1998 (1) TMI 87 - SC - Customs

Whether Abbalide imported by the respondents is classifiable as an organic chemical under Chapter 29 or a mixture of odoriferous substances falling under Heading 33.02 of Chapter 33 of the Tariff in the Schedule to the Customs Tariff Act, 1975? Held that - The Tribunal was in error in construing Clause 1(e) of Chapter 29 and in holding that the said product was classifiable under Chapter 29. Clause 1(e) of the Notes in Chapter 29 postulates that if a product mentioned in sub-clauses (a) (b) or (c) of Clause 1 is dissolved in a solvent and the solution constitutes a normal and necessary method of putting up these products adopted solely for the reasons of safety or for transport then the product would fall within Chapter 29 only if the solvent does not render the product particularly suitable for specific use rather than for general use. As per the certificate dated September 19, 1986 issued by the manufacturer the compound imported by the respondents cannot be used in the condition it is manufactured and for making it suitable for use and for retaining its suitability for use it has to be dissolved in a solvent. The need of a solvent is not only for the purpose of storage and transport of the chemical, but also for retaining the suitability of the product after it is manufactured. Its dissolution in the solvent is necessary in order to make the product suitable for use. Since the product is used only for perfumery and not for any other purpose, it has to be held that the product is intended for specific use only. In view of Clause 1(e) of the Notes in Chapter 29, it may be held that the product imported by respondents cannot be regarded as falling under Chapter 29 of the Tariff and would fall under Heading 33.02 in Chapter 33 of the Tariff. Appeal allowed.

Summary

Issues:
Classification of imported product `Abbalide' under Chapter 29 or Heading 33.02 of the Tariff.

Detailed Analysis:

1. Background:
The appeals by the Revenue challenge the classification of `Abbalide' imported by the respondents under Chapter 29 or Heading 33.02 of the Tariff by the Customs, Excise and Gold (Control) Appellate Tribunal.

2. Case of S.H. Kelker & Co. Ltd.:
- `Abbalide' imported by S.H. Kelker & Co. Ltd. was initially classified under Chapter 29 but later deemed to fall under Heading 33.02.
- Tribunal remanded the matter to the Assistant Collector for re-examination.

3. Case of Hindustan Lever Ltd.:
- Hindustan Lever Ltd. imported `Abbalide' classified under Heading 33.02, later claimed it to be under Chapter 29.
- Tribunal remanded the classification issue back to the Assistant Collector.

4. Contentions:
- Revenue argued `Abbalide' is a mixture of odoriferous substances under Heading 33.02.
- Respondents contended it falls under Chapter 29 as an organic chemical.

5. Legal Provisions:
- Chapter 29 pertains to "Organic Chemicals," while Heading 33.02 relates to "Mixtures of odoriferous substances" under Chapter 33.

6. Customs Laboratory Report:
- `Abbalide' was identified as a solution of an odoriferous substance in a non-odoriferous solvent.
- Technical Opinion suggested classification under Heading 33.02 due to the nature of the compound.

7. Product Characteristics:
- `Abbalide' and `Galaxolide' are identical compounds used in perfumery.
- Commercial product is diluted for practical use in industries like soaps and cosmetics.

8. Judicial Analysis:
- Tribunal's classification under Chapter 29 was deemed incorrect.
- Clause 1(e) of Chapter 29 indicates specific use exclusion, leading to classification under Heading 33.02.

9. Decision:
- The Tribunal's judgments were overturned, and the appeals by the Revenue were allowed.
- `Abbalide' was held to be classifiable under Heading 33.02 of the Tariff.
- No costs were awarded in the matter.

This judgment clarifies the classification of `Abbalide' as a mixture of odoriferous substances under Heading 33.02 of the Tariff, emphasizing the exclusion for specific use under Chapter 29. The decision highlights the importance of product characteristics and legal provisions in determining the appropriate classification for imported goods, ensuring consistency and accuracy in customs duty assessment.