2010 (4) TMI 548 - AT - Central Excise

Classification of goods - The department issued three show-cause notices covering the total period, March 93 to February 94, to the assessee classifying the goods under SH 3909.10 and SH 3909.20 and demanding duty on that basis. Held that - the short-question is whether any duty of excise is recoverable from the assessee in respect of the above goods which were cleared from the factory during March 93 to February 94. It is not in dispute that, if the goods are classified under Heading 3909 as proposed by the Revenue, duty is recoverable from the assessee. It would follow that the demand of duty against the assessee is liable to be sustained.

Issues:
Classification dispute regarding urea-formaldehyde and melamine-formaldehyde resins under Central Excise Tariff Act; Duty liability for goods cleared during March 93 to February 94.

Classification Dispute Analysis:
The dispute revolved around the classification of urea-formaldehyde and melamine-formaldehyde resins under the Central Excise Tariff Act. The assessee described the products as finishing agents and dye-fixing agents used in textile, paper, and leather, but the department objected and classified them under specific sub-headings 3909.10 and 3909.20. The appellate authority upheld this classification, leading to an appeal by the assessee challenging this decision.

Upon examination, it was found that the goods were indeed urea-formaldehyde and melamine-formaldehyde resins, as described by the assessee. Samples tested in the department's laboratory confirmed the composition of the goods. The assessee argued for classification under SH 3809.00 as finishing agents based on expert opinions and previous case laws. However, the department argued that the specific entries under SH 3909.10 and 3909.20 should be preferred over the general entry under SH 3809.00 in accordance with Interpretative Rule 3(a).

The tribunal favored classifying the goods under SH 3909.10 and 3909.20 for several reasons. Firstly, the goods were accurately described by the assessee as urea-formaldehyde and melamine-formaldehyde resins, falling under the specific sub-headings during the material period. Secondly, the Chemical Examiner's report confirmed the composition of the goods as aqueous solutions of the respective resins, aligning with the primary form classification under SH 3909. Additionally, the case laws cited by the assessee were deemed inconclusive as they did not provide clear chemical compositions for classification.

Interpretative Rule 3(a) was applied, giving preference to specific descriptions over general ones. As per Rule 3(c), when a commodity is classifiable under two headings, the later one in the schedule should be preferred, leading to the classification of urea-formaldehyde and melamine-formaldehyde resins under SH 3909.10 and 3909.20, respectively. Consequently, the classification dispute was settled in favor of the Revenue, and the appeal E/2822/98 was dismissed.

Duty Liability Analysis:
The remaining two appeals focused on the duty liability for goods cleared during March 93 to February 94. If the goods were classified under Heading 3909 as proposed by the Revenue, duty would be recoverable from the assessee. As the classification under SH 3909.10 and 3909.20 was upheld, the duty liability against the assessee was deemed sustainable. Therefore, these two appeals were also dismissed, affirming the duty liability as per the classification decision.

In conclusion, the judgment resolved the classification dispute by classifying urea-formaldehyde and melamine-formaldehyde resins under specific sub-headings and upheld the duty liability for the goods cleared during the specified period based on the classification decision.

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