1999(09)LCX0221
IN THE CEGAT, WEST ZONAL BENCH, MUMBAI
S/Shri Gowri Shankar, Member (T) and J.N. Srinivasa Murthy, Member (J)
GODREJ SOAPS LTD.
Versus
COMMISSIONER OF CUSTOMS, MUMBAI
Order No. 2357/99-WZB/C-I, dated 16-9-1999 in Appeal No. C/253/98
Cases Quoted
Bakelite Hylam Ltd. v. Commissioner — 1996(10)LCX0116 Eq 1997 (091) ELT 0165 (S.C.) — Followed [Para 13]
Chemical and Fibres India Ltd. v. U.O.I. — 1982(06)LCX0018 Eq 1982 (010) ELT 0917 (Bom.) — Referred [Para 11]
U.O.I. v. Wood Polymer — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Followed [Para 13]
Advocated By : Shri R. Ravindran, Advocate, for the Appellant.
Shri A.K. Chatterjee, SDR, for the Respondents.
[Order per : Gowri Shankar, Member (T)]. - The question for consideration in this appeal is the classification of a product C-14 alpha olefins also known as 1 tetradecene in the Customs Tariff. The appellant claimed classification of the product under Heading 2901.29. Notices were issued by the Customs House proposing to classify the consignment imported under Heading 2910.00 of the Tariff. The Assistant Commissioner, after considering the cause shown, and hearing the importer’s representative, held that the goods were more appropriately classifiable under Heading 2910.00. The importer appealed to this order. The Commissioner (Appeals) did not accept the contention raised by the appellant before him, that the goods were classifiable under heading claimed by it. He confirmed the classification determined by the Assistant Commissioner. Hence this appeal.
2. Chapter 29 of the Tariff is for organic chemicals. Heading 29.01 if for acyclic hydrocarbons. Sub-heading 10 of this heading is for saturated acyclic hydrocarbon. The remaining heading is for unsaturated acyclic hydrocarbons. Sub-heading 29 claimed by the appellant is for those unsaturated hydrocarbons other than those in sub-headings 21, 22, 23 and 24. Chapter 27, in which the department has classified the goods, covers mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes. Heading 2710.00 is for petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations.
3. The Assistant Commissioner has said, in his order, that the product will not be classifiable under Chapter 29 for the following reasons : Note 1 (b) to Chapter 29, excludes from the scope of that chapter, mixtures of acyclic hydrocarbon isomers (other than stereo-isomers) whether or not saturated. Note 2 to Chapter 27 provides that petroleum oils and oils obtained from bituminous minerals referred to in Heading 27.10 includes not only petroleum oils and oils obtained from bituminous minerals but also similar oils, as well as those consisting mainly of mixed unsaturated hydrocarbons, obtained by any process, provided that the weight of the non-aromatic constituents exceeds that of the aromatic constituents. The goods imported by the appellant consist of mixtures of acyclic hydrocarbons i.e. C12, C14 and C16. The presence of C12 and C16 therefore, by virtue of application of chapter note referred to above, excludes their classification under Chapter 29 and justifies their correct classification under Heading 2710.00.
4. The Commissioner (Appeals) has taken a somewhat different view. He has said that the Assistant Commissioner’s view, that C12 alpha olefin, C14 alpha olefin and C16 alpha olefin are isomers of the same chemically defined organic compound substance, is wrong. He says that they are distinctly different chemical compounds with different molecular formulae and molecular weights and hence are not isomers. He says that the tetradecene imported by the appellant is a mixture of C14 alpha olefin isomers. He finds the composition to be 94% (min) n-alpha olefins, 4% (max) branched olefin and 2.5% (max) beta olefin. He also finds that the literature given by the supplier and M/s. S.G.S. Inspection Agency (apparently appointed by the importer to inspect the goods prior to shipment), indicate that the goods are isomeric mixtures containing linear terminal, branched terminal and linear internal terminal olefins. He finds isomers to be defined by Concise Oxford Dictionary as “one of two or more compounds with the same molecular formula but a different arrangement of atoms and different properties.” Since the goods are those mixtures of isomers acyclic hydrocarbon other than stereo-isomers, these are excluded from Chapter 29 by virtue of Note 1(b) to that chapter.
5. The view of the Commissioner (Appeals), that the Assistant Commissioner is in error in not considering C12, C14 and C16 alpha olefin is to be isomers of the same compound, has to be accepted as correct. An isomer is defined in the Condensed Chemical Dictionary by Hawley’s to be as follows :
“one of two or more molecules having of the same atoms and hence the same molecular weight, but differing in respect to the arrangement or configuration of the atoms. Butanol (C4H9OH or C4H10) and ethyl ether (C2H5OC2H5 or C4H10O) have the same empirical formulas but are entirely different kinds of substances; normal butanol (CH3CH2CH2CH2OH) and isobutanol ([CH3]2CHCH2OH) are the same kinds of substances, differing chiefly in the shape of the molecules; sec-butanol (CH3CH2OCH2CH3) exists in two forms, one a mirror image of the other (enantiomer).”
The product that we are concerned falls in a group of chemical compound known as olefins. The dictionary defines olefin at page 819 :
“A class of unsaturated aliphatic hydrocarbons having one or more double bonds, obtained by cracking naphtha or other petroleum fractions at high temperatures (1500-1700F). Those containing one double bond are called alkenes, and those with two are called alkadienes, or diolefins. They are names after the corresponding paraffins by adding-ene or -ylene to the stem. Olefins are particularly reactive because the double bond is on the first carbon. Examples are 1-octene and 1-octadecene, which are used as the starting point for medium-biodegradable surfactants. Other olefins (ethylene, propylene, etc.) are starting points for certain manufactured fibres.”
6. Tctradecene has the formula C14 H30 or CH3 (CH2)12 CH3. Octadecene has the formula C18, H48 Octene has a formula C8, H165. It will be noted from these examples that the names of those olefins refer to the number of carbon atoms present in the one molecule of the compound. Octene, tetradecene and octadecene referred to as C8, C14 and C18 have that number of carbon atoms present in each molecule of each of these substances. C12, C14 and C16 olefins will have respectively 12, 14 and 16 carbon atoms in each molecule. Each of them has a separate formula and structure. Each of them in short is a different chemical compound. One of them therefore cannot be an isomer of the other. The reasons furnished by the Assistant Commissioner for disallowing the classification have therefore rightly been hold to be unacceptable by Commissioner (Appeals).
7. The Commissioner (Appeals)’ finding that C14 contains, in addition to the 94% alpha olefin up to 4% of branched olefin and 2.5% beta olefin is not disputed by the appellant. Alpha olefin, branched olefin and beta olefin are isomers. Each of them has the same molecular formula. Each product has the same number of carbon and hydrogen atoms. They therefore have the same molecular weight. However, the arrangement or configuration of the atoms in the molecule differs in each of them. The major constituent of the product of C14 is a straight chain (or linear) olefin. The straight chain (or linear) beta olefin, branched olefin have the carbon atoms in different position. To the extent that these small quantities of these isomers are present the product is a mixture of isomers. Nor is it the contention of the appellant that these isomers are stereo-isomers that is isomers which are mirror images of each other with regard to structure, the presence of each would not rule the classification of the product mixture under Chapter 29.
8. It is the contention of the appellant that these branched olefin and beta olefin which are present are impurities, constituting a tiny fraction of the product. Its Advocate refers to the definition of the term “impurities” in the notes to Chapter 29, the presence of which does not result in a compound being considered a chemically defined compound. If the presence of any isomers in an acyclic hydrocarbon is sufficient to exclude its classification in Chapter 29, pentenes, hexenes, heptenes, octenes of which are unsaturated acyclic hydrocarbons, which contain isomers, would not be classifiable under Chapter 29. But these are specified as classifiable in Chapter 29. Professor V.V.R. Subramanian of the Bombay University, Department of Chemical Technology has affirmed these isomers in question to be impurities, relying for this purpose on a book “Alfa Olefin Application Handbook”. The supplier of the goods in his letter to the appellant has certified the goods to be “pure cut i.e. C14 tetradecene. The US Customs classifies the goods under Heading 2901.29.
9. The departmental representative counters by saying that the specifications of the product are C14 95% (min) C12 3% (max) C16 3% (max). Thus C14 olefin can be 94%, the rest being isomers, linear or terminals of C12 and C16. Ethyl Corporation, the supplier, has also confirmed this view indicating in its test report the presence of C16 and C12 isomers to the extent of 7.3% to 7.7% in its tank from which the goods were supplied. What is imported is therefore heterogeneous association of various isomeric compounds. Professor Subramaniam’s affidavit indicates that the chemical formula of alpha olefin used for making surfactants CH3 (CH2)n CH = CH2 where n can be 11, 13 or 15 so that the total number of carbon atoms become 14, 16 or 18. Since n is not a definite number this by itself would show that the alpha olefins imported for the manufacture of surfactants cannot be a definite organic chemical compound, as its structure is indefinite. The 10% impurities referred to in the professor’s affidavit are nothing but mixtures of isomers of C12 and C16 olefins. Note 2 to Chapter 27 justifies classifying that product, such a mixture in unsaturated hydrocarbons obtained by any process under Heading 27.10. The process by which the goods are obtained is fractional destilation and reflux and molecular destilation. Liquid components have widely separated boiling points for such mixtures can each be conveniently isolated by these processes. The boiling point of C10, C12 and C16 is 172°C, 213°C and 274°C, they could each be conveniently separated. C12 C14 and C16 olefins is used in the manufacture of household detergent which is the purpose for which the present consignments have been imported. The presence of C12 and C16 in the mixture therefore will not create any hindrance in the manufacture of these goods and are therefore they are not unwelcome impurities. M/s. Albemarle Corporation, earlier known as Ethyl Corporation is one of the leading producer of alpha olefin and supplier of the consignment. This company follows the procedure called Albemarle process patented by it for manufacture of the other goods, whereas the other manufacturers follow different processes. This is clear from the Condensed Chemical Dictionary by Hawley’s 4th Edition, Volume 17 page 840. The supplier or SGS does not indicate a specific formula for the product, thus saying that what has been imported is heterogeneous association of various molecular entities therein. It is therefore a mixture and the definition of mixture in Condensed Chemical Dictionary by Hawley supports this view. M/s. Chevron Corporation, another manufacturer separates the individual components of C12, C14 and C16 unlike the supplier of the goods. Thus the contention that what has been imported is a pure cut is not acceptable.
10. C12 and C16 isomers presence may, in the strict technical sense, be impurities, but they are not impurities in terms of general explanatory note in the HSN to Chapter 29. C12 and C16 isomers are byproducts and are not, in all cases, regarded as impurities. They do not fall within the definition of impurities in the note. In any event, mixtures of acyclic hydrocarbon isomers (other stereo-isomers), whether pure or impure, would be classifiable under Chapter 27.
11. The contention that commercial understanding of what is pure or not pure is not acceptable, since the classification of the product is regulated according to the Explanatory notes not by the commercial parlance but by the scientific and technical details. Impurities are also defined in the chemical science. The rule that words should be construed in a popular sence cannot therefore be applied. Bombay High Court judgment in Chemical and Fibres India Ltd. v. Union of India & Others - 1982 (010) ELT 917 is cited.
12. As we have observed earlier, the Commissioner (Appeals) has ruled on the classification of the product under Chapter 29 only on his finding that the goods are mixtures of isomers. He has not accepted the reason given by the Assistant Commissioner for excluding Chapter 29, that the goods in addition to the C14 olefin contain C12 and C16 olefins. The arguments of the departmental representative that the presence of C12 and C16 olefins renders the goods mixtures of olefin of the type C12, C14 and C16 and hence not a chemically defined compound therefore is beyond the scope of the proceedings which must necessarily be limited to the issues settled by the Commissioner (Appeals) in his order. The department has not come up in appeal against the finding of the Commissioner (Appeals) in this regard. In any event, the departmental representative in his argument has contended that C12, C14 and C16 i.e. dodecene, tetradecene and hexadecene each of fixed molecular weight which differ from the molecular weight of the other products. As he says in his summary, each of the chemicals has a fixed molecular weight having a chemical diluent structure and formula. He has described the goods in his argument as a heterogeneous association of various molecular entities. His argument in this regard in fact reflects the correct position, as we have indicated in paragraph 5 above. Whether C12 olefins and C16 olefins present in what is predominently C14 olefins are impurities therefore is not a matter which we have to concern ourselves in order to see whether the reasons given by the Commissioner (Appeals) are correct or not. We are therefore for this purpose not proposed to deal with. The arguments raised by the departmental representative in this context therefore, relating to difference in the process of manufacture between the supplier of the goods etc therefore are not relevant.
13. We are however in agreement with his contention that it would not be correct to deal with the product as it is commercially understood. The Customs Tariff in its structure and scope is based on the Harmonised System of Nomenclature. Chapters 29 and 27 have identical headings in the nomenclature. These headings in chapters do not determine classification in accordance with the commercial parlances, but in accordance with the principles of chemist, which they have set out. In such a situation, it is proper to decide classification not by the chemical parlance but in accordance with the Explanatory Notes to the Harmonised System of Nomenclature, in which the Tariff is based. This is the view the Supreme Court explained in Union of India v. Wood Polymer - 1995 (077) ELT 23 and Bakelite Hylam Ltd. v. C.C.E. - 1997 (091) ELT 165. The contention of the appellant is that these isomers which are isomers in small quantities are in the nature of impurities the presence of which is permitted by chapter notes. Note 1(a) makes the headings of the chapter apply except where the context is otherwise required to separate chemically defined organic compound, whether or not containing impurities. Note 1(b)(2) refers to mixtures of two or more isomers of the same organic compound (whether or not containing impurities) except mixtures of acyclic hydrocarbon (other stereo-isomers whether or not saturated) as falling under the chapter. Reading these two together, it will be clear that it is not only separate chemically defined organic compound which are classifiable under Chapter 29. Mixtures of two or more isomers of the same organic compounds may not, as we have seen, be separate chemically defined organic compound. Such mixtures also would be classifiable under this chapter. In fact Notes (c) to (h) of the chapter indicate various products which are clearly not separate chemically defined organic compound which are classifiable under Chapter 29. Examples are separate chemically defined organic compounds with a solvent; such compound, with added stabilizers necessary for their preservation or transport or with an added anti dusting agent or coloring or odoriferous substances [subject to conditions specified in Note 1(g)]. General Explanatory Note to Harmonized System of Nomenclature 343 there are certain exceptions to the rule that Chapter 29 is limited to separate chemically defined compounds and also (incidentally indicates exclusion of Chapter 29; even of separate chemically defined compound). What is therefore to be determined is therefore whether the presence of the isomers in the product renders it a mixture of acyclic hydrocarbon and it is excluded from Chapter 29; if not whether, these isomers, are impurities, the presence of which can be permitted for classification under this chapter.
14. As we have noted, any mixtures of acyclic hydrocarbon isomers (other than stereo-isomers) is excluded from classification under Chapter 29. The Explanatory Notes provides that such a mixture “whether or not containing impurities” is excluded from Chapter 29. It is not disputed that the product imported by the appellant is a mixture of acyclic hydrocarbon isomers. Proportion of the isomers varies somewhat. According to the Commissioner (Appeals) the alpha olefins are to the extent of 94% minimum, branched olefins to the extent of 4% maximum, and beta olefins to the extent of 2.5% maximum. The product specification of Ethyl Corporation, the manufacturer, shows a slightly different percentage - linear terminal 81%, branched terminal 14% and linear internal 5%. The appellant itself does not dispute that the product is a mixture of isomers.
15. The significance of impurities is relevant in deciding whether a product is a chemically defined compound. It is not possible to consider any one of these isomers as impurities. Each of the two or more isomers of a compound is not a chemically defined compound separate from any of the other isomers. Each of the two different isomers has a constant ratio of elements and can be represented by a definitive structural diagram. The only difference that we are concered with in the isomers is the placement of the carbon atoms which differs from isomer to isomer. This is also made clear from the note of the Explanatory Notes at page 243 which provides that the chapter includes, whether or not they contain impurities, mixtures of isomers of the same organic compound (emphasis ours). Isomers of the same compound obviously cannot each be a different compound. A substance consisting solely of one isomer of a compound will be referred to as that compound. Thus tetradecene composed entirely of branched olefin isomers and tetradecene composed solely of linear olefin isomers are both the same compound tetradecene. Each isomers is therefore a chemical compound. It therefore cannot be an impurity in that compound. To cite an example, in tetradecene consisting of 95% alpha olefin and 6% beta olefin, beta olefins are not impurities. The contention that these isomers to the extent of 10% are impurities therefore cannot be accepted.
16. It is not possible to agree that holding mixtures of acyclic hydrocarbon isomers not to be excluded from Chapter 29 will result in various items of unsaturated acyclic hydrocarbon of Chapter 29 being excluded from that chapter. The Advocate for the appellant emphasises that the Explanatory Notes refer to pentenes, hexenes, heptenes and octenes being included in the chapter. The argument is that since these compounds are referred to in the plural, they are mixtures. This is a simplistic argument. Reference to these compounds in the plural, in our view, is evidently to indicate that each of the isomers of the compound would, by itself be classifiable under Chapter 29. The Notes instead of specifying each of the isomers have grouped them together as pentenes, hexenes etc. It is significant that ethane, which does not have any isomers, is referred to as ethane in the singular. It has to be kept in mind that unsaturated acyclic hydrocarbons of this section are subject to the General Explanatory Notes excluding mixtures of such hydrocarbons.
17. The reference to the US Customs classification of the goods is misleading. US Custom House Guide 1999 edition, has been cited in this regard. An extract of this publication containing the tariff classification of some products of Chapter 29 has been produced. However, Heading 2901.29.10 of this heading shows classification of linear alpha olefin (C6 to C30) unmixed under this heading. Alpha olefin, as we have seen, have only one isomer. Therefore, the product consisting solely of linear alpha olefin would be classifiable under Heading 2901.29. It is not a mixture of isomers. The extract of the Guide does not support the view that mixtures of isomers of this product would be classifiable under this heading. On the other hand, the reference to unmixed olefins suggest the contrary. The fact that the shipper M/s. Ethyl Corporation has referred to the classification of these goods under Heading 2901.29 cannot influence us. It is not possible to say on what basis this classification has been done. The Encyclopaedia of Chemical Technology by Kirk Othmers says at page 324 that in the polymerisation of Ethyl Corporation to one olefin, branched olefins of the vinylidene type CH2 = CRR’’ are the chief impurities. It was not explained to us whether the isomers that are present in small quantities in the product under consideration, are identical to the branched olefin of the vinylidene type. Reference to the Encyclopaedia does not suggest it to be so. In the same page the Encyclopaedia indicates that vinylidene structure is undesirable to most 1-olefin uses. Even if these are the same, the term “impurities” has to be considered with reference to the HSN Explanatory Notes. As we have seen, the isomers are not referred to as impurities in these notes.
18. The affidavit of Professor Subramanyam does not refer to the presence of isomers. It refers to the presence of olefins of a carbon number slightly different from those mainly containing i.e. C12 or C16 molecules is a predominantly C14 compound.
19. Many of the arguments of the appellant deal with the presence of C12 and C16 olefins in the compound which is mainly composed of C14 olefins. The reference to the commodity being a “pure cut” in the letters of Ethyl Corporation refers to this. These arguments do not address the fact that the goods are mixture of isomers. So also the reference to the pure or commercially pure compound in the Explanatory Notes to Chapter 27 being classifiable under Chapter 29 does address this issue.
20. We therefore do not find any reason to interfere with the finding of the Commissioner (Appeals) that the goods being unsaturated mixture of acyclic hydrocarbon isomers are classifiable under Chapter 29. The alternative classification under Chapter 27 in the event that the goods are not classifiable under Chapter 29 is not questioned in the appeal.
21. Accordingly, we see no reason to interfere.
Equivalent 2000 (115) ELT 710 (Tribunal)