, maltos, glucose and fructose in any form”. The Tariff Heading 1702.19 falls under this sub-heading. The second sub-heading is not relevant for the present purpose and hence is not reproduced. The third sub-heading is “sugar syrups not containing added flavouring or colouring matter; artificial honey, whether or not mixed with natural honey; caramel”. The Tariff sub-heading 1702.30 falls under this category. By reading these two descriptions it is obvious that “Sugar syrups satisfying the conditions stipulated in the description quoted above will be more specifically cover under Tariff sub-heading 1702.30 since the description of the first category, namely ”other sugars" is by its very nature a `residual’ and a general term. In order to exclude a product from the purview of sub-heading 1702.30 it has to be established that it is not sugar syrup or it is a sugar syrup that contains added flavouring or colouring matter. The Asstt. Collector has urged that glucose which is not chemically pure is not excluded from the sub-heading 1702.19. He has also observed that although Central Excise Tariff is based on the HSN system, the description of Heading 17.02 in the Tariff is not exactly identical to the description of Heading 17.02 in the Explanatory Notes to the HSN. Former also includes the preparations of sugars which is not there in the Explanatory Notes. While it is true, I observe, that “other sugars” includes particularly chemically pure glucose and does not specifically exclude glucose which is not chemically pure, the fact remains that a product which is known and acknowledged as sugar syrup would have to fall under the specific description `sugar syrup’ appearing under Tariff Heading 17.02 as a separate category. The Asstt. Collector has not taken the ground that the appellants’ product is a chemically pure glucose nor does it deny the appellants’ claim that the products are known as sugar syrup. It is also not the Department’s case that the sugar syrup in question contains added flavouring or colouring matter. Therefore, even without reference to HSN it naturally falls from the description of the items given in the Tariff Heading 17.02 of the Central Excise Tariff that the products under consideration will be more appropriately covered by the description `sugar syrups’ not containing added flavouring or colouring matter’ under Tariff sub-heading 1702.30. I notice that the Asstt. Collector has sought to exclude the products from the coverage of Tariff sub-heading 1702.30 by referring to the types of sugar syrups which could fall under Tariff Heading 1702.30 as enumerated at page 132 of the Explanatory Notes. While referring to this particular Explanatory Note, I find that the Asstt. Collector has missed out the main text of the Explanatory Note under the Heading “Sugar Syrup”. For the purpose of clarity and precision I quote the relevant portion of this Explanatory Note which has been overlooked by the Asstt. Collector.

“This part covers syrups of all sugars (including lactos syrups and aqueous solutions other than aqueous solutions of a chemically pure sugars of heading 29.40), provided they do not contain added flavouring or colouring matter (see Explanatory Note 21.06).

In addition to the syrups referred to in Part (A) above [i.e., glucose (starch) syrup, fructose syrup, syrup of maltodextrins, inverted sugar syrup as well as sucrose syrup], this heading includes :

From this it is clear that what the Asstt. Collector has quoted is not the full coverage of the expression ‘sugar syrups’ as given in the said Explanatory Notes and it includes not only those quoted by the Asstt. Collector but also syrups referred in Part (A) namely, glucose (Starch) syrups, fructose syrups, syrups of maltodextrins, invert sugar as well as sucrose syrup. This contention of the Asstt. Collector is therefore also not sustainable in law and on facts. The same argument applies to the product, namely, maltodextrins syrup which is the other item involved in this dispute.

In view of the above, I find that the Asstt. Collector’s contention that the Tariff Heading 1702.19 is more specific than the Tariff sub-heading 1702.30 for the two products in question is not justified. I, therefore, annul the order of the Asstt. Collector and hold that the two products in dispute should be classified under Tariff sub-heading 1702.30. The appeal is disposed of accordingly."

6. There is no evidence on record to show that the above order of the Collector (Appeals) on an identical issue has been appealed against and in the absence of any evidence on record it is reasonable to presume that the above order of the learned Collector (Appeals) has become final. In such a situation it would not only be inequitable but also incongruous to have two divergent views by two appellate authorities on an identical issue between two manufacturers. If such a situation is allowed to continue that would only lead to unjust and hostile discrimination of two similarly placed manufacturers, one enjoying the benefit of concessional duty while the other being denied the same and it need hardly be emphasised that such a situation in existence would be a constitutional anathema, offending the spirit of Article 14 of the Constitution of India. It is indeed strange that when the order of the Collector (Appeals) was brought to the notice of the lower appellate authority he has only chosen to observe as under :

“The practice elsewhere on classification is outside the scope of this Appeal, which cannot be discussed by me. In any case, each case has to be examined on merits and if necessary on chemical examiner’s opinion on the samples and therefore, I cannot comment on the practice in other jurisdictions outside Karnataka.”

Therefore, in the peculiar facts and circumstances of the case set out above, in the interests of justice we are obliged to set aside the impugned order and remand the matter to the original authority for reconsideration of the appellants contentions regarding liability to differential duty for the period June 1992 to April 1993 on liquid Glucose. It should be noted that if all over the country, manufacturers similarly placed as the appellants manufacturing identical goods have been permitted to pay duty on liquid Glucose by classifying the same under 1702.29 or 1702.30, there is no reason or legal justification for denying the similar privilege or right to the appellants. This aspect of the matter will be borne in mind by the authorities while reconsidering the issue in the light of our observations above. The appeal stands remanded in the above terms.

7. [Contra per : V.P. Gulati, Member (T.)]. - I have given a careful thought to the order recorded by my learned Brother and I am not able to agree with him that the  impugned order has to be set aside at this interlocutory stage of hearing for the reason that there has been violation of principles of natural justice inasmuch as cross-examination of the Chief Chemist has not been allowed and also for the reason that in another Collectorate on appeal the appellants’ plea in that case for assessment of the goods under Tariff Heading 1702.30 as pleaded in this case has been allowed. I observe that the learned lower authorities in the present case have given very reasoned findings. Prima facie there is no infirmity in the reasoning of the lower authorities. I observe that the assessments in the appellants’ case for the relevant period were made on provisional basis and it is not as if the appellants were taken by surprise as to the approval of the classification list by the proper officer. The appellants were given necessary show cause notice before finalisation of the classification list and the order came to be passed after giving the appellants full opportunity of hearing including for contesting the result of the chemical examination. It is pertinent to note that sample was originally tested by the Chemical Examiner and thereafter at the request of the appellants the same was got re-tested by the Chief Chemist which sample was found to be in the form of a colourless viscous liquid composed of reducing sugars and free from colour with sugar contents expressed as dextrose as 34.6% and 35.6% by weight as against 36.4% and 36.8% as ascertained by the Chemical Examiner. The lower authorities after taking into consideration the parameters relating to colour, and also whether it contained flavour or not, the percentage of dextrose and after considering the wording of the Tariff Heading 1702.19 and 1702.30 came to the conclusion that the appellants’ product is commercial Glucose meriting assessment under Tariff Heading 1702.19. The appellants’ plea is that apart from giving the chemical composition, the Chief Chemist has also opined on the classification aspect and also given his interpretation of the tariff after taking into consideration the Chapter notes in the HSN and therefore the learned lower authorities would have been prejudiced by this opinion. It has also been pleaded that the appellants had called for the cross-examination of the Chemical Examiner which was denied in violation of the principles of natural justice. The learned Counsel for the appellants, therefore, sought for setting aside the order of the learned lower authority on this ground after dispensing with the pre-deposit of duty as demanded.

8. I observe that a reading of the order of the learned lower authority clearly shows that the lower authorities have applied their minds independently and have held that the goods are assessable under Tariff Heading 1702.19 after a thorough discussion of the scope of the Tariff entries under Heading 1702.19 and 1702.30 after taking into consideration of the chemical composition aspect as given by the Chemical Examiner and the Chief Chemist on re-test at the request of the appellants. The learned lower authority has taken note of the fact that no doubt, the Chief Chemist has gone beyond the query raised to him inasmuch as he has given his view on the classification matter and has clearly stated that the decision of the original authority was based on the merits of the Chemical composition and the interpretation of the tariff by the lower authority. It is pertinent to note that the appellants have not in any way contested the percentage of the Dextrose and other physical characteristics given in the chemical examination report. It was put to the learned Counsel as to whether the appellants had contested before the lower authority this percentage, he fairly conceded that the results of the Chemical test as such were not contested. It is also seen that the appellants on their own have also not given the chemical composition and the physical characteristics according to them. Therefore, when the lower authority has gone by the chemical test and which has not been contested and examined the matter as to the classification on his analysis of the tariff, refusal of the learned lower authority to allow cross-examination of the Chief Chemist cannot be said to have prima facie prejudiced the appellants in any way. It would have been a different matter in case the appellants had contested the Chemical composition as determined on the chemical test and had given different figures before the learned lower authority in that regard or they wanted to test the veracity of the figure given by the Chemical Examiner. When this was not the case, prima facie the plea for cross-examination of the Chief Chemist has been rightly rejected by the learned lower authority. The appellants had the choice to bring in any expert before the lower authority [to] furnish any expert opinion by way of an affidavit, if they felt that the chemical test results were not as per their own determination. The appellants have not done this. The only grievance against the Chief Chemist’s opinion, therefore, that would survive is that the Chief Chemist went beyond the terms of reference to him and gave his opinion on the classification of the goods. As mentioned earlier, a reading of the order of the learned lower authorities clearly shows that they had applied their minds independently. The appellants were issued with show cause notice by the original authority and given full opportunity to meet the charge on merits in respect of the chemical composition as determined on test including personal hearing. As mentioned earlier, they did not choose to furnish any expert opinion nor even contested the test result. They had also full opportunity to put forth their case before the lower appellate authority. In view of this, I hold that prima facie there is no denial of principles of natural justice. I may mention that the Hon’ble Supreme Court in the case reported in AIR 1977 SC 965 observed that natural justice is not unruly horse and what the quasi judicial authority is required to show is that there has been fairness and also the form, features and the fundamentals of such essential processual propriety have to be conditioned by the facts and circumstances of each situation. In the present case as mentioned, the appellants had full opportunity to put forth their case.

9. On the merits of the case, the learned Advocate has stressed the decision of the Collector (Appeals), New Delhi that similar product had been classified by the said authority under Tariff Heading 1702.30. To appreciate the position, the two computing headings viz. 1702.19 and 1702.30 are reproduced below :

It is seen that this tariff heading figures under Chapter 17 and Tariff Heading 17.01 covers Cane or beet sugar and chemically pure sucrose, in solid form. Heading 17.02 has two broad headings: (i) `other sugars, including chemically pure lactose, maltose, glucose and fructose in any form’; and (ii) preparations thereof; sugar syrups not containing added flavouring or colouring matter; artificial honey, whether or not mixed with, caramel’. Under the first heading there are two sub-divisions i.e. 1702.11-Palmyra sugar and 1702.19-Others and under the second part are Headings 1702.21, 1702.29, 1702.30. The learned lower authorities have taken note of the fact that the appellants were marketing their product as liquid Glucose and has gone by the Tariff Heading 1702.19 which covers other sugars including chemically pure lactose, maltose, glucose and fructose in any form. It is relevant in this context to mention that the manufacturing process carried out by the appellants is for the manufacture of Glucose, the product that emerged was Glucose in liquid form. After the manufacturing process nothing else has been done as seen from the records. Without any further processing of this material prima facie, therefore, it cannot be called preparation of glucose but Glucose itself. The I.S.I. 873 1994 recognises liquid Glucose as a form of Glucose and it is not the case of the appellants that the percentage and the parameters laid down therein are not satisfied by the appellants product. In fact, the learned Counsel for the appellants did not argue on the Chemical composition of the product and the inference drawn by the lower authorities on the analysis of the tariff entries and consideration of I.S.I. etc. He merely stressed that another co-ordinate authority viz. the Collector (Appeals) after investigation of the whole position has held that the similar product to be classifiable under Tariff Heading 1702.30. It is to be observed that in that case the learned appellate authority went by the description of the goods as declared, namely, Sugar Syrup. In the present case as mentioned earlier the process of manufacture brought into existence is prima facie Glucose in liquid form and the same has been marketed by the appellants as Glucose. Therefore, prima facie it can be held that the product is a liquid Glucose and since Tariff Heading 1702.19 is applicable to Glucose in all form the assessment as held in the impugned order before us, under Heading 1702.19 has to be held to be prima facie correct. In the above view of the matter, I hold that no case has been made out by the applicants for setting aside the order of the lower authority at this interlocutory stage.

10. In regard to the financial position, the learned Counsel for the appellants/applicants pleaded that the appellants are in bad shape financially and they are before the BIFR for restructuring in view of the loss they have suffered. He pleaded that the appellants are a loss making concern. He pleaded that they had a turn over of over Rs. 9.53 crores last year and suffered accumulated loss of over Rs. 4.00 crores. From their un-audited provisional balance-sheet for the year ending 30-9-1993, it is seen that during the six months ending 30-9-1993 the applicants are in a better position compared to the previous six months. The expenditure shows reduction over previous six months. However, interest liability is more than what was in the previous six months. The applicants have not produced a complete balance sheet to show the position of sundry debtors and what their current assets comprise of and also what is their term liability of 26 crores relating to. These are significant points required to be shown. The applicants have not made any provision for taxation as seen from the provisional un-audited financial position when their assessments were provisional. It is also seen that the applicants Unit has been promoted by M/s. Glaxo and also Karnataka State Industrial Development Corporation. The applicants are thus a unit promoted by well established financially sound Organisations. It is also seen that the applicants have shown depreciation of over Rs. 2.36 crores in 1991-92 and over Rs. 2.47 crores in 1992-93. Taking into account the details in regard to their financial position placed before us particularly the depreciation taken by the applicants, it cannot be said that the applicants are in a very bad position financially. The applicants continue to have turn over in crores. Therefore, taking into consideration the totality of the facts, I direct the applicants to make a pre-deposit of Rs. 5,00,000/- (Rupees Five lakhs) subject to which pre-deposit of the balance amount would stand dispensed with pending appeal. I am not fixing any date for compliance for the purpose of pre-deposit as this will depend on the reference of the matter to the 3rd Member on account of difference of opinion in the matter.

POINT OF DIFFERENCE

Whether in the facts and circumstances of the case pre-deposit of duty as demanded in terms of the impugned order should be dispensed with and the matter remanded to the original authority for the reason that there has been denial of principles of natural justice inasmuch as cross-examination of Chief Chemist was not allowed and also that Collector (Appeals) in another Collectorate classified similar goods as pleaded by the appellants under Tariff Heading 1702.30 as held by Member (Judicial).

OR

Prima facie there has been no denial of principles of natural justice, inasmuch as the test results as such have not been contested and the lower authority has gone by the test results and on his own interpretation of the Tariff entries and also on consideration of the I.S.I. standard has come to a reasoned conclusion and therefore, prima facie there is no infirmity in the order of the lower authority for reason of not allowing the cross-examination of the Chief Chemist and further that inasmuch as the appellants’ process of manufacture is that of Glucose and no further process had been carried out after the Glucose came into existence it could not be considered prima facie a preparation of sugar falling under Tariff Heading l702.30 and would fall under Tariff Heading 1702.19 which covers Glucose in any form, as held by Member (Technical), and therefore, taking into consideration the financial position of the appellants, they should make a pre-deposit of Rs. 5,00,000/- (Rs. Five lakhs) as ordered by Member (Technical).

11. [Order per : K. Sankararaman, Member (T)]. - The points of difference in this case between learned Member (J)/Vice President and learned Member (T) have been referred to me for the purpose of resolving the difference. The view taken by learned Member (J)/Vice President is that in the facts and circumstances of the case pre-deposit of duty demanded in terms of the impugned order should be dispensed with and the matter remanded to the original authority. While coming to this conclusion the learned Member (J)/Vice President has taken into consideration the aspect of denial of principles of natural justice since cross-examination of the Chemical Examiner was not allowed. Further, Collector (Appeals) in another Collectorate has classified the similar goods in the manner claimed by the petitioner/appellant under Tariff Heading 1702.30. On the contrary, the learned Member (Technical) held that there was no denial of principles of natural justice since the test results had not been contested as such and the learned lower authority had gone by the test result and also on his own interpretation of the tariff entries. He had also considered the I.S. standards and come to a conclusion because of which it could not be taken that there was any infirmity in the order of the learned lower authority. On merits the learned Member (T) had taken note of the manufacturing process followed by the appellants for glucose for which no further process had been carried out after that material had come into existence. In the circumstances, he was of the view that it could not be considered, prima facie, a preparation of sugar falling under Tariff Heading 1702.30 and the item would fall under Heading 1702.19 which covers glucose in any form.

12.  When the difference of opinion matter came up for hearing before me, the applicant/appellant was represented by Shri K. Parameswaran, Advocate. He submitted that subsequent to the passing of the orders by the two learned Members, it has become clear that there are two decisions by the Tribunal on the same product which is the subject matter of dispute in the present case. He handed over a copy of the order passed by the Tribunal in the case of Collector of Central Excise, Chandigarh v. Sukhjit Starch Chemicals Ltd. reported in 1994 (072) ELT 753. This decision had subsequently been followed by the Tribunal in the case reported in 1995 (075) ELT 329 in the case of Maize Products v. CCE, Ahmedabad. The learned Counsel pointed out that similar issue had been considered in the present case which had formed the difference of opinion and in view of the decisions cited, the difference of opinion has been thrashed out on the lines claimed by the applicant/appellant. In this view of the matter, he submitted that the matter is no longer res integra and the matter should be decided in favour of the applicant/appellant, as held by the learned Member (J)/Vice-President. The Counsel particularly referred to the discussions in the Sukhjit Starch & Chemicals Ltd. case cited supra where the scope of the expression `Preparation of other sugars’ had come in for detailed analysis.

13.  Shri S. Murugandi, the learned DR for the department while submitting that he would support the view taken by learned Member (T), stated that he would leave the matter for decision by the Bench in view of the Tribunal’s decision cited by the learned Counsel for the applicant/appellant.

14.  I have taken note of the submissions made by both the sides. I have also gone through the decisions cited by the Counsel for the appellant. In view of the fact that these decisions relate to the same product which is the subject matter of dispute in the present case, it can be safely stated that a prima facie case has been made out by the appellant. In view of the above position I am inclined to agree with the view taken by learned Member (J)/Vice President.

15. Now the matter will have to go to the Bench which heard the case originally for passing appropriate order.

FINAL ORDER

16.  In the light of the majority view, pre-deposit of the duty as demanded in terms of the impugned order is dispensed with and the matter remanded to the original authority.

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Equivalent 1996 (87) ELT 463 (Tribunal)