2003 (11) TMI 371 - AT - Central Excise

Summary

Issues Involved:
1. Classification of polyethylene glycol (PEG) under the appropriate tariff heading.
2. Applicability of the extended period of limitation for duty demand.
3. Interpretation of relevant chapter notes and explanatory notes for classification.
4. Consideration of technical literature and previous tribunal decisions in classification.

Detailed Analysis:

1. Classification of Polyethylene Glycol (PEG):
The primary issue is whether PEG should be classified under Chapter Heading 29.13.00 or 29.40 as claimed by the appellant, or under Heading 39.07 as confirmed by the Commissioner. Chapter 29 covers specified organic chemicals, while Chapter 39 covers poly acetals, other polyethers, and epoxide resins in primary forms. The tribunal noted that Note 1 to Chapter 39 does not mandate that only plastics can be classified under Chapter 39, but rather defines the term "plastic" for classification purposes. The tribunal emphasized that not all polymers are plastics, and the classification under Chapter 39 is justified based on the Harmonised System of Nomenclature (HSN) and the Explanatory Notes.

2. Applicability of the Extended Period of Limitation:
The Commissioner ruled that the extended period of limitation was not applicable because the appellant had made the Department aware of the nature of the product. The duty demand was therefore limited to the normal period of limitation under Section 11A of the Act.

3. Interpretation of Relevant Chapter Notes and Explanatory Notes:
The tribunal examined several notes from Chapters 29 and 39 to determine the correct classification. Note 1(a) to Chapter 29 specifies that the headings apply only to separate chemically defined organic compounds. Note 2(b) to Chapter 39 excludes separate chemically defined organic compounds from its scope, which would fall under Chapter 29. The tribunal found that PEG, being a polymer with varying molecular weights and hydroxyl groups, does not meet the criteria for a separate chemically defined compound and thus falls under Chapter 39.

4. Consideration of Technical Literature and Previous Tribunal Decisions:
The appellant cited various technical literatures and previous tribunal decisions to support their classification claim. However, the tribunal found that the technical literature indicated that PEG is not a separate chemically defined compound. The tribunal also referred to previous decisions, such as CCE v. Premier Tyres Ltd. and National Organic Chemical Industries v. CCE, but distinguished them based on differences in the tariff structure and the nature of the product. The tribunal concluded that PEG is not a plastic as defined in Note 1 to Chapter 39, but this does not preclude its classification under Chapter 39.

Conclusion:
The tribunal confirmed the classification of PEG under Heading 39.07, dismissing the appeal. The tribunal's analysis was based on the interpretation of chapter notes, technical literature, and previous tribunal decisions, concluding that PEG does not qualify as a separate chemically defined compound and is rightly classified under Chapter 39.07. The extended period of limitation was not applicable, and the duty demand was limited to the normal period of limitation.