1990 (5) TMI 145 - AT - Central Excise

Summary

Issues Involved:
1. Classification of products under Tariff Item 15A or Tariff Item 68.
2. Applicability of exemptions under Notifications No. 104/82 and No. 234/82.
3. Consideration of pharmacopoeial standards for classification.

Detailed Analysis:

1. Classification of Products under Tariff Item 15A or Tariff Item 68:
The primary issue revolves around whether the products manufactured by the respondents, namely Dimethicon-20, Dimethicon-350, Dimethicon-2000, Dimethicon-1000, Dimethicon-100, and Simethicon, should be classified under Tariff Item 15A or Tariff Item 68. The Assistant Collector initially classified these products under Tariff Item 15A(1) based on their chemical composition and manufacturing process, concluding that they are products of polymerisation and silicones. This classification was supported by the Deputy Chief Chemist's report, which identified the products as polysiloxane compounds (silicone oils) with defoaming properties and simethicon as a jelly-like mass composed of silicone oil and silica.

The Collector of Central Excise, however, overturned this classification, arguing that the products conformed to pharmacopoeial standards and were recognized as drugs, thus should be classified under Tariff Item 68. The Collector noted that the Assistant Collector had not verified whether the products possessed resinous character, a requirement for classification under Tariff Item 15A(1).

Upon appeal, the Tribunal considered the submissions and relevant citations, including previous decisions by the Tribunal and the Supreme Court. The Tribunal noted that the products in question were silicone in primary form, and regardless of their use as drugs, they should be classified under Item 15A(1) as held by the Larger Bench in the case of Hico Products. The Tribunal emphasized that silicone products, whether used as drugs or otherwise, fall under Item 15A if they are in primary form.

2. Applicability of Exemptions under Notifications No. 104/82 and No. 234/82:
The Assistant Collector held that since the products were classified under Tariff Item 15A, the exemptions under Notifications No. 104/82 and No. 234/82 were not applicable. These notifications provided exemptions for certain drugs, but since the products were classified as silicones under Item 15A, they did not qualify for these exemptions.

The respondents argued that their products, being of pharmacopoeial standards and used as drugs, should be exempt under these notifications. However, the Tribunal upheld the Assistant Collector's decision, stating that the classification under Item 15A precluded the applicability of these exemptions.

3. Consideration of Pharmacopoeial Standards for Classification:
The respondents contended that their products met pharmacopoeial standards and were manufactured under a Drug Control Licence, thus should be classified under Tariff Item 68. They cited various cases where products used as drugs were classified under different tariff items based on their end use and pharmacopoeial standards.

The Tribunal, however, found that the primary consideration for classification was the chemical nature of the products. The Tribunal referred to the Larger Bench decision in the case of Hico Products, which held that silicone products in primary form must be classified under Item 15A, irrespective of their end use as drugs. The Tribunal concluded that the products in question, being silicone in primary form, should be classified under Item 15A(1).

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order of the Collector of Central Excise, and restored the order-in-original of the Assistant Collector, classifying the products under Tariff Item 15A(1). The Tribunal emphasized that the classification should be based on the chemical composition and primary form of the products, not their end use or pharmacopoeial standards. The Tribunal also declined to keep the decision in abeyance pending the Supreme Court's decision in a related case, as there was no stay order from the Supreme Court.

This judgment underscores the importance of adhering to the specific descriptions and criteria outlined in tariff items for classification purposes, irrespective of the end use or pharmacopoeial standards of the products.