2014 (8) TMI 81 - AT - Central Excise

Classification of Lost Circulation Control Additives (LCCA) - CETH No.4701.00 attracting Nil rate of duty or CETH 3824 - Held that - on a question of fact which indicate that the product LCCA is a product derived from cellulosic fibre the classification of the said product under Chapter 47 as held by first appellate authority is a correct view. - the first appellate authority was correct in recording that the opinion of the chemical examiner could be restricted to the analysis of the product in question and hence he cannot opine on the classification of the product. - Decided against the revenue.

Summary

Issues involved:
Classification of Lost Circulation Control Additives (LCCA) under CETH No.4701.00 or CETH 3824, Chemical properties of LCCA, Interpretation of HSN Chapter Note for classification, Reliance on previous tribunal judgments for classification, Competency of chemical examiner in determining classification.

Analysis:

1. Classification of LCCA: The issue revolves around the correct classification of Lost Circulation Control Additives (LCCA) under the Central Excise Tariff. The appellant classified LCCA under CETH No.4701.00 attracting Nil rate of duty, while the Revenue contended that it should be classified under CETH 3824. The dispute arose from a chemical test conducted on LCCA, with the Revenue authorities arguing that the product should be classified based on its chemical properties.

2. Chemical Properties of LCCA: The Revenue emphasized the chemical properties of LCCA, claiming it contains modified cellulose and starch used for bridging, suspending, and thickening effects. The chemical examiner's report indicated that LCCA was not classifiable under CETH 47.01 based on its composition. However, the appellant argued that LCCA's ingredients align with the HSN Notes under Chapter 47, consisting of cellulose fibers, maize starch, and tamarind kernel powder.

3. Interpretation of HSN Chapter Note: The first appellate authority relied on the HSN Explanatory Notes under Chapter 47 to support the classification of LCCA. The authority noted that the product's ingredients, including cellulose fibers, maize starch, and tamarind kernel powder, corresponded with the requirements specified in the HSN Notes under Chapter 47. Previous tribunal judgments, such as the case of Reliance Cellulose Products Ltd and Samson Rubber Industries, were cited to reinforce the classification under Chapter 47.

4. Competency of Chemical Examiner: The competency of the chemical examiner in determining the classification of LCCA was questioned. The first appellate authority emphasized that the chemical examiner's role should be limited to analyzing the product's composition and not opining on its classification. Precedents like East West Exporters, Danmet Chemicals, and Pushpanjali Floriculture Ltd were cited to support this view.

5. Judicial Pronouncements: The appellate tribunal, after thorough consideration of the submissions and evidence presented by both parties, upheld the first appellate authority's decision. The tribunal found that the classification of LCCA under Chapter 47 was justified based on factual evidence and legal interpretations. The appeals filed by the Revenue were deemed devoid of merit, and the impugned order was upheld as legally sound and correct.

In conclusion, the judgment clarifies the classification of Lost Circulation Control Additives, emphasizing the importance of factual evidence, legal interpretations, and adherence to established precedents in determining the appropriate tariff classification of a product under the Central Excise Tariff.