Customs, Excise and Gold Tribunal - Delhi
Indrox Chemicals Ltd. vs Collector Of C. Ex. on 25 September, 1998
Equivalent citations: 1998(60)ECC646, 1999ECR113(TRI.-DELHI), 1999(106)ELT260(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The classification of the product described as "Indrox-985-P-12" which is a dye penetrant to detect cracks or other flaws in metal surfaces, arises for determination in the present appeal against the order passed by the Collector of Central Excise (Appeals), Bombay - the Revenue has classified the product under sub-heading 3204.30 as a 'Synthetic organic product of a kind used as fluorescent brightening agent' while the assessee seeks classification under sub-heading 3823.00 of the Schedule to the Central Excise Tariff Act, 1985 as a 'residuary product of the chemical industry not elsewhere specified or included'.
2. We have heard Shri B.N. Rangwani, learned Consultant and Shri A.K. Madan, learned DR. The product in dispute is obtained by mixing of aromatic solvents, fluorescent Dye and Corrosion inhibitor. Undisputedly, it is a synthetic organic product. It is used to detect cracks or flaws on metal surfaces by the following process :
(i) The metal surface is cleaned with solvent so as to prepare the surface;
(ii) Dye Penetrant is applied on such cleaned surface;
(iii) After application of dye, developer is applied and the cracks are made visible to the naked eye.
The Chemical examiner's report shows that 'the product is in the form of flourescent yellow colour liquid and composed of complex organic compound, colouring matter and mineral oil and the mineral oil content is less than 70%.' The Assistant Collector had classified the item under sub-heading 3204.29 on the ground that it was a preparation based on dyes falling under sub-heading 3204; however, the Collector (Appeals) has upheld the classification under sub-heading 3204.30 as proposed on the show cause notice, holding that it is synthetic organic product of a kind used as fluorescent brightening agent and not a preparation based on synthetic organic colour matter falling under CET heading 3204.29. The appellants contention that the product becomes fluorescent only after addition of a developer is not supported by any material while on the other hand, the report of the Chemical examiner who has tested the product as it is (without addition of developer) clearly states that the sample is in the form of fluorescent yellow colour liquid. The Chemical Examiner's report has not been challenged by way of request for retest or by way of his cross examination. Therefore, the contention of the appellants remains unsubstantiated and going by the basis of the chemical test, we hold that the product is covered by the specific entry viz. CET sub-heading 3204.30 and not by the residuary entry viz. 3823.00. Accordingly, we see no infirmity in the impugned order, uphold the same and reject the appeal.
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(Jyoti Balsundaram) Member (J) Shiben K. Dhar, Member (T)
3. With due respect of Member (J) I am writing separate order as under :
4. Collector (Appeals) has in detail recorded the contentions of the Appellants, particularly, what a dye penetrant is. According to McGraw Hill Dictionary Dye penetrant is a dye containing liquid used for detecting cracks or other surface defects in non-magnetic materials. At internal page 2 Collector (Appeals) records that "it will be thus seen from the above that the dye penetrant is used as an agent for detection of cracks; in the metal surface." After recording this Collector (Appeals) goes on to add "the cracks are made visible to the naked eye because the dye penetrant is in the form of fluorescent yellow liquid." While chemical analysis report indicates that the dye is in the form of fluorescent yellow coloured liquid and composed of complex organic compound, it does not say that it is because of fluorescence that crack is detected. It was contended before us that organic products of a kind used as fluorescent brightening agent on synthetic organic product of kind used as luminophores. It was contended by the ld. Counsel that the product is not used as luminophores. It is through penetration at it shows up the cracks. In this context therefore it is not clear how the Collector has arrived at the conclusion that cracks are made visible to the naked eye because the dye penetrant is in the form of fluorescent yellow liquid. There is no technical opinion in the order according to which the dye penetrant detects cracks because of its fluorescence. Adjudicating Authority cannot substitute his own opinion for expert opinion. The order does not indicate, as against the contention of the Appellants, how because of fluorescence the cracks are detected. In view of this, since the findings arrived at are not supported by any evidence, I am of the view that the matter has to be remanded to the Commissioner (Appeals) for de novo examination in the light of technical literature, character of the items as also the HSN notes. Ordered accordingly.
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(Shiben K. Dhar) Member (T) Dated 5-3-1998 POINT OF DIFFERENCE The following difference of opinion is framed for reference by the Hon'ble President to the third Member:
Whether the impugned order is required to be upheld and the appeal rejected, as proposed by the learned Member (Judicial) or The matter requires to be remanded to the lower appellate authority for de novo examination, as proposed by the learned Member (Technical).
Sd/- Sd/- (Shiben K. Dhar) (Jyoti Balasundaram)) Member (T) Member (J) Dated 10-3-1998 Dated 5-3-1998 THIRD MEMBER'S OPINION Lajja Ram, Member (T)
5. The difference of opinion referred to me in this appeal filed by M/s. Indrox Chemicals Ltd. is Whether the Order-in-Appeal No. KVV-207/92 B.III dated 23-9-1992 passed by the Collector of Central Excise (Appeals), Bombay is required to be upheld and the appeal rejected, as proposed by the ld. Member (J) OR Whether the matter requires to be remanded to the lower appellate authority for de novo examination as proposed by the ld. Member (T).
6. Shri B.N. Rangwani, Advocate appearing for the appellants submitted that the product - Dye Penetrant - Indrox-985-P-12 was for use in Aero Space Industry for detection of any crack in the metal surface, and that it was not a fluorescent brightening agent or luminophores. He pleaded that goods under consideration were correctly classifiable under sub-heading No. 3823.00 of the Central Excise Tariff.
7. In reply, Shri R.S. Sangia, JDR submitted that the report of the Chemical Examiner was not contested by the appellants, and that on the basis of the said test report, the goods in question had been correctly classified under sub-heading No. 3204.30 of the Central Excise Tariff, by the ld. Collector of Central Excise (Appeals), Bombay. He pleaded for acceptance of the order proposed by Member (J).
8. I have carefully considered the matter. The goods in dispute have been described by the appellants as Dye Penetrant Indrox 985-P-12. Learned Member (J) had proposed that the goods in question were covered by subheading No. 3204.30 of the Central Excise Tariff. Sub-heading No. 3204.30 of the Central Excise Tariff covered synthetic organic products of a kind used as fluorescent brightening agents or as a luminophores.
9. Heading No. 32.04 of the Central Excise Tariff covered Synthetic Organic Colouring matter, whether or not chemically defined; preparations based on Synthetic Organic colouring matter as specified in Note 2 under Chapter 32; synthetic organic products of a kind used as fluorescent brightening agents or as luminophores whether or not chemically defined. Note 2 under Chapter 32 provided that Heading Nos. 32.03, 32.04, 32.05 and 32.06 apply also to preparations based on colouring matter of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations. The headings however, did not apply to pigments dispersed in non-aqueous media, in liquid or paste form, of a kind used in the manufacture of paints, including enamels or to other preparations of Heading Nos. 32.07, 32.08, 32.09,32.10,32.12, 32.13 or 32.15. The scope of sub-heading No. 3204.30 (fluorescent brightening agents) has been discussed in Reckitt & Colman of India v. Collector of Central Excise, Bangalore -1994 (71) E.L.T. 44 (Tribunal). Para 4.3 from that decision is extracted below :-
4.3 Classification under Heading 32.04 covers the following products :
(i) Synthetic organic colouring matter
(ii) Preparations based on synthetic organic colouring matter
(iii) Synthetic organic products of a kind used as fluorescent brightening agents or as luminophores.
Product RLFW as found above is a preparation with a basis of inorganic substance ultramarine blue. It is not identifiable with any of three products mentioned in Heading 32.04. There is no synthetic organic colouring matter present in the product RLFW. Chief Chemist's opinion for classification of the product under Heading 32.04 because of presence of about 3 per cent of Synthetic Organic product, brightening agent (i.e. Ranipal) is not tenable. The Heading 32.04 inter alia speaks of Synthetic Organic products of a kind used as fluorescent brightening agent, this heading would be applicable to a product which is purely a S.O. product used as fluorescent brightening agent or as luminiphores or whose essential character is imparted by such S.O. product.
10. The scope of the Tariff Entry relating to Synthetic Organic Products of a kind used as fluorescent brightening agents or as luminophores, whether or not chemically defined, has been explained in the Explanatory Notes under Harmonised Commodity Description and Coding System (HSN) as under :-
(i) Organic products of a kind used as fluorescent brightening agents are synthetic organic products which absorb ultraviolet rays and give off visible blue radiations thus intensifying the apparent whiteness of white articles. They generally consist of stilbene derivatives.
(ii) Organic products of a kind used as luminophores are synthetic products, which under the action of light rays, produce a luminescent or fluorescent effect.
It has been provided that some of these products have also the character of colouring matter.
11. As described in the Encyclopaedia of Chemical Technology by Kirk - Othmer, the operation of bleaching or brightening is concerned with the preparation of fabrics whose commercial value is dependent on the highest possible whiteness. With the aid of optical brighteners, also referred to as fluorescent whitening agents, or fluorescent brightening agents, optical compensation of the yellow cast of substrates such as textiles, paper, detergents etc. could be obtained. Initially, fluorescent whitening agents were used exclusively in textile finishing. The detergents and paper industries followed thereafter, and now these products are in wide use in various other industries including textiles, plastics, paints, paper, washing powder, etc.
12. As against the above description of the synthetic organic products of a kind used as fluorescent brightening agents or as luminophores, the dye penetrant is a dye containing liquid, used for detecting cracks or other surface defects in non-magnetic materials. The Ardrox 985-P12' was a fluorescent penetrant of a particular sensitivity and was to be used with a separate emulsifier. It is to be used for penetrant inspection of metal components during manufacture and overhaul, according to the technical information of Ardrox Pyrene, U.K. These products are suitable for use in Nuclear Industry and were formulated to conform to the requirements of the ASME Boiler and Pressure Vessel Code and, other relevant specifications.
13. The use of the product and the test report of the Chemical Examiner has already been discussed in the adjudication order, and in the Order-in-Appeal. The learned Member (T) had observed that it was not clear from the impugned order-in-appeal that how the Collector of Central Excise (Appeals) had arrived at the conclusion that the cracks are made visible to the naked eye because the dye penetrant was in the form of fluorescent yellow liquid. He had proposed that the matter be remanded to the Commissioner of Central Excise (Appeals) for de novo consideration in the light of the technical literature and character of the item as also the HSN notes.
14. In the light of the tariff description, the HSN Explanatory Notes and the technical description as given in the Encyclopedia of Technology, and technical information with regard to the product in question. I agree with the ld. Member (Technical) that this matter needs to be remanded to the jurisdic-tional Commissioner of Central Excise (Appeals) for de novo consideration.
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(Lajja Ram) Member (T) MAJORITY ORDER In the light of the majority opinion, the impugned order is set aside and the matter is remanded to the Commissioner of Central Excise for de novo examination of classification of the product in dispute, in the light of the technical literature, character of the item as also the HSN notes. The appeal is thus allowed by way of remand.