1988 (2) TMI 82 - AT - Central Excise

Issues Involved:
1. Intervention by M/s. Hico Products.
2. Classification of products under Central Excise Tariff Item 15A(1) or 15AA.
3. Assessment of duty on silicone-based products.
4. Relevance of end-use in product classification.
5. Impact of the 1982 amendment to Tariff Item 15A.
6. Use of Harmonized Code and CCCN for classification.

Detailed Analysis:

1. Intervention by M/s. Hico Products:
Before the appeal was heard, M/s. Hico Products sought to intervene, claiming interest in the proceedings. However, the bench did not allow their intervention.

2. Classification of Products:
The primary issue was whether M/s. Auxichem's products-silicone AU 331, Auxichem 831, and silicone softener 662-should be classified under Central Excise Tariff Item 15A(1) or 15AA. Initially, these products were classified under Item 15AA. However, after the 1982-83 budget amendment, the department reclassified them under Item 15A(1), leading to a demand for duty.

The Assistant Collector classified the goods under 15A(1) and demanded Rs. 465,459.60. The Collector of Central Excise Appeal, Bombay, overruled this decision, classifying the products under 15AA. The bench upheld this classification, noting that the products were not silicones but preparations containing silicones, used in textile processing.

3. Assessment of Duty:
The department argued that since the products were silicones, they should be assessed under Item 15A(1). However, the bench found that the products were merely preparations containing silicone, not silicones themselves. The silicone oil used in these products was already charged CV duty under 15A upon importation. Charging duty again under the same item for the preparations was deemed irregular and unlawful.

The bench emphasized that no product charged CV duty upon importation could be charged the same duty as excise duty again. This principle was reiterated in the judgment, stating that the action of the Central Excise in assessing duty on these preparations under 15A was irregular and unlawful.

4. Relevance of End-Use:
The department cited the Supreme Court decision in Dunlop India, arguing that end-use was irrelevant for classification. However, the bench clarified that the products in question were not silicones but preparations containing silicones for textile processing. Therefore, their classification should be governed by their properties as textile processing preparations, not merely by their silicone content.

5. Impact of the 1982 Amendment:
The amendment of Tariff Item 15A in 1982 was a contentious issue. The department argued that the amendment redefined silicones, affecting the classification. However, the bench found no substantial change in the definition of silicones before and after the amendment. The products were assessable under the same item before and after February 1982.

6. Use of Harmonized Code and CCCN:
The bench referred to the Harmonized Code and CCCN to support their classification. These codes classify only primary forms of silicones under the head "Silicones," explicitly excluding mixtures and preparations containing silicone fluids, oils, or greases. The bench concluded that M/s. Auxichem's products, being preparations containing silicones, should be classified under Item 15AA, not 15A.

Separate Judgments:
- G. Sankaran agreed with the classification under Item 15AA but expressed reservations about the finding in Paragraph 8 regarding the non-permissibility of charging Central Excise duty on preparations manufactured in India from imported products that have already suffered additional duty.
- S. D. Jha shared Sankaran's reservations and additionally expressed concerns about using the Harmonized Code and CCCN for classification.
- V.T. Raghavachari and K. Prakash Anand agreed with the classification under Item 15AA and dismissed the appeal.

Conclusion:
The bench ruled that M/s. Auxichem's products are appropriately classifiable under Item 15AA of the Central Excise Tariff Schedule, as they are preparations containing silicones used in textile processing. The appeal was dismissed, upholding the classification under Item 15AA and rejecting the department's reclassification under Item 15A(1).

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