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8. In order to determine the appropriate nature of the subject matter in question, as well as to adjudicate upon classification of the same under the Act of 1975, we may refer to the sub-headings involved herein: -

 1511 Palm Oil and Its Fractions, Whether Or Not Refined, But Not Chemically Modified 1511 10 00 - Crude oil [...] 1511 90 - Other 1511 90 10 --- Refined bleached deodorised palm oil [...] 1511 90 90 --- Other 3823 Industrial Monocarboxylic Fatty Acids; Acid Oils from Refining; Industrial Fatty Alcohols Industrial monocarboxylic fatty acids; acid oils from refining:

3823 11 -- Stearic acid:

-- Palm stearin: 3823 11 11 ---- Crude 3823 11 12 ---- RBD

9. Heading 15.11 covers palm oil and its fractions, whether or not refined, but not chemically modified. According to the Harmonized Commodity Description and Coding System (for short "HSN") Explanatory Notes developed by the World Customs Organization, Chapter 15 covers vegetable or animal fats and oils and their fractions when used as foodstuffs or for technical or industrial purposes. The  CESTAT, in deciding the issue of classification, has relied upon the opinion of the Customs and Central Revenue Control Laboratory (CRCL) and a Central Board of Excise and Customs (CBEC) Circular dated 03.12.2002 to fortify its conclusions. The CRCL opinion advised that heading 15.11 covers palm oil and its fractions, which include the constituent elements like triglycerides of fatty acids and point fractions obtained by the process of fractionation. The CBEC Circular had distinguished between triglycerides of fatty acids and free fatty acids and went on to state that palm stearin was basically a triglyceride (ester) of fatty acids. Based on this ground, and also on the fact that the report of the Chemical Examiner merely looked at the free fatty acid content and not the ester values to indicate the presence of triglycerides, the CESTAT ruled in favour of the respondent.

10. We are of the considered opinion that the import of the CRCL opinion and the CBEC Circular needs to be understood in proper perspective. The mere fact that the CRCL opinion and the CBEC Circular (No. 81/2002 - dated 03.12.2002) affirm  the chemical composition of palm stearin cannot make a case for its classification under Ch. Sub Heading No. 15 11 90 90. The essential conclusion to be drawn from these two reference documents is that palm stearin, which is obtained from the fractionation of palm oil, is comprised mainly of triglycerides of fatty acids. The question then arises as to whether it would be appropriate to categorize the triglycerides present in the oil, viz. Palm Stearin, under Chapter 15, while bracketing the free carboxylic acids derived during the refining process under Chapter 38.

11. To answer this question, we may analyse the key aspects of classification under Chapter 15 - the chapter covers palm oil and its fractions, which may be refined or unrefined, but the critical condition is that the product must not be chemically modified. The argument that palm stearin, a fraction of palm oil, being comprised primarily of triglycerides of fatty acids should be classified in Chapter 15 by way of exclusion from Chapter 38 which covers industrial carboxylic acids (or in other words, free fatty acids) is compelling, but not decisive.  This argument stems from the interpretation favoured in Rule 3(b) of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, wherein the essential character of the subject matter determines its classification.