2018 (7) TMI 9 - AT - Central Excise

Classification of goods - P-100 - The revenue wanted to classify the product under 3824 whereas the appellant had sought classification under heading 3823 - Held that - The office of the chemical laboratory is not sure of exact classification and has raised some doubts about classification, it is not open to original adjudicating authority to decide the issue suo motu without going back with the said clarification to the office of the chemical examiner. It is seen that the onus of establishing the change of classification is on revenue and from the records it is apparent that revenue has been unable to produce sufficient evidence to substantiate the claim. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of product under Central Excise Tariff Act, 1985 - Discrepancy in classification between revenue and appellant - Reliability of Dy. Chief Chemist report - Similar products classification by other manufacturers - Penalty imposition.

Analysis:
The case involved an appeal by Alpha Foam Pvt. Ltd. regarding the classification of product P-100 under the Central Excise Tariff Act, 1985. The revenue sought to classify the product under heading 3824, while the appellant argued for classification under heading 3823. The dispute arose from the different interpretations of the goods in question. The appellant contended that the products - Industrial mono carboxylic fatty acids, acid oils from refining, and industrial fatty alcohols - fell under the same Chapter Heading. The appellant challenged the reliance on the HSN description by the Commissioner (A) and highlighted the misalignment between the Tariff heading 3824 and HSN during the relevant period, asserting that this error invalidated the impugned order.

The appellant further contested the reliability of the Dy. Chief Chemist report, emphasizing that it was submitted in 1997 but only provided to them in 2007. The appellant argued that the report was inconclusive and required additional material for further analysis, which was not possible due to the cessation of production. Additionally, the appellant pointed out that similar products from other manufacturers were classified similarly to how the appellant proposed. The appellant detailed the chemical composition of product P-100, asserting it to be an industrial fatty alcohol derived from specific acids and reactions, thus justifying the classification under heading 3823.

During the proceedings, the Assistant Commissioner (AR) supported the impugned order, while the Tribunal examined the submissions from both sides. The Tribunal noted that the test report was inconclusive and not final, yet the original adjudicating authority had relied on it without clarifying the uncertainties with the chemical examiner's office. The Commissioner (Appeals) acknowledged the lack of clarity in the classification process and emphasized the revenue's failure to provide sufficient evidence to support their classification claim. Consequently, the Tribunal found the impugned order unsustainable and allowed the appeal, highlighting the revenue's inability to substantiate the classification change adequately.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the importance of proper evidence and clarity in the classification process under the Central Excise Tariff Act, 1985. The judgment underscored the significance of establishing a clear basis for classification and the burden of proof on the revenue to support any classification changes effectively.