1998 (5) TMI 134 - AT - Central Excise

Summary

Issues:
Classification of product under Chapter 27 or Chapter 38 - Applicability of sub-headings 2710.99 and 3811.00 - Challenge to the order of Collector of Central Excise (Appeals) - Proper classification based on chemical composition and commercial parlance.

Analysis:

1. Classification Dispute:
The appeal involved a classification dispute regarding a product marketed as an "oil saver of engine." The department preferred classification under Chapter S.H. No. 2710.99 as mineral oils, while the assessees argued for Chapter S.H. No. 3811.00 as chemical products. The product was claimed to improve viscosity and was tested to contain over 70% oil content. The department contended that the product fell under Chapter 27 as an oil preparation, emphasizing the predominance of oil content. However, the assessees argued for Chapter 38, citing the product's functions as a viscosity improver and anti-knock preparation.

2. Appellate Stage Arguments:
At the appellate stage, the department maintained that the product, 'oil saver of engine,' was correctly classifiable under sub-heading 2710.99 due to its composition and properties. The Chemical Examiner's report supported this classification, stating that the product's mineral oil content exceeded 70%, aligning with Chapter 27. The department also referred to explanatory notes to HSN, highlighting the inaccuracy of classifying the product under sub-heading 3811.00, which covers additives for mineral oils or liquids.

3. Cross Objection and Product Composition:
The respondents, in their cross objection, detailed the composition of the product as a mix of duty-paid raw materials, emphasizing its properties such as viscosity improvement, reduced oil consumption, and enhanced engine performance. They marketed the product as an anti-knock preparation and viscosity improver, suitable for use as an additive to motor oil. The department's refusal to classify the product under sub-heading 3811.00 was based on the argument that Chapter 38 covers chemical products, suggesting Chapter 27 as the appropriate classification.

4. Tribunal's Decision:
The Tribunal noted that the Collector (Appeals) had previously classified the product under sub-heading 3811.00, and any challenge to this classification should have been raised earlier. The Tribunal observed that the department failed to provide information on whether an appeal was filed against the Collector's order. Considering the Collector's finding that the impugned order was passed before the appeal decision, the Tribunal dismissed the department's appeal, upholding the Collector's classification under sub-heading 3811.00.

In conclusion, the judgment focused on the proper classification of the product based on its composition, properties, and commercial understanding. The Tribunal emphasized the importance of challenging classification decisions in a timely manner and upheld the previous classification under sub-heading 3811.00.