1993 (12) TMI 138 - AT - Central Excise

Issues Involved:
1. Correct classification of the product 'Bronidiol'.
2. Consideration of the Chemical Examiner's report.
3. Marketing and commercial recognition of the product.
4. Applicability of statutory formalities for fungicides.
5. Remand for proper classification.

Detailed Analysis:

1. Correct Classification of the Product 'Bronidiol':
The appellants claimed classification under chapter sub-heading 3801.20 of CET 1986, asserting 'Bronidiol' as a fungicide based on its literature and user letters. The Department, however, classified it as a preservative, arguing it was marketed and used as such in pharmaceutical products, cosmetics, and other similar products. The Assistant Collector upheld this classification, stating that merely possessing fungicidal properties does not qualify it as a fungicide. This decision was supported by the Collector, who emphasized that the product was not commercially known as a fungicide and rejected the Chemical Examiner's opinion.

2. Consideration of the Chemical Examiner's Report:
The appellants contended that the lower authorities erred in not accepting the Chemical Examiner's report, which indicated that 'Bronidiol' could be considered to possess fungicidal properties. The Chemical Examiner described the product as a broad-spectrum preservative, active against gram-negative bacteria, and capable of destroying fungi. The appellants argued that the lower authorities failed to examine their literature and customer letters supporting the fungicidal classification.

3. Marketing and Commercial Recognition of the Product:
The Department maintained that 'Bronidiol' was marketed as a broad-spectrum preservative and not as a fungicide. The Assistant Collector's analogy compared the product to kerosene and common salt, which have preservative properties but are not classified as fungicides. The appellants countered that the product's literature and customer letters demonstrated its primary use as a fungicide. However, the lower authorities concluded that the product was not known in common trade parlance as a fungicide and rejected the appellants' claim.

4. Applicability of Statutory Formalities for Fungicides:
The Department argued that no statutory formalities applicable to the manufacture and sale of fungicides were followed by the appellants. The lower authorities used this as an additional reason to reject the classification of 'Bronidiol' as a fungicide. The appellants contended that the tariff notes did not impose such conditions for classification and that the product should be classified based on its trade understanding and use.

5. Remand for Proper Classification:
The Tribunal observed that the product was not an alcohol or acyclic alcohol to fall under TI 2902 or TI 2905 of CET 1987. The Chemical Examiner's report did not support classification under these headings. The Tribunal concluded that the lower authorities did not provide sufficient evidence for classifying 'Bronidiol' under these tariff entries. Consequently, the case was remanded to the jurisdictional Assistant Collector for proper classification in accordance with the law, considering all relevant materials.

Separate Judgments:
- One member supported the appellants' claim, emphasizing the Chemical Examiner's report and product literature supporting the fungicidal classification.
- Another member disagreed, highlighting the product's marketing as a preservative and the lack of statutory formalities for fungicides, suggesting a remand for proper classification.
- The Vice President agreed with the latter, stating that the product's marketing as a preservative did not justify its classification as a fungicide.

Final Order:
In view of the majority opinion, it was held that 'Bronidiol' is not classifiable under sub-heading 3801.20 CETA, 1985. The jurisdictional Assistant Collector was directed to decide its classification between headings 29.02 and 29.05 in accordance with the law, providing the appellants with all relevant materials. The appeal was disposed of accordingly.

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