1998(09)LCX0016

IN THE CEGAT, WEST REGIONAL BENCH, MUMBAI

S/Shri K.S. Venkataramani, Vice President and J.N. Srinivasa Murthy,

Member (J)

A.P. CHEMICALS

Versus

COMMISSIONER OF C. EX., BARODA

Order No. 3665/98-WRB, dated 15-9-1998 in Appeal No. E/439/94-Bom

CASE CITED

Madras Petro-Chem. Ltd. v. Collector — 1990(09)LCX0079 Eq 1991 (051) ELT 0395 (Tribunal) — Referred              [Para 1]

Advocated By : Shri J.C. Patel, Advocate, for the Appellant.

Shri S. V. Singh, JDR, for the Respondent.

[Order per : K.S. Venkataramani, Vice President]. - The appellants herein are aggrieved by the impugned order passed by the Commissioner of Central Excise (Appeals), Ahmedabad whereby that authority has upheld the classification of the product manufactured by the appellants - paracetamol direct compression grade under sub-heading 2924.00 of Central Excise Tariff Act which was the classification adopted by the Jurisdictional Assistant Commissioner of Central Excise. The ld. Counsel for the appellants, Shri J.C. Patel submitted that the process of manufacture of the product is as follows :

(a) First Paracetamol I.P/B.P. and Starch I.P./B.P. are mixed for 30 minutes in a Mixer Machine. This step is called DRY MIXING.

(b) The second step is of preparing a Wet Paste of Starch I.P/B.P. Povidone I.P./B.P. Sodium Methyl Paraben I.P./B.P. and Sodium Benzoate I.P./B.P.

(c) The dry mixture and the wet paste are then thoroughly mixed to form a wet mass.

(d) The said wet mass is then dried in the Drier at 80^oC and thereafter granulated through a Mesh.

(e) Thereafter other ingredients viz. Talcum I.P./B.P. Magnesium Stearate I.P./B.P. Sodium Starch Glyconate I.P./B.P. and Aerosil I.P./B.P. are seived through Mesh and then added to the aforesaid granules and then mixed in Mixer. The resultant Product is called Paracetamol Direct Compression Grade 90%.

In the said product Paracetamol constitutes 90% and the other ingredients make up the balance 10%.

The ld. Counsel contended that the lower authorities have held that the product could be classified under Chapter 29. However, in order to so classify the goods one has to refer to Chapter Note 1(a) to Chapter 29 which lays down that the Chapter would apply only to separate chemically defined organic compounds, whether or not containing impurities. The ld. Counsel relied upon the HSN Notes to Chapter 29 which has laid down that - a separate chemically defined compound is a single chemical compound of known structure, which does not contain other substances deliberately added during or after its manufacture, The HSN note further explained that the term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process. According to the HSN notes, such substances are not in all cases to be regarded as ‘impurities’ permitted under Note 1(a). When such substances are deliberately left in the product with a view to rendering it particularly suitable for specific use rather than for general use, they are not regarded as permissible impurities. It was further submitted that in a decision of the Tribunal in Madras Petro-Chem. Ltd. v. Collector of C. Ex. - 1991 (51) E.L.T. 395 (Tribunal) the HSN explanatory note has been followed.

2.  We have heard Shri S.V. Singh, the ld. DR who has emphasised the fact that the lower authorities have highlighted the nature of the goods that after all the process in the hands of the appellants that it remains paracetamol classifiable under Chapter 29.

3.  We have considered the submissions. We find from the process of manufacture as detailed above that the other ingredients in the product manufactured by the appellants are not in the nature of the impurities as per the HSN explanation which lays down-what are the permissible impurities for the purpose of Chapter Note 1(a) of Chapter 29. These are deliberately mixed with the paracetamol of I.P. or B.P. grade which is starting material for paracetamol in order to make the product suitable for making of tablets. In such a situation, the view taken by the Commissioner (Appeals) in the impugned order that it is not of material significance for deciding the classification whether the other substances were added in a pre-planned manner or the same occurred as a result of something inherent in the manufacturing process, is not well founded and has to be rejected. Thus, in concluding that 10% of the presence of other material is in the nature of impurity so as to classify the goods under Chapter 29, both the lower authorities have not referred to the explanatory note to the HSN explaining the expression - a separate chemically defined compound and also explaining the term ‘impurities’ occurring in Chapter Note 1(a) of Chapter 29. In this view of the matter, the classification of the goods under sub-heading 2924.00 is not sustainable. In such a view of the matter, the classification of the goods in question under the residual Heading 3823.00 of CETA as claimed by appellants covering chemical products and preparations of the chemical or allied industries, not elsewhere specified, would be more appropriate for the product. The appeal is disposed of in the above terms.

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Equivalent 1999 (107) ELT 82 (Tribunal)