1998 (9) TMI 249 - AT - Central Excise

Summary

Issues: Classification of product under Central Excise Tariff Act

Classification of product under Chapter 29:
The appellants contested the classification of their product, paracetamol direct compression grade, under sub-heading 2924.00 of the Central Excise Tariff Act. They argued that the product should be classified under the residual Heading 3823.00 of the Act. The appellants highlighted the manufacturing process, emphasizing that the other ingredients in the product were deliberately mixed with paracetamol to make it suitable for tablet production. They referred to Chapter Note 1(a) to Chapter 29, which specifies that the chapter applies only to separate chemically defined organic compounds. The appellants relied on the HSN Notes to Chapter 29, which define a separate chemically defined compound as a single chemical compound of known structure without deliberately added substances. They also cited a Tribunal decision following the HSN explanatory note.

Analysis:
The Tribunal analyzed the manufacturing process and the nature of the other ingredients in the product. It noted that the lower authorities classified the product under Chapter 29 based on the presence of paracetamol. However, the Tribunal found that the other ingredients were not impurities as per the HSN explanation. These ingredients were intentionally mixed with paracetamol to enhance the product's suitability for tablet manufacturing. The Tribunal disagreed with the Commissioner (Appeals) who considered the addition of other substances as immaterial for classification. The Tribunal emphasized the HSN's definition of a separate chemically defined compound and permissible impurities under Chapter Note 1(a) of Chapter 29. It concluded that the 10% presence of other materials did not classify the product under Chapter 29. Therefore, the Tribunal ruled that the classification under sub-heading 2924.00 was unsustainable, and the product should be classified under the residual Heading 3823.00 covering chemical products and preparations not elsewhere specified. The appeal was disposed of in favor of the appellants based on the above analysis.