Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Kamal Traders And Ors. on 30 January, 1986
Equivalent citations: 1988(7)ECR379(TRI.-DELHI), 1986(24)ELT702(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. All these appeals result from orders of the Collector of Customs (Appeals), Bombay in which he decided appeals filed by different importers against rejection by the Assistant Collector of Customs Refund, Bombay and Assistant Collector of Customs, Oil Department, Bombay, of their refund claims. They concern the assessment of dodecylbenzene. The Custom House assessed the benzene under heading 38.01/19(1), while the importers claimed assessment under heading 27.10(1). The importers furthermore say that imports of dodecylbenzene by them in the past had been assessed by the Custom House under heading 27.
2. Dodecylbenzene has the structure C12H26C6H5. The Collector (Appeals) came to the conclusion that the product was a mixed unsaturated hydrocarbon and the weight of the non-aromatic constituents was more than the weight of the aromatic constituents. In order to be assessable under heading 27.10, the weight of the non-aromatic constituents in the imported product should be more than the aromatic constituents in the product and in this case he found that the criterion had been fulfilled. He further said that there was no doubt that the dodecylbenzene was composed predominantly of aliphatic mineral hydrocarbon of acetylene group (alkyl). He accordingly ordered assessment of the goods under heading 27.10(1).
3. In the appeal the department strongly disputes these findings saying that the Collector (Appeals) had erred and that his decision did not appear to be correct in law and on facts. Aromatic constituents means goods with a benzene ring C6H5, while non-aromatics means products which do not have benzene tings. The dodecylbenzene has the chemical formula of C12H25C6H5 and thus clearly contains a benzene ring and, therefore, must be an aromatic chemical. There was no other constituent mixed in the dodecylbenzene without having a benzene ring and, therefore, there was no non-aromatic content. Therefore, the condition of note 3 to Chapter 27 is not satisfied. Furthermore, the side chain C12H25 is not an unsaturated group and the goods are not an oil to be assessed under Chapter 27 and hence the inclusion of the goods in Chapter 27 by virtue of note 3 was ruled out.
4. The Collector (Appeals) stated that dodecylbenzene was composed of acetylene group. This was entirely wrong as there was no acetylene group in formula C12H25C6H5.
5. The term "dodecylbenzene" refers to benzene derivatives with side chain of 12 carbon atoms, whose chemical formula can be stated below : -
C12H25 C6H5 is the benzene while C12H25 is the side chain alkyl group; the goods can also be called alkylbenzene.
6. This side chain C12H25 is a linear side chain i.e. CH3-CH2-CH2-CH2-CH2-CH2-CH2-CH2-CH2-CH2-CH2-CH2 and the benzene is a linear alkylbenzene (soft); this liner alkylbenzene being a single chemical is assessable under heading 29 as per BTN explanatory note No. 29.0(7). [There is no note No. 29.0(7).]
7. However, if the side chain is not linear but branched, they are called dodecylbenze.
CH3 C1H3
| |
CH2-CH2-CH2-CH2-CH2-CH2-CH2-CH2
| |
CH2 CH2
(C12 H25)
The side chain can have many forms of branches, giving different forms of alkylbenzene. Therefore, these goods are a mixture of different forms of alkylbenzene and because of this they are also called mixed alkylbenzene. Dodecylbenzene is nothing but a mixture of different forms of alkylbenzene in which the side chain is branched instead of being linear and is also known as alkylbenzene (hard). The goods are a mixture of chemicals and are thus classifiable under Chapter 38. The classification is also confirmed by explanatory notes on page 558 of the BTN according to which the goods are mentioned specifically as being governed by Chapter 38. The analysis and facts stated above are supported by the Deputy Chief Chemist's test report No. 63/30-12-76, 2031/15-2-82 and to No. 254/17-5-83.
8. The classification of dodecylbenzene under Chapter 38 and not under Chapter 27 is further justified by exemption Notification No. 32/83-Cus. by virtue of which goods falling under heading 38 are exempted in excess of 70% of the duty but that this would not apply to dodecylbenzene, meaning thereby that dodecylbenzene will be liable to duty at statutory rate under heading 38.
9. The two learned counsels who appeared for the two sides reiterated the known position. Mr. Sogani argued that the Collector (Appeals) was right since this was nothing but an oil, a non-aromatic substance, which would be more appropriately classified under Chapter 27. It is not a chemical to be assessed under Chapter 38 as desired by the department, but it is a product of distillation of petroleum. Since the non-aromatics exceed the aromatics in weight, note 3 under Chapter 27 would require assessment under heading 27. 10.
10. The learned counsel for the department Mr. Sundar Rajan reiterated all that has been stated in the appeal filed on behalf of the Customs House and stated that the Appellate Collector was wrong to consider that dodecylbenzene, which is clearly an aromatic chemical, falls under heading 27 which is an item only for mineral fuel, mineral oils and products of their distillation. He presented a number of letters and notes by his letter dated 9-12-1985, as additional evidence. These were accepted.
11. Note 3 in Chapter 27 is the note that has created this dispute. It runs:
"References in Heading No. 27.10 to petroleum oils and oils obtained from bituminous minerals are to be taken to include also similar oils, as well as those consisting of mixed unsaturated hydro-carbons, obtained by any process, provided that the weight of the non-aromatic constituents exceeds that of the aromatic constituents."
The same note appears as note 3 under Chapter 27 of the CCCN. The Chapter in that nomenclature also has a general note explaining that the Chapter covers, in general, coal and other natural mineral fuels, petroleum oils and oils obtained from bituminous minerals, their distillation products, and products of a similar kind obtained by any other process. It further explains that goods falling in the Chapter may be crude or might be refined, but when they are separate chemically defined organic compound in the pure or commercially pure state, they are to be classified in Chapter 29. The entire Chapter up to the end is of fuel oils and gases, petroleum lubricants, transformer oils with or without additives (except waxes, jellies, bitumen, apphalts, petroleum cooks etc.). The product has to be petroleum oil or oil obtained from bituminous mineral and oil similar to those oils obtained by any process, provided the weight of the non-aromatic constituents exceeds that of the aromatic constituents. The product has to be an oil similar to petroleum oils and oils obtained from bituminous minerals. This is the substance of note 3. The error in the Appellate Collector's understanding was that this was an oil and should find classification under a. Chapter for mineral fuels and mineral oils. The dodecylbenzene is not even a product of distillation, although the benzene was such a product. The dodecylbenzene is a modified/ changed substance that is no longer the distillation product that benzene was.
12. There are very great differences in the nature and character of benzene and dodecylbenzene : benzene C6H6 is a volatile, colourless, and highly flammable liquid aromatic hydrocarbon with a characteristic odour and is used primarily as a chemical raw material in the synthesis of styrene (polystyrene plastics and synthetic rubber), phenol (phenolic resins), cyclohoexane (nylon), aniline, maleic anhydride (polyester resins), alkylbenzenes (detergents), chlorobenzenes, and other products used in the production of drugs, dyes, insecticides, and plastics. Benzene is also used as a solvent.
13. The structure of benzene is given thus :-
Its flash point is 12°F. All of the carbon and hydrogen atoms in the benzene molecule are coplanar. The six carbon atoms form a regular hexagon in which each carbon atom is 0.139 nm from each of the two adjacent carbon atoms. Each hydrogen atom is 0.108 nm from the carbon atom to which it is bonded.
14. Dodecylbenzene, on the other hand, has a flash point of 285°F, though it is combustible. (Cotton is combustible).
15. The reason in the Appellate Collector's order is that he held that the alkylated or alkylbenzene contained more non-aromatic constituents than aromatic constituents. Present day detergent alkyls are usually made by the alkylation of benzene with olefins, usually ethylene. The alkylation of benzene with higher molecular weight olefins or alkyl chlorides in the 10 to 18 carbon range gives a product called detergent alkylate which is subsequently sulfonated and converted to a detergent. Benzene is the only aromatic alkylated at the present time to produce detergent alkylate.
16. Present requirements as to biodegradability require linear or straight chain alkyl groups. Older alkylation processes employed olefins which were branched propylene tetramer fraction. Branched olefins have been largely replaced as feed stock by linear olefins, oc olefins (ethylene oligomers), or straight chain alkyl halides. At this point it will be instructive to enquire into the nature of ethylene.
17. The CONDENSED CHEMICAL DICTIONARY (HAWLEY) describes its properties as a colourless gas with sweet odour and taste and with a flashing point of-213°F; it is described as extremely flammable and a dangerous fire and explosion risk. Alkylation with ethylene will produce an alkylbenzene with aromatic constituents preponderating. Due to this the alkylbenzene will have to be excluded from Chapter 27 by virtue of Chapter Note 3.
18. Dodecylbenzene is also produced by alkylation of benzene with propylene tetramer (dodecene) in the presence of aluminium chloride and other substances, but since 1965 due to demands for environmental preservation, biodegradable detergents with a non-branched hydrocarbon have been produced. As pointed out in the appeal, dodecylbenzene is a benzene derivative with a side chain of 12 carbon atoms, the said chain being C12H25, the alkyl group. This side chain is not an unsaturated group. Soft or biodegradable alkylbenzenes have linear side chains, whereas hard alkylbenzenes have branched side chains. The appeal is mistaken in suggesting that dodecylbenzene is nothing but mixture of different forms of alkylbenzene. It is not a mixture of alkylbenzene but it is an alkylbenzene produced by alkylation of benzene. The appeal further states that the goods are a mixture of chemicals i.e. alkylbenzene with different forms of side chains but it does not say what is the authority for this. The appeal further says that this classification under 38 is confirmed by the CCCN explanatory note at page 558. This, however, is a note that speaks of mixed alkylbenzene obtained by alkylation of benzene with fairly long side chains. If they are alkylbenzenes with fairly long side chains, they cannot be of the type that the appeal seems to be speaking about, that is to say, a mixture of alkylbenzenes having different forms of side chains.
19. On the other hand, it is fairly clear that the dodecylbenzene under import is not of the kind that would fit into Chapter 27. It is not a product of a kind that would fit into Chapter 27. Chapter 27.10 covers goods like petroleum spirit, white spirit, kerosene which are lighter fractions removed by distillation and are non-aromatic hydrocarbons. The Indian tariff lists under 27.10 goods like motor spirit with flash point below 20°C, kerosene used as an illuminant in oil burning lamps, aviation airline fuel, high speed diesel oil with flash point of over 25°C on so on and, of course, lubricating oils and lubricating greases. These goods belong to the oil family being used in utilities connected with or which demand oils. They are all the results of distillation of petroleum and other bituminous minerals. They are products that are consumed as fuels or as lubricating agents and similar applications. On the other hand, Chapter 38 of the Indian tariff is a Chapter with the head Miscellaneous Chemical Products. This Chapter does not cover, amongst other things, separate chemically defined elements or compounds. Dodecylbenzene is not a separate chemically defined compound, because it is not a single chemical compound of known structure and contains other substances (alkyl groups) added deliberately during its manufacture (alkylation of benzene to add the alkyl groups). The side chains, according to HAWLEY'S CONDENSED CHEMICAL DICTIONARY average 12 carbon atoms. This is evident that its structure is not a fixed one which is required for a single chemical compound of known structure. The McGRAW-HILL DICTIONARY OF SCIENTIFIC AND TECHNICAL TERMS also suggests that dodecyl-benzenes have side chains averaging 12 carbons atoms. This also suggests that the structure is variable. Further confirmation can be seen in the article on linear alkyl sulfonate (HAWLEY'S CONDENSED CHEMICAL DICTIONARY) which suggests that linear alkylates may be normal or is (branched at end) but are C10 or longer.
20. The index to the CCCN appears to lend some support to the assessment of dodecylbenzene under Chapter 38 by placing these products there.
21. Dodecylbenzene is used in the manufacture of surface-active agents which are used in washing. They serve not the applications under oils to be seen in Chapter 27, but of a chemical to be used in manufacture of products which are used in washing. They are themselves the products of the kind not associated with petroleum spirit, kerosene, diesel oil, which are fractions obtained by the distillation etc. of petroleum; but are manufactured products produced by synthetic process by which one product, benzene, is subjected to a process called alkylation, that is the introduction of an alkyl radical into an organic molecule to produce a new product, an alkylbenzene or alkylated benzene. From the structure at the beginning we can see that the redical CH3 is present in dodecylbenzene, with one hydrogen atom dropped.
22. We are, therefore, of the opinion that Chapter 38 is the most appropriate Chapter for the assessment of dodecylbenzene. We order accordingly, and allow the appeals.
S. Venkatesan, President
23. I agree with my learned brother that dodecylbenzene was classifiable under Chapter 38 of the Customs Tariff [Heading No. 38.01/19 (1) to be exact]. In view of the highly technical nature of the subject, I am summarising my reasons below.
24. The rival Chapters of the Tariff are 27, 29 and 38. Within Chapter 27, heading Nos. 27.07 and 27.10 could arise for consideration.
25. Relevant characteristics of dodecylbenzene, as given in the Condensed Chemical Dictionary (Hawley, 10th Edition), are as under :
"A commercial blend of isomeric, predominantly monoalkyl benzene. The side chains are saturated, averaging twelve carbon atoms.
* * * * Uses : Detergents of ABS or LAS type".
26. Chapter 29 of the Customs Tariff applies only to separate chemically defined organic compounds [Note l(a) to Chapter 29J, and Chapter 27 does not cover separate chemically defined organic compounds [Note l(a) to Chapter 27]. Dodecylbenzene being a commercial blend of benzene, with side chains averaging twelve carbon atoms, will obviously have to be excluded from Chapter 29.
27. The scope of headings 27.07 and 27.10 of Chapter 27 has been explained in paras 19 and 21 of my learned brother's order. It is also explained therein why dodecylbenzene cannot be considered as coming within the scope of these headings.
28. In the Explanatory Notes to the C.C.C.N. at page 558 under heading No. 38.19, the following appears :-
"Mixed alkylbenzenes and mixed alkylnaphthalenes obtained by alkylation of benzene and naphthalene. They have fairly long side chains and are not of the kind mentioned in Note 2 to Chapter 27. Mixed alkylbenzenes are used, inter alia, as solvents, and in the manufacture of surface-active agents, lubricants and insulating oils."
The description of mixed alkylbenzenes corresponds to that of dodecylbenzene as found in the condensed Chemical Dictionary (para 25 above). The view of the C.C.C. is made further clear by the Alphabetical Index, where dodecyl-benzenes are specifically shown as falling within heading No. 38.19.
29. It is well known that since the Customs Tariff is based on the C.C.C.N., the Explanatory Notes have considerable persuasive force. This is particularly so where highly technical aspects of composition and technology are involved. The view of the C.C.C., as found in the Explanatory Notes, the Alphabetical Index and the letter dated 6 July, 1984 from the Director of the Nomenclature and Classification Directorate of the C.C.C. (filed by Shri Sundar Rajan), has to be given due weight.
30. In short, dodecylbenzene has to be excluded from Chapters 27 and 29 and would therefore fall within Chapter 38.
31. For these reasons, I hold that the correct classification was under heading No. 38.01/19 (1), and thus concur in my learned brother's order.
Raghavachari, Member (J) I have carefully perused the orders prepared by the Hon'ble President and Shri H.R. Syiem (Member). I agree with their conclusion that all these appeals should be allowed.