1997 (8) TMI 185 - AT - Central Excise

Summary

Issues: Classification of goods under sub-heading 3808.10 or 2915.90

In this case, the main issue revolves around the classification of the product Calcium Propionate under sub-heading 3808.10 or 2915.90. The Departmental appeal challenges the Order-in-Appeal passed by the Collector of Customs & Central Excise, which classified the goods under sub-heading 3808.10, while the Assistant Collector initially classified them under sub-heading 2915.90. The dispute arises from the nature and use of the product, whether it should be considered as an organic chemical or a fungicide for classification purposes.

Detailed Analysis:

The Assistant Collector initially classified the product under sub-heading 2915.90, considering it as an organic chemical falling under Chapter 29. The Assistant Collector's decision was based on the fact that the product, Calcium Propionate, was used not only for baked goods to prevent fungus but also for other industrial purposes. The Chemical Examiner confirmed that Calcium Propionate is indeed an organic chemical. However, the Collector of Customs & Central Excise, in the impugned order, classified the product under sub-heading 3808.10, emphasizing that the predominant use of the product as a fungicide is significant for classification purposes.

The Collector's decision was supported by the argument that the function of the goods, in this case, fungicidal properties, is crucial for classification under Chapter 38. The Collector highlighted that the end use of certain goods cannot solely determine their classification, but the predominant use is relevant. The Collector referred to Chapter Note 1 to Chapter 38, which specifies the inclusion of fungicides under sub-heading 3808.10. The appellants provided an end-use certificate supporting the fungicidal nature of the product, further reinforcing its classification under Chapter 38.

On the other hand, the Department argued, based on the HSN explanatory notes, that the product should be classified under sub-heading 3808.10 only when packaged for retail sale as disinfectants or insecticides. The Department contended that since the product is primarily used as an industrial product in the bread industry and not for retail sale, it should be classified under Chapter 29 as an organic chemical.

After considering the arguments presented, the Tribunal concluded that the product should be classified under Chapter 29, sub-heading 2915.90, as an organic chemical, rather than under Chapter 38, sub-heading 3808.10. The Tribunal emphasized that the end use of the product is not the determining factor for classification and that the product's nature as an organic chemical is pivotal for its classification.

Therefore, the Tribunal allowed the Department's appeal, overturning the Collector's classification under Chapter 38 and reverting to the original classification under Chapter 29 for the product Calcium Propionate.