2018 (10) TMI 1016 - AT - Customs

Demand of custom duty - import of Rynaxypyr Tech which consist of compound namely Chlorantraniliprole - change in classification claimed by the appellant under chapter heading 2933 39 90 to chapter heading 380891 - Whether the product imported by the appellant Rynaxypyr is classifiable under chapter 29 as separately defined chemicals or under chapter 38 as pesticides? Held that - The Hon ble Apex Court in the case of UNION OF INDIA VERSUS PESTICIDES MFG. FORMULATORS ASSOCIATION OF INDIA 2002 (10) TMI 95 - SUPREME COURT OF INDIA has examined all aspect before coming to the decision. It is seen that Hon ble Apex Court has examined the rules of interpretation, the chapter notes chapter heading and HSN notes in the said case - it was held in the said case that the amendments to Chapter 38 in 1996 and 1997 served to exclude TGP or insecticides etc. in bulk forms from Chapter 38. Thus when Hon ble Apex Court describes a compound as mixture, it does not result in any error. There are no grounds to deviate from the decision of the Hon ble Apex Court in case of Pesticide MFG. Formulators Association of India - Appeal dismissed.

Issues Involved:
1. Classification of Rynaxypyr Tech under Customs Tariff.
2. Applicability of Chapter 29 vs. Chapter 38 for customs duty.
3. Relevance of previous legal precedents and expert opinions.
4. Interpretation of Chapter Notes and HSN Explanatory Notes.
5. Impact of Supreme Court decisions on classification.

Issue-Wise Detailed Analysis:

1. Classification of Rynaxypyr Tech under Customs Tariff:
The primary issue revolves around whether Rynaxypyr Tech, consisting of Chlorantraniliprole (approx 93%), should be classified under Chapter 2933 39 90 (Organic Chemicals) or Chapter 380891 (Insecticides) of the Customs Tariff. The appellant argued that the product should be classified under Chapter 29 as it is a separate chemically defined organic compound and not a preparation or article for retail sale as described under Chapter 38.

2. Applicability of Chapter 29 vs. Chapter 38 for Customs Duty:
The appellant contended that Chapter Note 1(A)(2) of Chapter 38 specifies that it does not cover separate chemically defined elements or compounds unless they are put up in forms or packings for retail sale or as preparations or articles. They argued that since Rynaxypyr Tech was imported in bulk and not in retail packing, it should fall under Chapter 29. The appellant supported this claim with various test reports indicating that the product is not a preparation but a technical pesticide with 93% purity.

3. Relevance of Previous Legal Precedents and Expert Opinions:
The appellant relied on several legal precedents, including decisions from the Tribunal in cases like M/s Shakti Chemicals and M/s Parshwa Associates, which supported the classification of pure chemicals under Chapter 29 despite being notified as insecticides under the Insecticide Act. They also cited the opinions of the Joint Director (Chem) and other experts, which confirmed that the product is a chemically defined organic compound and not a preparation.

4. Interpretation of Chapter Notes and HSN Explanatory Notes:
The appellant emphasized the explanatory notes to Chapter 29, which state that separate chemically defined organic compounds, whether or not containing impurities, should be classified under Chapter 29 unless they are put up as described in heading 3808. They argued that the explanatory notes support their position that only products put up in forms or packings for retail sale or as preparations or articles should be classified under Chapter 38.

5. Impact of Supreme Court Decisions on Classification:
The respondent, represented by the Ld. AR, relied on the Supreme Court decision in Union of India Vs. Pesticides Mfg & Formulators Association of India, which held that pesticides in bulk form should be classified under heading 38.08 of the Central Excise Tariff Act, 1985. The Tribunal noted that while the Supreme Court decision was based on the Central Excise Tariff, the principles could be applied to the Customs Tariff as well. The Tribunal found no grounds to deviate from the Supreme Court's interpretation, which considered the rules of interpretation, chapter notes, and HSN notes.

Conclusion:
The Tribunal concluded that the product Rynaxypyr Tech, despite being a chemically defined organic compound, should be classified under Chapter 38 as an insecticide based on the Supreme Court's decision and the relevant chapter notes. The appeal was dismissed, affirming the classification under Chapter 38 and the corresponding customs duty demand.

(Pronounced in the open court on 11.10.2018)

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