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1. This appeal arises from Order-in-Appeal No. 130/93, dated 29-9-1993 upholding the classification of the item Weldgrade Ilmenite under Tariff Heading 38.23 which reads as follows :-

"Prepared binders for foundry moulds or cores; 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."

As a consequence, the demands for the period July, 1989 to October, 1990 to the extent of Rs. 6,31,042.34 has been confirmed.

2. The learned Advocate submits that the item in question is a pure grade with composition of TiO2 (Titanium Dioxide) to the extent of 92 to 93%. It has the constituent of Fe2O3 of 1.8%, FeO 0.25%, silica of 2% and other impurities including garnet of 3.5% and the resultant product is also treated with MnO2 which gives Weldgrade Ilmenite with a fused coating of MnO. He contend that although the appellants are clearing aluminium as weldgrade to be used in the manufacture of electrodes as flux. However, the item has to be classified only under Chapter Heading 28 as it satisfies the description as Titanium Oxide. It is his contention that in the case of Bombay Paints and Allied Products Ltd. v. C.C.E. as reported in 1984 (17) E.L.T. 473, wherein the Tribunal considered the classification of the item Titanium Dioxide RCR2 (Rutile grade) to be classified under Heading 32.04/12(1) of Customs Tariff Act as a pigment. While considering the aspect for classification, the Tribunal in para 8 noted that TiO2 when it is unmixed with barium or calcium sulphate or other materials or has not been surface treated is classifiable under Chapter 28 [28.01/58(12)]; otherwise as a pigment under Chapter 32 [32.04/12(1)]. It is his contention that the item impugned does not contain barium or calcium sulphate and therefore, it is required to be classified only under Chapter 28. He also brings to our notice the judgment rendered in the case of Apoorva Impex as reported in 1990 (49) E.L.T. 591 wherein also the Titanium Dioxide Rutile (TiO2) was held to be classifiable under Chapter 32.06 (3206.10) of the Customs Tariff Act, 1975.

4. On a careful consideration of the submissions, we notice that the Commissioner has taken into consideration the report of the Chemical Examiner and the manner in which the item has been treated as MnO2 and the appellants treating the same as welding electrode. The Commissioner (Appeals)'s finding given in para 4 of the impugned order is noted herein below :

"4. I have examined the appeal records. The short point for consideration in this case is whether Weldgrade Ilmenite manufactured by the appellants is classifiable under Chapter Heading 2614.00 or 2823.00 or 3823.00. The appellants content that they were not furnished with full text of the Original copy of the Re-test reports of the Central Revenue Control Laboratory, New Delhi. I have perused from the records, the report of the Chief Chemist, C.R.C. Laboratory and I observe the complete relevant portion of the report had been furnished to the appellants. That being so, I have not been able to apply the reasoning of the appellants in asking the original copy of the test report by invoking Rule 215 of the Central Excise Rules, 1944. I, therefore, do not consider this request reasonable and relevant and hence I do not find that the impugned order suffers from violation of principles of natural justice on this score. Also I do not find any ambiguity or deficiency in the chemical analysis reports, from the Chemical Examiner Custom House, Madras, and the Central Revenue Control Laboratorary, New Delhi. From these reports, it is quite clear that after undergoing various processes of upgradation including roasting with coke and treating with hydrochloric acid, the resultant product ceases to remain Ilmenite as an Ore in natural form. The report of the Research Laboratory, Trivandrum, does not refer to the process by which Ilmenite Ore is upgraded to make it equivalent to natural rutile or beneficiated Ilmenite. In fact, the process by which it is upgraded is an important factor for ascertaining the classifiability of the product under Chapter 26. On the other hand, the Chemical Examiner, Madras, has clearly stated that the Weldgrade Ilmenite is obtained by a process not normal to metallurgic Industry. Therefore, the product falls out of the purview of the Chapter 26. Again, the Weldgrade Ilmenite is not Titanium Oxide in pure form, but also contains small quantities of other inorganic oxides. As such it cannot be classified under Chapter 28 which would include Titanium Oxide in its pure form and not in admixture with other ingredients. Chemical analysis report also indicates that the Upgraded Ilmenite is subsequently treated with MnO2which gives Weldgrade Ilmenite a fused coating of MnO which is subsequently used in the manufacture of Electrodes as flux. In fact, the appellants have themselves stated that they add a special compound to achieve purity suitable for use in the manufacture of Welding Electrodes, Treatment of Upgraded Ilmtenite with Hydrochloric acid and subsequently giving it the fused coating of MnO leaves no doubt that it is a chemically treated product. As per the explanatory notes for Chapter Heading 38.23 in the Harmonised Commodity Description and Coding System, the preparations either wholly or partly of Chemical products or wholly of natural constituents would also be classified as chemical-products and chemical or other preparations. Thus, in the overall consideration of the manufacturing process, the Chemical Analysis reports and use of the Weldgrade Ilmenite, it would appropriately be classifiable under Chapter Heading 38.23.00 of the Central Excise Tariff Act, 1985.1, therefore, do not find any merit in the appeal and accordingly dismiss the same."

We have considered the pleas raised by the appellants and examined the judgment of Bombay Paints & Allied Products Ltd. cited supra, wherein in para 8 of the Tribunal order, it has been noted that for classifying under Chapter 28 TiO2 it should be unmixed with barium or calcium sulphate or other materials or has not been surface treated, while in the present case, the item has been treated with MnO2 and has undergone certain manufacturing processes and the item is being cleared specifically for the purpose of welding electrode as Weldgrade Ilmenite. Although we agree with the Commissioner (Appeals)'s findings that the item is not classifiable under Chapter Heading 2614 or 2823.00 and that the item has to fall under Chapter 38 of the Central Excise Tariff, we notice that the heading adopted is under Chapter sub-heading 3823.00, which is a residual heading and in the said heading, the item has been considered as a residual products of chemical or allied industries, not elsewhere specified or included. The Commissioner (Appeals) has been guided on the basis of Explanatory Notes under Chapter Heading 3823 in the Harmonised Description and Coding System and has taken into consideration the chemical analysis report, which indicated that upgraded ilmenite is subsequently treated with MnO2 which gives Weldgrade ilmenite a fused coating of MnO which is subsequently used in the manufacture of Electrodes as flux. The appellants have also admitted that they add a special compound to achieve purity suitable for use in the manufacture of welding electrodes. The Commissioner's findings with treatment of upgraded ilmenite with Hydrochloric Acid and subsequently giving it the fused coating of MnO leaves no doubt that it is a chemically treated product. We notice from the chemical analysis report that the Chemical Examiner has recommended for classification under Heading 3823.00 and the Commissioner (Appeals) has been guided on this aspect and has followed the classification accordingly. We are of the considered opinion that the Chemical Engineer (Examiner) cannot arrive at the classification and give his recommendations for such classification and this has been disapproved by the Tribunal in large number of judgments. The Chemical Engineer (Examiner) has to merely express his expert opinion on the product. The expert opinion given by him clearly disclosed that the item is used as flux for the purpose of welding electrodes. Appellants have admitted that the item is also marketed as welding electrodes. There is a separate sub-heading for welding electrodes under sub-heading 38.10. This sub-heading includes fluxes and other auxiliary preparations for soldering, brazing or welding; soldering, brazing or welding powders and pastes consisting of metal and other materials; preparations of a kind used as cores or coatings for welding electrodes or rods. Taking into consideration the report of the Chemical Examiner and the manner in which it is traded the item being electrodes has to fall under sub-heading 38.10 and not under 38.23 as 'on a preparation either wholly or partly of chemical products or wholly of natural constituents'. We notice that there is no change in the rate of duty between the Headings 38.10 and 38.23 as both the headings carry 15%. Therefore, we modify the impugned order to the extent that the item would fall under sub-heading 38.10 and not under 38.23 of the Central Excise Tariff. We are of the further view that the said HSN Explanatory Notes have got persuasive value in terms of the judgment of Hon'ble Apex Court as relied by the learned DR which is already noted above. The learned DR's contention that where the item satisfies one more heading, in terms of the Interpretative Rules 3(c), the latter heading is required to be preferred and hence, the same is accepted. In the case of Apoorva Impex cited supra, the Tribunal noted that Titanium Dioxide Rutile was classifiable under Chapter Heading 32 as it satisfies the description of that heading as the item therein was of pigment grade.