2000 (2) TMI 374 - AT - Central Excise

Summary

Issues: Classification of the product "stiff paint" - whether as "Paint" under sub-heading 3208.90 or as "Pigment" under sub-heading No. 3212.90.

Analysis:
1. Classification Issue: The main issue in these appeals is the classification of the product "stiff paint" manufactured by M/s Glossy Paint & Chemicals (P) Ltd. The Revenue claimed it should be classified as "Paint" under sub-heading 3208.90, while the Commissioner (Appeals) ordered it to be classified as "Pigment" under sub-heading 3212.90.

2. Revenue's Arguments: The Revenue argued that the impugned product should be classified as paint under heading No. 32.08, emphasizing that the product is used in the manufacture of paint and is in paste form. They stated that the only difference between paint and pigment, as per the Explanatory Notes of H.S.N., is the presence of a binder in paint, which the impugned product lacks. The Revenue contended that the impugned product is known and sold as paint in trade parlance, and dissolving it in a medium before use does not amount to manufacturing.

3. Respondent's Arguments: The respondent's advocate argued that the impugned product cannot be used as paint, as it lacks essential components like a binder. They highlighted that the product is in paste form, consisting of pigment mixed with non-aqueous media, and requires additional substances like thinner, varnish, and tinters to be used as paint. The advocate stressed that the product should be classified based on its characteristics and process, irrespective of its name in trade.

4. Decision: The Tribunal analyzed the provisions of the Central Excise Tariff Act and the Explanatory Notes of HSN. It found that the impugned product satisfied the requirements for classification under heading 32.12 as a pigment dispersed in non-aqueous media, used in the manufacture of paints. The Tribunal noted that the impugned product lacked a binder, a crucial component of paints under heading 32.08. Since the Revenue failed to prove the presence of a binder in the product, the Tribunal upheld the Commissioner (Appeals) decision to classify the product as pigment under sub-heading 3212.90. Consequently, the appeals filed by the Revenue were rejected.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal interpretation of relevant provisions, and the reasoning behind the Tribunal's decision regarding the classification of the product in question.