2003(07)LCX0061

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri Gowri Shankar, Member (T) and G.N. Srinivasan, Member (J)

VIPOR CHEMICALS PVT. LTD.

Versus

COMMISSIONER OF CUSTOMS, MUMBAI

Order No. 1742/2003-WZB/C-II, dated 3-7-2003 in Appeal No. C/1448/2002-Mum.

REPRESENTED BY :   Shri J.C. Patel, Advocate, for the Appellant.

Shri R.K. Pardeshi, DR, for the Respondent.

[Order per : Gowri Shankar, Member (T)]. - This appeal arises from an order of the Commissioner (Appeals) passed in pursuance of the order passed by the Tribunal on 8-5-2002 disposing of an appeal by the assessee against earlier order of that authority. The question for consideration in this appeal is the classification of “linear alpha olefin C-14” imported by the assessee. The assessee claimed classification of the goods in Heading 29.01 which is for “Unsaturated Acryclic Hydrocarbon.” By notice issued, the department proposed classification of the goods in Heading 27.10 as which covers petroleum oils and oils obtained from bituminous mineral. The department referred a sample of the product to the Indian Institute of Technology, Mumbai (IIT) for testing the product. In its report dated 15-9-1998 the IIT reported that the sample tested by it consists by weight as follows :

“Percentage by weight of C-14 olefin in the sample - 90%

Percentage by weight of other impurities - 03%

Percentage by weight of unsaturated acrylic compounds - not detectable.

In the light of the GC-MS report, it can be concluded that the given sample is a single chemical with 97% purity.”

2. In reply to the clarification sought by the Assistant Commissioner of Customs, Professor and Head of the Department of Regional Sophisticated Instrumentation Centre of the IIT again clarified “the product under test, 1-Tetradecene (linear alpha olefin) is a chemically defined compound having a known structure in pure form. It consists of a very little amount of impurities.” It appears that the department referred this report to the Deputy Chief Chemist of the Custom House for his opinion. In that opinion, a copy of which, was not made available to the importer or to us, but referred to in the order of the Deputy Commissioner of Customs, the Deputy Chief Chemist reported as follows :

“The IIT has stated that the percentage by weight of C-14 Olefin in the sample is 9.7%, but it is silent on the issue of isomers which could be resolved only by the I.R. spectra which IIT has not carried out on the sample under reference... the length of the Carbon Chain increases in both the straight chain and the branched chain Olefin, the number of isomer formed by change in the position of the double bond increases rapidly (M.C. grant H.S. Encyclopaedia of Science & Technology, Edition 1997 Vol. I pg. 281) and therefore the presence of isomers in C-14 Olefin is to be there though the purity of 1-Alpha olefin is 97% and that shall exclude the goods under reference from Chapter 29 by virtue of Chapter Notes 2(b) of Chapter 29 of Customs Tariff Act, 1975.”

3. In the meantime, however, notice has been issued to the importer that the product was a mixture of hydrocarbon and merit classification in Heading 27.10. Confiscation was also proposed in the notice.

4. In the order passed by the Deputy Commissioner confirmed the proposal in the notice.

5. The importer, appealed this order to the Commissioner (Appeals). The Commissioner (Appeals) relied upon in the appeal the finding of the IIT that the product was a separate chemically defined compound and hence, classified in Heading 29.01. The Commissioner (Appeals) was of the view that the report by the IIT was not reliable because it referred only to testing of 97% of the consignment and not the entire consignment. He said further “In short, it is required to be categorically ascertained whether the 97% main ingredient and balance 3% of other constituents could collectively be reckoned as “mixture of acrylic hydrocarbon isomers.” He remanded the matter to the Assistant Commissioner for determination and further testing of the product. It is this order of the Commissioner (Appeals) which was set aside and the matter remanded to the Commissioner (Appeals) by the Tribunal by its order of 8-4-2001. By that order it was made it clear to the Commissioner (Appeals) that 97% referred to in the report of the IIT was as to the presence of C-14 alpha olefin in the sample tested and that the report could not mean that only 97% of the consignment was subjected to test. The Tribunal directed the Commissioner (Appeals) to decide the issue accordingly.

6. In the order that he has now passed, the Commissioner (Appeals) has come to the conclusion that the goods are classifiable in Heading 27.10. The reasoning he advances is that the report of the Deputy Chief Chemist is binding on the adjudicating authority and he should have therefore referred the matter to the Central Revenue Chemical Laboratory. He said “At the same time, the fact remains that IIT did not test the goods to the extent that whether 1-tetradecene which constitutes 97% was not a mixture of 2 or more isomers of alpha olefin C-14 which is relevant for classification of the impugned goods.” The question as to whether the product is a mixture or a chemically defined compound assumes significance in the light of the provisions of Note 1(a) to Chapter 29 and 1(a) to Chapter 27 Note 1(a) to Chapter 27 excludes from classification in that chapter separate chemically defined organic compounds other than those specified therein. The corresponding Note 1(a) to Chapter 29 specifies that except whether the text otherwise requires, the headings of the chapter apply only to separate chemically defined organic compounds whether or not containing impurities. The Explanatory Notes to the Harmonised System of Nomenclature at page 342 (Chapter 29) defines a separate chemically defined compound as under :

“A separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram. In a crystal lattice, the molecular species corresponds to the repeating unit cell.”

7. To put it more simply, any portion of a separate chemically defined compound will have the same composition defined by the constituent ratio of the element, and can be represented by distinctive structural diagram. The Condensed Chemical Dictionary defines a mixture as “heterogeneous association of substances that cannot be represented by a chemical formula. In components may or may not be uniformally dispersed and usually can be separated by mechanical means.” The report of the IIT was clear and categorical that the product in question was a separate chemically defined compound. The first report refers to a single chemically defined compound and the second to a chemically defined compound having a known structural form. The report of the Deputy Chief Chemist does not say that this report is wrong, but says that it is silent as to the issue of isomers.

8. The Note 1(b) to Chapter 29 excludes from classification in that chapter mixture of acyclic hydrocarbon isomers and says that the heading also applies mixtures of two or more isomers of the same organic compound (whether or not containing impurities), except mixtures of acyclic hydrocarbons isomers (other than stereo isomers), whether or not saturated, indicating classification of such goods in Chapter 27. The question of an ingredient of a mixture is an isomer would only arise, if the product were a mixture. The product which is a chemically defined compound cannot by that very fact be a mixture. The IIT report indicated that 97% of the product consisted of linear alpha olefin C-14, and this opinion is not challenged by the Deputy Chief Chemist, the question of testing the samples for the presence of isomers could not arise. The opinion of the IIT settled the issue beyond dispute. The goods were therefore correctly classifiable in Heading 29.10.

9. The appeal is allowed and the impugned order set aside.

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Equivalent 2003 (156) ELT 420 (Tri. - Mumbai)