1999(03)LCX0116

IN THE CEGAT, COURT NO. III, NEW DELHI

Ms. Jyoti Balasundaram, Member (J) and Shri G.R. Sharma, Member (T)

CIBA SPECIALITY CHEMICALS LTD.

Versus

COMMISSIONER OF C. EX., GOA

Final Order No. 200/99-C, dated 30-3-1999 in Appeal No. E/ 2927/93-C

Advocated By : Shri R.G. Seth, Advocate, for the Appellant.

Shri S.K. Das, DR, for the Respondents.

[Order per : Jyoti Balasundaram, Member (J)]. - The dispute in the above appeal relates to classification of following Cationic Surface Softeners for softening of textiles and treating of leather :

1. Sapamin OC

2. Sapamin OC liquid

3. Sapamin P

4. Irgamin 1281

2. The appellants filed classification list No. 105/91 classifying the above products under CET sub-heading 3402.90 as Organic Surface Active agents and claimed the benefit of Notification No. 101/66, dated 17-6-1966. A show cause notice was issued to them on 26-10-1990 proposing classification of the products under Chapter Heading 38.09 on the basis of Chemical Examiner’s report that the products were based on ingredients which were not surface active agents and proposing denial of the exemption under the notification. The Assistant Collector of Central Excise vide order dated 21-7-1991, confirmed the classification proposed in the notice viz. Heading 3809 relying upon the chemical examiner’s report, and rejecting the opinion of Prof. V.V. Subramaniam relied upon by the appellants. Pursuant to the above order, classification list No. 105/90-91 was approved under Chapter 38. Subsequently, the appellants filed another classification list bearing No. 112/91-92 effective from 28-8-1991 under Heading 38.09 which was approved by the Assistant Commissioner on 18-9-1991.

3. The Department filed an appeal under Section 35E(2) against the approval of classification list No. 105/90-91 in respect of three products namely Sapamin OC, Sapamin OC liquid and Sapamin P and also filed an appeal against the approval of classification list No. 112/91-92 which were disposed of by a common order of the Commissioner of Central Excise(Appeals), Goa holding that all the four products were classifiable under C.E.T. sub-heading 3402.90 and setting aside the Assistant Commissioner’s approval of both classification lists and allowing the Department’s application on the basis of opinion of Prof. Subramaniam mentioned herein above. Hence this appeal by the assessee.

4. We have heard Shri R.G. Seth, learned Advocate for the appellants and Shri S.K. Das, learned DR. We find that the products in dispute were tested by the Chemical Examiner who has given a detailed report (pages 50 to 55 of the paper book). In this report, he has held that the main softening effect of the product is derived from a non-surface active reaction product aided by a small amount of surface active agent which is externally added, and since the softener is thus not based upon an OSAA, it falls outside the purview of Chapter 34. He has noted that the requirement of reduction of surface tension of water to 44 d/cm or less by a OS solution in water is only for surface active agents (Note 3(b) to Chapter 34) and not for surface active preparations. The HSN Explanatory Notes to Heading 34.02 also clearly sets out that the heading does not cover ‘preparations containing surface active agents where the surface active agents function is either not required or is only subsidiary to the main function of the preparation (Headings 34.03, 34.05, 38.08, 38.09 and 38.23 etc)’. The appellants have contended that the surface active function in their products is only subsidiary to its main function. The Department has not challenged the test report of the Chemical Examiner which has been furnished after testing the samples of the disputed products, by seeking retest at the material point of time but has only contended that the report is incorrect and have not substantiated this claim. The Chemical Examiner’s report is to be given preference over the opinion of Prof. Subramaniam whose opinion is a general one, and is not based on actual testing of the samples of the products. The appellants had also furnished the opinion of Dr. V.A. Shenai of Bombay University who confirmed that the products in dispute were finishing agents or softners used in textile industry for softening of textile fabrics and that the products, as seen from the tests carried out by the University of Bombay, Department of Chemical Technology, should not be considered as organic surface active agents.

5. We, therefore, hold that the report of the Chemical Examiner is most relevant and is required to be relied upon for the purpose of classification of the products in dispute. Based upon the Chemical Examiner’s report, we hold that all the four products fall for classification under C.E.T. sub-heading 3809.00 and are eligible to exemption in terms of Notification 101/66 which is available to goods falling under Chapter 38, set aside the impugned order and allow the appeals.

Equivalent 2000 (119) ELT 358 (Tribunal)