1985 (1) TMI 309 - AT - Customs

Summary

Issues Involved:
1. Assessment of naphthalene under the correct tariff heading.
2. Interpretation of 'separate chemically defined organic compounds.'
3. Determination of the appropriate dividing point for purity (80^0C or 79.4^0C).
4. Applicability of Chapter 27 vs. Chapter 29 of the Customs Tariff.

Detailed Analysis:

1. Assessment of Naphthalene under the Correct Tariff Heading:

The primary issue was whether the naphthalene imported by M/s. Atul Products Limited and M/s. Atic Industries Limited should be assessed under heading 27.07 or 29.01/45(1) of the Customs Tariff. The Assistant Collector initially assessed the goods under heading 29.01/45(1), but the Appellate Collector later ruled that the goods should fall under heading 27.07 due to their melting point of 79.6^0C, which he believed did not qualify them as a separate chemically defined organic compound under Chapter 29.

2. Interpretation of 'Separate Chemically Defined Organic Compounds':

The assessment centered around the interpretation of 'separate chemically defined organic compounds.' The Appellate Collector opined that a substance must have a high degree of purity to be classed as such and that impurities like water or moisture, which do not affect the commercial purpose, are tolerable under Chapter 29. He concluded that the naphthalene in question was only refined and not pure, thus should not be classified under Chapter 29.

3. Determination of the Appropriate Dividing Point for Purity (80^0C or 79.4^0C):

The Appellate Collector used 80^0C as the dividing line for assessing the purity of naphthalene, referencing the Kirk-Othmer Encyclopaedia of Chemical Technology. However, the department argued that the crystallisation point of 79.4^0C should be the standard, as per the ISI 539 of 1965 and the Materials Handbook by Brady. The CCCN note under Chapter 29.01 also specifies that naphthalene must have a crystallisation point of 79.4^0C or more to fall under Chapter 29.

4. Applicability of Chapter 27 vs. Chapter 29 of the Customs Tariff:

The Tribunal noted that Chapter 27 covers mineral fuels, oils, and products of their distillation, but explicitly excludes separate chemically defined organic compounds. Chapter 29 specifically includes such compounds, whether or not they contain impurities. The Tribunal emphasized that the naphthalene in question, with a melting point of 79.6^0C, is a separate chemically defined organic compound and should be classified under Chapter 29.

Conclusion:

The Tribunal concluded that the naphthalene imported by M/s. Atul Products Limited and M/s. Atic Industries Limited should be assessed under Chapter 29. The Appellate Collector's orders were set aside, and it was determined that the naphthalene, being a separate chemically defined organic compound with permissible impurities, falls under Chapter 29. The Tribunal highlighted that Chapter 27 does not cover such compounds, reinforcing that the correct classification is under Chapter 29.