1994 (12) TMI 155 - AT - Central Excise

Summary

Issues: Classification of 'toluene' under Chapter 27 or Chapter 29.

The appeal was filed against the order of the Collector (Appeals) regarding the classification of 'toluene' under either entry 27.07 or 29.02. The appellants, who are manufacturers of 'toluene,' argued that their product should be classified under Chapter 29 as a separate chemically defined organic compound, despite containing impurities. They contended that the Assistant Collector did not consider the relevant Chapter Notes and Section Notes in the Tariff and failed to distinguish the case law and certificates provided by Bombay University and IIT. The appellants emphasized that the product met the criteria for 'toluene' under Chapter Note 1(a) of Chapter 29, even with impurities present. They relied on the Tribunal's previous order and stressed the importance of Section Notes and Chapter Notes in determining classification, rather than solely relying on HSN explanatory notes.

The Department's representative argued that the product did not satisfy the parameters for 'toluene' as per the HSN explanatory notes under Heading 29.02, and therefore should be classified under 27.07. They pointed out that the chemical test reports confirmed the characteristics of 'toluene' in the product but highlighted a difference in the editions of HSN regarding the classification. The Department failed to provide evidence that the product was a mixture or 'Toluole' covered by Chapter Note 3 of Chapter 27. Additionally, they raised concerns about the appellants not claiming the benefit of Notification No. 75/84 and not satisfying its conditions.

The Tribunal analyzed the submissions and noted that while HSN serves as a guide, the classification must be based on the legal provisions of the tariff, considering Section Notes and Chapter Notes. It was established that 'toluene' is a separate chemically defined organic compound, and the key issue was whether the appellants' product was high purity 'toluene' or an impure mixture. The Tribunal found that the product, despite containing traces of impurities, met the criteria for 'toluene' under Chapter 29.02. The Department's case lacked substantiation, and the outdated HSN note was not sufficient to override the certificates provided by reputable institutions confirming the product as high purity 'toluene.'

Ultimately, the Tribunal ruled in favor of the appellants, classifying the product under Chapter 29. It was clarified that the appellants could claim the benefit of Notification No. 75/84 separately at the original level if they met the conditions specified. The Tribunal emphasized the importance of considering Section Notes and Chapter Notes for classification, ensuring that the legal provisions of the tariff guide such determinations.