1999 (7) TMI 310 - AT - Central Excise

Summary

Issues:
Classification of Sorbitol under Heading 29.05 or 38.23 for benefit of Exemption under Notifications.

Analysis:
The appeal involved the classification of Sorbitol under Heading 29.05 or 38.23 for the benefit of Exemption under Notifications. The learned Commissioner (Appeals) classified Sorbitol under Heading 29.05 and granted the benefit of Exemption. The Revenue challenged this decision, arguing that the purity of the end product was based on dry matter, which could be classified under both headings. The Revenue contended that the Harmonised System of Nomenclature (HSN) Notes provided detailed guidelines for classification, indicating that Sorbitol could fall under Heading 38.23. The Tribunal was tasked with determining the critical factor distinguishing the classification under the two headings.

The learned DR highlighted that the manufacturing process of Sorbitol did not start with glucose or invert sugar, as required for classification under Heading 29.05. The Revenue argued that the classification under Heading 38.23 was correct as it was not a bulk drug but a drug intermediate. The Revenue cited a previous Tribunal decision and an Apex Court ruling supporting Sorbitol as a drug intermediate. On the other hand, the respondents emphasized the technical aspects of the manufacturing process, claiming that the separation process ensured a high abundance of mono saccharides, meeting the standards for classification under Heading 29.05. The respondents argued that the product should be considered a finished bulk drug, not a drug intermediate.

The Tribunal carefully considered the submissions and noted that the Tariff description and HSN Notes were insufficient for classification, suggesting consulting the HSN and its Notes for a more detailed analysis. The Tribunal concluded that the classification depended on the composition of the syrup before hydrogenation, specifically the presence of di saccharides, poly saccharides, and mono saccharides. As there was no conclusive evidence regarding the composition of the syrup, the matter was remanded to the original authority for further investigation by technically qualified persons or agencies. The respondents were granted the opportunity to present additional evidence during the de novo proceedings.

The Tribunal acknowledged the factual verification conducted by the Hyderabad Commissionerate in a related case and directed the original authority to consider that Order-in-Original. Consequently, the Order-in-Appeal was set aside, and the matter was remanded for reconsideration by the Assistant Commissioner with specific directions. The appeal succeeded by way of remand, ensuring a thorough examination of the manufacturing process for accurate classification of Sorbitol under the appropriate heading for the benefit of Exemption under Notifications.