2006(12)LCX0141

In the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad

Ms. Jyoti Balasundaram, Vice President and Shri M. Veeraiyan, Member (Technical)

Advance Petrochemicals Ltd.

Versus

Commissioner of Customs (Prev.), Ahmedabad

Final Order No. A/46/WZB/2007/Ahmd. dt. 6.12.2006 certified on 19.1.2007 in Appeal No. C/991/2001

Cases Quoted -

National Organic Chemical Indus. Ltd. Vs. CCE, Mum-III 2000 (040) RLT 0824 (CEGAT) - Referred [Paras 4.4, 7.0]

Advocated By -

S/Sh. V.K. Jain, Adv. &VishalAgarwal,C. A. for Appellants
Shri R.B. Pardeshi, JDR for Respondent

Per M. Veeraiyan :

This is an appeal against the order of the Commissioner (Appeals) No. 275/2001 (45-CCP) Cus/Commr. (A)/Ahd dated 22.5.2001 by which he upheld the order of the Assistant Commissioner No. 01/AC/1999-2000 dated 22.4.1999. 1.2 The above orders have passed in pursuance of Tribunal's Order No. 309/92/C dated 20.10.92.


2.1 Heard both sides.


3.1 The facts, in brief, are that the appellants have imported during the year 1988, consignments of Poly Glycol P-2000 covered by 5 different Bills of Entry filed with Mumbai Customs. All these consignments of Poly Glycol P-2000 were transported to Ahmedabad and re-warehoused in Public Bonded Warehouse under Bond Bills of Entry. At the time of warehousing of the goods at Ahmedabad, the appellants executed 5 Bonds separately for each consignment under Section 18 of the Customs Act, 1962 for provisional assessment. The goods were assessed provisionally for want of test results. The samples were drawn and sent for chemical test. The re-warehoused goods were cleared on payment of duty provisionally pending test result from Deputy Chief Chemist, CRCL, New Delhi. The test result was received from Chemical Examiner, Central Excise, Vadodara on 16.11.1988 and 21.2.1989. The test results were for the sample drawn for Poly Glycol P-2000 re-warehoused in Public Bonded Warehouse, Ahmedabad. In the test result, it was mentioned that Poly Glycol P-2000 is the general term which included both Polyethylene Glycol and Polypropylene Glycol. Physio chemical properties of Polypropylene Glycol and Polyethylene Glycol overlapping and it is possible to distinguish between the two only by sophisticated instrumental analysis for which the laboratory has no facilities. Therefore, the representative samples were sent for re-test to Central Revenue Chemical Laboratory, New Delhi. The test result was intimated on 13.3.1989 informing that the sample is Polyoxypropylene Glycol, a polyether. It is other than polypropylene. Accordingly, less charge demand of Rs. 14,12,682/- with interest thereon was issued. After considering the reply to the Show Cause Notice and the defence of the appellants, the Assistant Commissioner adjudicated the case under Order-in-Original No. 32/90 dated 25.7.1990 confirming the demand of Rs. 14,43,297/- including the amount of interest. Against the order of Assistant Commissioner, the appeal filed before Commissioner (Appeals) was rejected under Order-in-Appeal No. 347/ 92 (237-Ahd-CE/Collr(A) Ahd dated 12.5.1992. The appellant, therefore, filed appeal before CEGAT against the order of Commissioner (Appeals), which was decided by the CEGAT under Order No. 309/92-C dated 20.10.1992. The CEGAT remanded back the case to the Assistant Commissioner to consider the issue afresh after allowing an opportunity of cross-examination of Deputy Chief Chemist and also for dealing with the plea for alternate classification under Chapter 38 of Customs Tariff Act with the following observations:-


3.2 "From the above, it is clear that the Deputy Chief Chemist's report was at variance with that of the chemical examiner. It is also not clear whether the Dy. Chief Chemist had considered the technical literature which has been referred to by the Chemical Examiner in his report as also certain technical aspects referred to by the chemical examiner in his further report that in some technical literature polyethelene glycol and polyglycol are described as synonymous. It is not shown how the Deputy Chief Chemist gave a different report and how he met the points raised by the Chemical Examiner on the technical aspects relating to the goods. The endorsement of Deputy Chief Chemist report to the Chemical Examiner also indicates that there appears to have been some correspondence between the Chemical Examiner and the Deputy Chief Chemist on the subject. In such a situation, the plea of the appellants that they should have been given the opportunity of cross-examining the Deputy Chief Chemist has a lot of force. In this context it is noted that in the Gujarat High Court decision in Arunodaya Mills Ltd. and another case the tests by chemical examiner and Chief Chemist were at the instance of the petitioner and these reports were against them, and yet when they asked for cross-examination which was denied, the Court had remanded the matter directing the Assistant Collector to allow cross-examination. In the present case on the other hand the retest by Deputy Chief Chemist adverse to the appellants was get done by the Department. The lower authorities have also not dealt with the plea of the appellants for alternate classification of the goods under Chapter 38. Therefore, it will be appropriate and in the interest of justice in the facts of this case to remand the matter to the jurisdictional Assistant Collector to consider the issue afresh after allowing the opportunity of cross-examination of Deputy Chief Chemist as also dealing with the plea for alternate classification under Chapter 38 in accordance with law."


3.3 Accordingly, the Assistant Commissioner followed the directions of the CEGAT and he re-adjudicated the case again confirming the demand of Rs. 14,43,297/- (Duty of Rs. 14,12,682 + interest Rs. 30,615).


3.4 The Commissioner (Appeals) vide his Order dated 22.5.01 confirmed the above order of the Assistant Commissioner.


4.0 The appellant contested the order of the Commissioner, inter alia, on the following grounds:-


4.1 Polypropylene Glycol P--2000 imported by the appellants is a separately defined organic compound and has a definite molecular structure and definite molecular weight which is represented by the number 2000 mentioned after Polypropylene Glycol. Chapter Note 1 to Chapter 29 clearly provides that separate chemically defined organic compounds are classifiable under Chapter 29 Chapter Note 2 (b) to Chapter 39 provides that the said chapter does not cover separate chemically defined organic compound.


4.2 Alternatively product Polypropylene Glycol P-2000 should be classified under Chapter 38.12 as compounded plasticizer for rubber or plastic, not elsewhere specified or included, anti-oxidizing preparation and other compounded stabilizers for rubber or plastics.


4.3 For classifying any product under sub-heading 39.01 to 39.14, it is necessary that the items should be plastic. For this, they relied on the Chapter Note 1 of Chapter 39, which is as follows:-

"Throughout the Nomenclature the expression 'plastics' means those materials of Heading Nos. 39.01 to 39.14 which are of have been capable, either at the moment of polymerization or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticizer) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.

Throughout the Nomenclature any reference to 'plastics' also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI."


4.4 In the case of National Organic Chemical Industries Ltd. Vs. CCE, Mumbai-III reported in 2000 (040) RLT 0824 (CEGAT)=2000 (122) ELT461 (Tri.), Polyethylene Glycol (PEG 300 to 1500) which was sought to be classified by the department under Chapter 3907.20 has been found to be not classifiable under Chapter 39 on the ground that Note 1 of Chapter 29 clearly provides that separate chemically defined organic compounds fall under Chapter 29 and if the product does not confirm of plastic as given in Note 1 of Chapter 39, it cannot be classified as plastic or articles thereof under Chapter 39.


5.0 The learned DR supports the order of the Commissioner, inter alia, on the following grounds:-


5.1 The description of product given by the appellant in the Bills of Entry was found to be wrong which chemical test was conducted. The product was found to be Polyoxypropylene Glycol.


5.2 Only the items, which are classifiable under sub-heading No. 3915 onwards of Chapter 39 are required to be waste, parings and scrap of plastics used only under those headings.


5.3 There is specific entry in Heading 3907.20 and product in dispute is Polyetlier as has been determined on the chemical examination by the Chief Chemist.


6.0 It is to be noted that the goods have been imported through Mumbai Customs and into Bond and Bills of Entry have been filed with Mumbai Customs and thereafter transferred under Bond to Ahmedabad Public Bonded Warehouse. The goods were provisionally assessed at the time of import and Bonding. The test report given by the Baroda Chemical Examiner was more by way of relying on the literature given by the appellant and also expressed difficulties about accurate testing for want of specialized equipments. The test result by the Dy. Chief Chemist, New Delhi confirms the product was other than Polypropylene as claimed by the importer. Though in the earlier proceedings before the Tribunal, one of the main grounds taken was that the adjudicating authorities have not allowed cross examination of the Chief Chemist, who has tested their samples. The Chief Chemist has since been cross examined in the de-novo proceedings on 5.3.1999.


7.0 In the case of National Organic Chemical Industries (cited supra), the Tribunal has taken the following views:-

"The Collector, Central Excise, Bombay-Ill, in his impugned order has given his finding that Note 1 to Chapter 39 is definitive Note on Plastic and not a note on classification and therefore, he rejected the contention of the appellants M/s. National Organic Chemical Industries Ltd. that impugned goods manufactured by them do not confirm to the specification of Note 1 to Chapter 39. We do not agree with the findings of the Collector. Chapter 39 deals with plastic and articles thereof and Note 1 to Chapter 39 lays down the definition of plastic for the purpose of Schedule to the Central Excise Act. If a product does not confirm to the definition of the plastic as given in the said Note 1, it cannot be classified as plastic or articles thereof under Chapter 39."


7.1 As the test report of the Chief Chemist or submissions of the Chief Chemist do not show any evidence about the properties of plastics to the product in question, even at a latter stage. Since, for classification under Chapter 39, this is an essential condition as per the judgment cited the classification under Chapter 39 as held by the Commissioner cannot be upheld.


7.2 Regarding their claim for classification under Chapter Heading 2905.32 and 38.01 the same was raised before the Tribunal during their earlier round of litigation and the Tribunal in their Order dt. 20.10.92 after careful consideration has directed the original authority to consider only the alternate classification claimed under Chapter 38 only. Therefore, their present claim again under Chapter Heading 2905.32 does not merit any discussion.


7.3 Now what remains is the claim of the appellant that their product should be treated as under Chapter 3812. This merits acceptance. In view of the above, the original authority is directed to requantify the duty involved adopting the classification under Chapter 3812.


8.0 The appeal is disposed off in the above terms.

Pronounced in Court on 6.12.2006.

Equivalent 2007 (079) RLT 0536 (CESTAT-Ahmd.)

Equivalent 2007 (210) ELT 0685 (Tri.- Ahmd.)