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TMI Blog2010 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... in question is specifically identified in Ch. Sub Heading No. 38 23 11 as "Palm Stearin", and further differentiated as "Crude" and "RBD" in Sub Heading Nos. 38 23 11 11 and 38 23 11 12 respectively The issue of the essential character of the subject matter in question may be resorted to only if identification under Rule 3(a) is impossible - the CBEC Circular needs to be thus harmonized with the Eight-digit First Schedule introduced vide the Customs Tariff (Amendment) Ordinance, 2003. As mentioned before, the Circular had been issued prior to the coming into force of the amended Tariff Schedule and consequently, did not have the latter as its reference point the interpretive powers of this Court are significantly curtailed by the presence of a specific enumeration in Chapter 38 of the Tariff Schedule. This Court, while deciding an issue of classification, can only adjudicate along the lines of settled norms and precedents drawn from statutory interpretation and judicial precedents - 6979-6982 of 2009 - - - Dated:- 15-12-2010 - Mukundakam Sharma and Anil R. Dave, JJ JUDGMENT Mukundakam Sharma, J 1. The primary issue for consideration in these cases is one of classi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same while relying on its decision in the case of M/s Jocil Ltd. and Ors v. The Commissioner of Central Excise and Customs, Visakhapatnam - II. 4. The CESTAT, in determining the appeal, took note of the fact that the Chemical Examiner has only ascertained the free fatty acids of the sample, which comes to 23.2%. According to the Tribunal, since the balance contents of 76.8% have not been considered, it could not be conclusively said that the same is not composed of triglycerides. The CESTAT also relied on the ester value and saponification value registered at the load port (Load Port Analysis) during the time of clearance. The said analysis indicated that the balance is nothing but triglycerides. According to the Central Revenue Chemical Laboratory (CRCL) opinion which was relied upon by CESTAT, Chapter 15.11 covers palm oil and its fractions -this view is also espoused in the HSN Explanatory Notes. Since Palm Stearin falling under 15.11 is a glyceride of fatty acids, the CESTAT concluded that the categorization should also have to be made under Ch.15.11. As stated hereinabove, reliance was also placed on its own decision in M/s Jocil Ltd. and Ors v. The Commissioner of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of the Customs Tariff Act, 1975. To fortify this conclusion, they have contended that:- a. Commissioner (Appeals) erred in not appreciating and applying CBEC Circular dated 03.12.2002. Respondent claims that the circular had distinguished between products which are fractions of Palm Oil classifiable under Chapter 15, and products which are fatty acids classifiable under Chapter 38. The Respondent contends that the distinction between both these products was the presence of triglycerides, determined by the ester value of the product in question. b. The Chemical Examiner did not ascertain the ester value of the goods in the chemical analysis, when it was incumbent on the department to do so. On the other hand, the Report determined free fatty acid, which clearly indicated that the product had triglycerides. When the authorities have thus ignored the CBEC directions, the Respondent contended, the assessment needs to be set aside. c. The onus to classify a particular product under a specific heading is on the Department [Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay reported at 1997 (89) ELT 16). Therefore, the Department should have had the product chemically an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituent elements like triglycerides of fatty acids and point fractions obtained by the process of fractionation. The CBEC Circular had distinguished between triglycerides of fatty acids and free fatty acids and went on to state that palm stearin was basically a triglyceride (ester) of fatty acids. Based on this ground, and also on the fact that the report of the Chemical Examiner merely looked at the free fatty acid content and not the ester values to indicate the presence of triglycerides, the CESTAT ruled in favour of the respondent. 10. We are of the considered opinion that the import of the CRCL opinion and the CBEC Circular needs to be understood in proper perspective. The mere fact that the CRCL opinion and the CBEC Circular (No. 81/2002 - dated 03.12.2002) affirm the chemical composition of palm stearin cannot make a case for its classification under Ch. Sub Heading No. 15 11 90 90. The essential conclusion to be drawn from these two reference documents is that palm stearin, which is obtained from the fractionation of palm oil, is comprised mainly of triglycerides of fatty acids. The question then arises as to whether it would be appropriate to categorize the triglycerid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific where the identification is less complete. 13. In the case at hand, the subject matter in question is specifically identified in Ch. Sub Heading No. 38 23 11 as "Palm Stearin", and further differentiated as "Crude" and "RBD" in Sub Heading Nos. 38 23 11 11 and 38 23 11 12 respectively. The Explanatory Notes are categorical in affirming the accepted practice that Rule 3(b), which the CESTAT and the Respondent has referred to, shall be used only if classification under Rule 3(a) fails. In this instance, we are of the considered opinion that the issue of the essential character of the subject matter in question may be resorted to only if identification under Rule 3(a) is impossible. Since the description offered in Chapter 38 certainly attempts to identify Palm Stearin' within its ambit, we do not find it necessary to place reliance on the explanation offered by the Respondent. 14. In effect, by contending that free carboxylic acids are classified under Chapter 38, and thus the remaining component from refining process, viz. palm stearin which contains triglycerides, should be shunned to Chapter 15, the Respondent is implying that Chapter 15 is of a residuary nature. This wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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