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2009 (6) TMI 513 - AT - CustomsClassification- The issue involved in this case is regarding the classification of the product Exxsol Hexane RD . It is the contention of the revenue that the said product will merit classification under Chapter 27 of the CETA while the assessees contend that the said product will merit classification under Chapter 29 of ITC-HS classification of Export Import items 2002-2007. The learned adjudicating authority has relied upon the various test reports given by CRCL and Indian Institute of Petroleum to come to the conclusion that the product imported has a Special Boiling Point Spirits with nominal boiling point range of 63-70 C. It is his finding that the such a boiling point of the product will be of the product which will fall under Chapter 27 of CETA. As regards the classification given by the DGFT, the learned adjudicating authority has brushed aside that the clarification does not cover Exxsol Hexane RD in paragraph 81. Held that- the classification of the product imported by the assessees in all these cases would merit classification under Chapter 29 of the Customs Tariff Act 1962 and not under Chapter 27 of the Customs Tariff Act. Consequently all the benefits will be available to the assessees herein and the appeals are disposed of with these findings. In the end all the appeals filed by the assessees are allowed and the appeals filed by revenue are rejected.
Issues Involved:
1. Classification of the product 'Exxsol Hexane RD' under the Customs Tariff. 2. Requirement of a license or import through a canalizing agency. 3. Binding nature of DGFT's classification on Customs Authorities. Detailed Analysis: 1. Classification of the Product 'Exxsol Hexane RD' under the Customs Tariff: The primary issue was whether 'Exxsol Hexane RD' should be classified under Chapter 27 or Chapter 29 of the Customs Tariff. The Directorate of Revenue Intelligence (DRI) argued that the product should be classified under Chapter 27 as 'Special Boiling Point Spirit' based on its boiling point range and composition. This classification would necessitate a higher customs duty. The assessee contended that the product should fall under Chapter 29, as it is used as a solvent in various industries and not as a motor spirit or fuel. The tribunal considered the test reports from the Indian Institute of Petroleum and Chennai Petroleum Corporation Ltd., which indicated that 'Exxsol Hexane RD' is a mixture of several hydrocarbons, predominantly n-Hexane. The tribunal also reviewed the DGFT's Policy Circular, which classified the product under Chapter 29 after consultation with the Department of Chemicals and Petrochemicals. The tribunal concluded that the product should be classified under Chapter 29, as the DGFT's classification is binding on Customs Authorities. This classification aligns with the product's use as a solvent in pharmaceuticals, bulk drugs, and oil seed extraction, rather than as a fuel. 2. Requirement of a License or Import through a Canalizing Agency: The tribunal examined whether 'Exxsol Hexane RD' required a license or had to be imported through a canalizing agency if classified under Chapter 27. The assessee argued that the product was not listed among items requiring canalization and was used as an industrial raw material, not as a fuel. The DGFT's Policy Circular clarified that the product is covered under Chapter 29 and can be imported without a license. The tribunal found that the DGFT's clarification resolved any ambiguity regarding the need for a license or canalization. Since the product is classified under Chapter 29, it does not require a license or canalization, supporting the assessee's position. 3. Binding Nature of DGFT's Classification on Customs Authorities: The tribunal emphasized the binding nature of the DGFT's classification on Customs Authorities. According to the EXIM Policy and the Foreign Trade Policy, any question regarding the classification of an item should be referred to the DGFT, whose decision is final and binding. The Supreme Court's decision in Atul Commodities v. CCE, Cochin reinforced this principle, stating that the DGFT's interpretation of the policy is binding. The tribunal cited previous judgments, including Cineland v. CCE, Chennai, Casio India Co. Ltd. v. CCE, Mumbai, and Commissioner of Central Excise, Hyderabad v. Sanghi Spinners (I) Ltd., which supported the binding nature of DGFT's clarifications on import policy. Conclusion: The tribunal held that 'Exxsol Hexane RD' should be classified under Chapter 29 of the Customs Tariff Act, 1962, based on the DGFT's binding clarification. Consequently, the product does not require a license or canalization for import. The tribunal allowed the appeals filed by the assessees and rejected the appeals filed by the revenue, emphasizing the finality and binding nature of the DGFT's classification on Customs Authorities.
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