Customs, Excise and Gold Tribunal - Delhi
Kantilal Manilal And Co. vs Collector Of Customs on 17 August, 1990
Equivalent citations: 1991(31)ECC23, 1991ECR125(TRI.-DELHI), 1991(51)ELT346(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellants have sought for setting aside the order-in-appeal issued on 1-11-88 passed by the Collector of Customs (Appeals) Bombay, who has rejected their refund claims in respect of. nine consignments of Hydroquinone. They have submitted that seven consignments were of the description of Hydroquinone Tech photo grade; one was of the description of Hydroquinone Pro photo grade and one consignment with description of Hydroquinone 99.6% purity.
2. The Department has assessed the imported items as prepared rubber chemical under Heading 38.01/19 (7) CTA with additional duty under Item 65 CET.
3. The appellants have sought for classification under residuary heading 29.01/45 (1) CTA and for the purpose of additional duty under item 68 CET.
4. The Assistant Collector of Customs, Refund Claims, has observed in his order-in-original that as per Condensed Chemical Dictionary of Hawley, the impugned goods are also known as "Antioxidant" which is specifically covered under Item 65 CET.
5. The Collector (Apeals) in his order-in-appeal has observed that it is not possible to ascertain the pre-dominant use of the item because of the utility or the extent of use of the same differ from person to person, place to place and country to country. Its use cannot be confined to a particular industry or particular area. He has held that the item is of general use and it cannot be treated as specific item for a specific use.
6. The appellants have relied upon the clarification available in the CCCN Explanatory notes, Vol. 2, Page 365 & 531. They have submitted that the item Hydroquinone photo grade is recognised to be intended for use as a developer in photography. They have stated that if the same item had been imported in retail packings ready for use, it would have automatically got classified under Heading 37.01/08(1) CTA, as chemical products of a kind in a form suitable for use in photography in terms of note 2(b) in Chapter 37 of the erstwhile CT Schedule. However, since all the consignments imported by them were in 25 kg packings, and therefore, other than retail packings, they deserve to be classified only under the residuary Heading 29.01/45(1) CTA, being an un-mixed substance suitable for photographic use but not put up in measured portions or put up for sale for retail in a form for use as defined in note 2(b) in Chapter 37 CTA.
7. The appellants have also relied upon the Test report No. C-1765 dated 9-9-83 from the Chemical Examiner, Bombay Customs Laboratory, confirming that "sample Hydroquinone in the form of crystal line powder. It is not surface active in character. It is not mentioned to be used as rubber chemical in any of the books here". They have further stated that there is a practice to subject Hydroquinone imported to additional duty only under Item 68 of CET. They have claimed that the Hydroquinone may have general uses but the imported item was specifically described as of photographic grade. Hence, the lower authorities were not justified to presume that the item imported was only an antioxidant for rubber when the Chemical test had indicated that the item was neither a surface active agent nor it is mentioned to be used as rubber chemicals in any books.
8. Shri T.V. Krishnamurthy, learned Consultant appearing for the appellants, sought to rely upon the chemical test report and also the description of the item in invoices and bills of entry. He submitted that the Department had not discharged its burden to classify the impugned goods as "rubber chemicals". He relied upon the rulings given by this Bench in the case of Hico Products v. Collector of Central Excise, Bombay reported in 1983 (14) ELT 2483 and in the case of Union Carbide India Ltd., Bombay v. Collector of Cus., Bombay reported in 1986 (24) ELT 325 (Tri.)
9. Shri M. Jayaraman, learned Departmental Representative appearing for Revenue, submitted that the appellants had not produced any literature except the Bill of entry and invoice. The literature produced had showed, among other uses, the use of anti-oxidant also. They had not produced any specific catalogue to support their claim. The Chemical test report also had not specifically disclosed that it is photographic grade.
10. We have heard both the sides and carefully considered the submissions made by both the sides. The competing entries are 38.01/19(7) and 29.01/45(1) of erstwhile CTA which are reproduced below -
__________________________________________________________________________ "Heading Sub-heading No. and description of article Rate of duty No. a) Standard
b) Preferential areas ___________________________________________________________________________ 38.01/19 Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included:
x x x
(7) Prepared rubber chemicals a) 100%
b) 90%
"29.01/45 Organic compounds including antibiotics,
normones, sulpha drugs, vitamins and other
products specified in Notes 1 and 3 of
this chapter:
(1) Not elsewhere specified a) 100%"
__________________________________________________________________________ 11 The appellants have relied upon the entries shown in the bill of entry, invoices and the Test report to support their claim. The authorities have examined the literature of Hydroquinone produced by the appellants. It is indicated in the column "Applications" -
- "Photographic developers (for x-ray photographs, photoprints, and black and white photographs)
- Polymerization inhibitors (for acrylonitrile, methyl methacrylate, acrylic ester, acrylic acid, and vinyl acetate)
- Antioxidant (for organic rubber chemicals)
- Food additive
- Dye intermediates
- Pigments
- Pharmaceuticals
- Raw materials for other fine chemicals"
The lower authorities have noticed "Antioxidant (for organic rubber chemicals) as one such application and proceeded to classify as rubber chemical. It is observed by us that the application in the literature also shows for use in other fields. It is surprising to note that the Department has chosen to prefer its uses as Antioxidant (for organic rubber chemicals) and ignored the other applications indicated in the literature produced by the appellants. If the Department wanted to proceed on the basis of this literature and to choose only one of the item of applications shown therein, it should clearly give reasons for rejecting the other applications by supporting evidence like Test report of the imported items and other expert opinions. The Chemical Test report has disclosed that "It is not surface active in character. It is not mentioned to be used as rubber chemical in any of the books here". There is no other evidence on record to come to conclusion that the item imported is rubber chemical or that its application is for "Antioxidant (for organic rubber chemicals). The Department has not discharged its onus to classify as rubber chemicals under Chapter 38.01/19(7). On the other hand, the importer has produced the invoice which shows that the item is described as 'Hydroquinone Tech Photo grade'. The literature produced and relied upon by them, in the column "application," the first one is 'Photographic developers' (For x-ray photographic photo prints and black and white photographs). There is no reason to disbelieve that these items were in fact imported as photographic chemicals for such use.
12 In Hico Products Ltd., Bombay v. Collector of Central Excise, Bombay as reported in 1983 (14) ELT 2483, it has been held at para 12 that "Although it is for the claimant to establish that his goods are exempt under notification, yet the burden is on the Department to prove that particular goods are covered under a specific tariff item".
13 The citation also referred to rubber processing chemicals and the scope of it under Tariff Item 65. It has held that an item in order to fall under Tariff Item 65, goods should not only be accelerators and anti-oxidant but also rubber processing chemical. In case a substance has several alternative uses and if it is not used predominantly as a rubber processing chemical, it would not be correct to describe it so merely because this description finds place in CET. Again the Bench has observed at para 17 that end use of certain goods cannot determine their classification in general but predominant use relevant and significant where classification is related to function of the goods as in Tariff Item 65.
14 in Union Carbide India Ltd., Bombay v. Collector of Central Excise, Bombay as reported in 1986 (24) ELT 325 (Tri.) , it has been held that the burden of proof of classification of goods is on the-Department. It has been further held that chemicals which have several alternative uses, cannot be called as rubber processing chemicals, if their use as rubber processing chemicals is not the predominant use.
15 By applying the ratio of both the cases, it has to be observed in this case, that there is no material for the Department to come to the conclusion that the item imported is anti-oxidant (for organic rubber chemicals). The Chemical test report also does not support the Department. In the citation referred to supra, it has been held that in case a substance has several alternative uses and if it is not used predominantly as a rubber processing chemical, then it would not be correct to describe it so merely because this description finds place in the Central Excise Tariff. The Department has chosen to look into one such application of the imported product in the literature without any supportive evidence. They have not even cared to ascertain whether the imported goods are predominantly being used as rubber chemicals. In that view of the matter, the impugned orders have to be set aside and the claim of the appellants have to be allowed on the basis of the evidence produced by them which has not been controverted by the Department. The appeals are allowed.