1990 (9) TMI 159 - AT - Central Excise

Issues Involved:
1. Classification of Liquid Paraffin IP under Central Excise Tariff Act, 1985.
2. Interpretation of "separate chemically defined organic compounds."
3. Validity of Chemical Examiner's report.
4. Consideration of expert opinions submitted by appellants.
5. Application of Chapter Notes to Chapters 27 and 29.
6. Applicability of Tribunal's previous decisions.

Issue-wise Detailed Analysis:

1. Classification of Liquid Paraffin IP under Central Excise Tariff Act, 1985:
The appeal was directed against the order of the Collector of Central Excise (Appeals), Madras, which upheld the classification of Liquid Paraffin IP under Tariff Heading 2710.99. The appellants claimed classification under Chapter 29 with exemption under Notification 234/86, but the department classified it under Chapter 27. The Assistant Collector confirmed this classification after obtaining a Chemical Examiner's report.

2. Interpretation of "separate chemically defined organic compounds":
The appellants argued that the term "separate chemically defined organic compounds" was not defined under the Central Excise Tariff Act, 1985, and should be understood through expert opinion. The Assistant Collector interpreted it as a single compound, which was contested by the appellants. The Tribunal referred to its previous decision in the case of Collector of Customs, Bombay v. The Atul Products Ltd., which defined a separate chemically defined compound as a single chemical compound of known structure without other substances deliberately added.

3. Validity of Chemical Examiner's report:
The Chemical Examiner's report stated that Liquid Paraffin IP is a mixture of liquid hydrocarbons and not a single chemical compound, thus not meriting classification under Chapter 29. The Assistant Collector relied on this report, which was contested by the appellants for not addressing specific queries. The Tribunal noted that the appellants did not insist on cross-examining the Chemical Examiner during adjudication.

4. Consideration of expert opinions submitted by appellants:
The appellants submitted expert opinions from various chemists, arguing that Liquid Paraffin IP has a unique chemical identity. However, the Assistant Collector did not make any observations on the validity of these opinions. The Tribunal found that these opinions did not categorically define Liquid Paraffin IP as a separate chemically defined organic compound.

5. Application of Chapter Notes to Chapters 27 and 29:
Chapter Note 1(a) of Chapter 27 excludes separate chemically defined organic compounds, while Chapter Note 1(a) of Chapter 29 includes them, whether or not containing impurities. The Tribunal emphasized the importance of Chapter Notes in classification and referred to the Explanatory Notes to the Harmonized System of Nomenclature (HSN), which define a separate chemically defined compound as a single chemical compound without other substances deliberately added.

6. Applicability of Tribunal's previous decisions:
The Tribunal applied the criteria from its decision in the Atul Products Ltd. case, which dealt with the classification of Naphthalene. The decision emphasized that a chemically defined compound should have a known structure and can contain impurities resulting solely from the manufacturing process. The Tribunal concluded that Liquid Paraffin IP, being a mixture of hydrocarbons with varying chemical structures, does not meet this criterion and thus cannot be classified under Chapter 29.

Conclusion:
The Tribunal concluded that Liquid Paraffin IP is a mixture of hydrocarbons with varying chemical structures and cannot be considered a separate chemically defined organic compound. Therefore, its classification under Heading 2710.99 by the lower authorities was confirmed. The appeal was rejected, and the order of the Collector (Appeals) was upheld.

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