1999 (3) TMI 345 - AT - Central Excise

Summary

Issues involved: Classification of Cationic Surface Softeners for softening textiles and treating leather under Central Excise Tariff (CET) sub-heading 3402.90 or Chapter Heading 38.09, and eligibility for exemption under Notification No. 101/66.

Classification Dispute:
The dispute centered around the classification of Cationic Surface Softeners, including Sapamin OC, Sapamin OC liquid, Sapamin P, and Irgamin 1281. The appellant initially classified these products under CET sub-heading 3402.90 as Organic Surface Active agents, seeking the benefit of Notification No. 101/66. However, a show cause notice proposed their classification under Chapter Heading 38.09 based on a Chemical Examiner's report indicating that the products were not surface active agents. The Assistant Collector confirmed this classification, rejecting the appellants' reliance on another expert opinion. Subsequently, the appellants filed a new classification list under Heading 38.09, which was approved by the Assistant Commissioner.

Appeal and Decision:
The Department appealed under Section 35E(2) against the classification lists, contending that all four products should be classified under CET sub-heading 3402.90. The Commissioner of Central Excise(Appeals) held in favor of the Department, relying on the opinion of an expert mentioned earlier. The appellants then appealed this decision. After hearing arguments, the Tribunal considered a detailed report by the Chemical Examiner, which highlighted that the main softening effect of the products was not derived from surface active agents but from a non-surface active reaction product. The report emphasized that the products did not meet the criteria for surface active agents under Chapter 34. The Tribunal noted that the Department did not challenge the test report and had not provided evidence to refute it. Additionally, the Tribunal gave preference to the Chemical Examiner's report over a general opinion by another expert. A confirmation from a university expert further supported that the products should not be considered organic surface active agents. Consequently, the Tribunal held that all four products should be classified under C.E.T. sub-heading 3809.00 and were eligible for exemption under Notification 101/66, overturning the previous decision and allowing the appeals.