2004 (11) TMI 403 - AT - Customs

Summary

Issues involved: Classification of imported product under Customs Tariff Act - Heading 3811.19 or sub-heading 3403.99.

The appeal filed by M/s. Iftex Oil & Chemicals Pvt. Ltd raised the issue of whether the imported product, Pennzadd 3114, should be classified under heading 3811.19 of the Customs Tariff Act as claimed by the appellant or under sub-heading 3403.99 as confirmed by the Commissioner (Appeals) in the impugned order. The appellant argued that the impugned product is an additive used to formulate lubricant oil, falling under heading 3811.19 for additives for manufacturing lubricating oils/preparations. The Department classified the product under sub-heading 3403.99 based on recommended dosage levels and the exclusion clause in the Explanatory Notes of HSN. The appellant contended that the exclusion clause in HSN refers to lubricating preparations, not additives, and that similar products were classified differently in subsequent imports and by another manufacturer in India.

Upon considering the submissions, the Tribunal analyzed the technical literature of Pennzadd 3114 and found it to be a universal low-zinc antiwear package designed for use in low-sulfur base oils to meet specific performance requirements. The Tribunal noted that the impugned product is an additive mixed with base oil, contrary to the Department's classification under heading 34.03 based on the exclusion clause in the Explanatory Notes of HSN. The exclusion clause excludes lubricating preparations intended for small quantities in motor fuels or lubricants, which the Tribunal determined did not apply to additives. The Tribunal agreed with the appellant's argument that heading 38.11 covers additives and classified the impugned product under sub-heading 3811.19 of the Customs Tariff, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal resolved the issue of classification by determining that the imported product, Pennzadd 3114, is appropriately classified under sub-heading 3811.19 of the Customs Tariff Act as an additive for manufacturing lubricating oils/preparations, rejecting the Department's classification under sub-heading 3403.99 based on the exclusion clause in the Explanatory Notes of HSN. The decision was based on the nature of the product as an additive mixed with base oil, aligning with the classification under heading 38.11 for additives specified within its scope.