1990 (11) TMI 265 - AT - Customs

Summary

Issues Involved:
1. Classification of "DOW CORNING ANTIFOAM 'A' COMPOUND" under the Customs Tariff Act, 1975.
2. Validity of the short-levy notice issued by the Department.
3. Appropriateness of the initial and reassessment of the customs duty.
4. Interpretation of relevant statutory Chapter Notes and Tribunal decisions.

Detailed Analysis:

1. Classification of "DOW CORNING ANTIFOAM 'A' COMPOUND":
The primary issue in this appeal is the classification of the imported product "DOW CORNING ANTIFOAM 'A' COMPOUND" under the First Schedule to the Customs Tariff Act, 1975. Initially, the product was assessed under Heading No. 38.01/19(1) with a basic customs duty of 60% ad valorem plus auxiliary duty at 15% ad valorem plus nil additional duty of customs. The Department later issued a notice alleging a short-levy, suggesting that the product should be assessed at 100% + 20% + c.v.d. 40%. The appellant contended that the product, being a preparation of silicone used as an anti-foaming agent, fell outside the scope of Chapter 39. The Tribunal considered various references, including the manufacturers' literature, the Kirk-Othmer Encyclopedia of Chemical Technology, and previous Tribunal decisions, to determine the correct classification. The Tribunal concluded that the product is a compounded silicone fluid and falls under Chapter 39 as a silicone in emulsion.

2. Validity of the Short-Levy Notice:
The Tribunal criticized the short-levy notice issued by the Department, stating that it was issued in a "most casual way" and lacked specific details on how and why the initial assessment was incorrect. The notice did not specify the heading under which the goods were proposed to be re-assessed, making it difficult for the appellant to make informed submissions. The Tribunal deprecated the tendency of issuing such vague notices, emphasizing the need for clarity and intelligibility in show cause notices to enable the noticee to respond adequately.

3. Appropriateness of the Initial and Reassessment of the Customs Duty:
The initial assessment classified the product under Heading No. 38.01/19(1), while the reassessment proposed a higher duty rate under a different heading. The appellant argued that the product, being a preparation of silicone, should not fall under Chapter 39, which covers silicones in primary forms. The Tribunal examined the product's composition and found that it is an emulsion of dimethyl polysiloxane compounds formulated in non-ionic emulsifying agents. The Tribunal concluded that the product is a silicone in emulsion and falls under Chapter 39, supporting the reassessment by the Department.

4. Interpretation of Relevant Statutory Chapter Notes and Tribunal Decisions:
The Tribunal referred to statutory Chapter Notes and previous decisions to interpret the relevant headings. It noted that Chapter 39 covers silicones in various forms, including emulsions, dispersions, and solutions. The Tribunal also referred to the decision in the Precise Impex case, which held that preparations containing silicone for specific uses are not covered by Chapter 39. However, the Tribunal distinguished the present case by noting that the product is a silicone in emulsion, not a preparation with other added substances. The Tribunal also referred to the Auxichem and Ceat Tyres cases, which discussed the classification of silicone products and preparations. The Tribunal concluded that unless Chapter 39 can be ruled out, the product should not be classified under the residuary Chapter 38.

Conclusion:
The Tribunal dismissed the appeal, upholding the reassessment of the product under Chapter 39 as a silicone in emulsion. The Tribunal emphasized the need for clarity in show cause notices and the importance of adhering to statutory Chapter Notes and previous decisions in determining the correct classification of imported goods.