1983 (9) TMI 280 - AT - Central Excise

Summary

Issues Involved:
1. Classification of "Hicar-Ion" under Central Excise Tariff Item 65 or Item 68.
2. Relevance of predominant use in determining classification.
3. Interpretation of tariff items based on function versus composition.

Detailed Analysis:

1. Classification of "Hicar-Ion" under Central Excise Tariff Item 65 or Item 68:
The primary issue was whether "Hicar-Ion," also known as Di-butyl Para Cresol (DPT) or Butylated Hydroxy Toluene (BHT), should be classified under Item 65 (rubber processing chemicals) or Item 68 of the Central Excise Tariff. The appellants argued for classification under Item 68, while the Department contended for Item 65. The Department's stance was based on the Chemical Examiner's report, which stated that DPT is mentioned in chemical literature as an antioxidant for rubber. However, the appellants provided evidence that their product and similar products from other manufacturers were not predominantly used as rubber processing chemicals but had various other uses, such as in petroleum products and food packaging.

2. Relevance of Predominant Use in Determining Classification:
The Tribunal emphasized the importance of predominant use in classification. It referenced its earlier Order No. 250/1983-C, noting that a chemical should not be classified based on a single use unless it is the predominant or common use. The Tribunal found that the Department had not established that the predominant use of DPT was as a rubber processing chemical. The Department's argument that the end use was irrelevant was rejected, as the Tribunal held that for functional descriptions like "rubber processing chemicals," the predominant use is indeed relevant.

3. Interpretation of Tariff Items Based on Function versus Composition:
The Tribunal differentiated between tariff items based on function and those based on composition. Item 65, which lists "rubber processing chemicals" including "accelerators" and "antioxidants," was deemed to be functionally descriptive. The Tribunal argued that for a substance to fall under Item 65, it must not only be an antioxidant but also predominantly used as a rubber processing chemical. This interpretation was supported by references to other tariff items and judicial decisions, including the Supreme Court's ruling in South Bihar Sugar Mills Ltd. v. Union of India, which emphasized the importance of predominant use in classification.

Conclusion:
The Tribunal concluded that the Department had not met the burden of proving that the predominant use of "Hicar-Ion" was as a rubber processing chemical. Therefore, the product should be classified under Item 68, not Item 65. The appeal was allowed, and the appellants were granted consequential relief.

Separate Judgment by M.G.S. Murthy:
M.G.S. Murthy dissented, arguing that "rubber processing chemicals" is a generic term encompassing various chemicals known and recognized as such in technical literature and trade. He contended that the description of a chemical as an accelerator or antioxidant is functional and that the actual or predominant use should not affect classification under Item 65. Murthy cited judicial precedents to support his view that the end use is irrelevant if not explicitly mentioned in the tariff entry. Despite his dissent, the appeal was allowed in line with the full Bench decision.