2012 (2) TMI 12 - AAR - Customs

Classification of super concentrate, a constituent of the antifreeze coolants assessee submitting super concentrate will fall classification under heading 3824 90 90 residuary entry imported product cannot itself be used as anti-freeze coolant - addition of MEG and others is also necessary to reach the desired concentration - Held that -Rule 2(a) of the General Rules for Interpretation cannot apply to these goods, since it refers to articles presented unassembled or disassembled. Rule 2(b) refers to mixtures and combinations of materials and substances. The rule further states that the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. To apply this rule, therefore, one has to first see whether the goods in question, prima facie, fall for classification under two or more headings. Therefore, on the basis of meaning of the word preparations and the inapplicability of rule 2(a), their classification under heading 3820 00 00 is ruled out. The goods are undeniably products of chemical industry. Consequently, their classification will have to be under the residuary entry of chapter 38 of the tariff i.e. Heading 3824 90 90 Decided in favor of assessee.

Issues Involved:
1. Classification of super concentrates imported by the applicant.
2. Applicability of specific tariff headings under the Customs Tariff Act, 1975.
3. Interpretation of the term "preparations" under heading 3820 00 00.
4. Application of General Rules for Interpretation of Import Tariff.

Detailed Analysis:

1. Classification of Super Concentrates Imported by the Applicant:
The applicant, a wholly owned subsidiary of a Belgium-based company, proposed to import super concentrates for manufacturing antifreeze coolants in India. The super concentrates in question were CSC-GEN/ CSC-GEN-NM, CSC-QFB, and CIP-FG. The applicant argued that these super concentrates should be classified under heading 3824 90 90, which covers "products and preparations of the chemical or allied industries not elsewhere specified or included."

2. Applicability of Specific Tariff Headings under the Customs Tariff Act, 1975:
The applicant contended that the super concentrates are mixtures of organic and inorganic chemical additives, not chemically defined, and thus, should not be classified under Chapters 28 or 29. They argued that these products are not directly usable as antifreeze coolants and require further processing, including blending with monoethylene glycol (MEG) and demineralized water, to achieve the final antifreeze coolant product.

3. Interpretation of the Term "Preparations" under Heading 3820 00 00:
The applicant emphasized that the term "preparations" under heading 3820 00 00 implies a substance ready for use, which is not the case with the super concentrates. The super concentrates need to be diluted and processed further to be used as antifreeze coolants. The technical opinion provided by the department's Chemical Examiner and the technical literature submitted by the applicant supported this view, indicating that the super concentrates, in their imported form, do not meet the criteria for antifreeze preparations.

4. Application of General Rules for Interpretation of Import Tariff:
The applicant argued that rule 2(a) of the General Rules for Interpretation, which deals with incomplete or unfinished articles, does not apply to chemical mixtures like the super concentrates. Instead, rule 2(b), which pertains to mixtures and combinations of materials or substances, should be applied. According to rule 3(c), if goods are prima facie classifiable under two or more headings, they should be classified under the heading that occurs last in numerical order.

Ruling:
The Authority ruled that the super concentrates CSC-GEN, CSC-QFB, and CIP-FG should be classified under heading 3824 90 90. The ruling was based on the following key points:
- The super concentrates are not ready-to-use antifreeze preparations and require further processing.
- The term "preparations" implies a substance ready for use, which is not applicable to the super concentrates.
- Rule 2(a) does not apply to chemical mixtures, and rule 2(b) leads to rule 3(c), which supports classification under heading 3824 90 90.
- The product CIP-FG, which contains no glycol or glycerol, also does not meet the criteria for antifreeze preparations.

Conclusion:
The super concentrates CSC-GEN, CSC-QFB, and CIP-FG are classified under heading 3824 90 90 as products of the chemical industry. This classification aligns with the General Rules for Interpretation and the specific nature of the super concentrates as not being ready-to-use antifreeze preparations. The ruling was pronounced on January 27, 2012.

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