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TMI Blog1992 (12) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... as found to be as under :- The sample is in the form of dark brown liquid and the same is composed of resin, bituminous matter and volatile solvent. It gives tack-free transparent coating. 4. Based on this report, the Assistant Collector instituted proceedings for classification of the product as varnish under Item 14II(i) as against the appellants claim for classification under Item 68. After the consideration of their reply to the notice and after hearing them, he decided the classification under Item 14II(i) which has also been upheld in appeal by Collector of Central Excise (Appeals), Bombay. 5. The grounds of appeal to the Tribunal is that the chemical test report cannot be the sole basis for arriving at a decision for re-classifying the product the commercial understanding and the end-use of the product very clearly establish that their product is not a varnish but it is only a temporary corrosion preventive fluid classifiable under Item 68; that varnish and temporary corrosion preventive fluids are different; that Collector (Appeals) has ignored the Defence Handbook on PX-2 Corrosion Preventive Compound submitted by them. They have also submitted that the Classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be no grievance on this score because the change was not made retrospective but from the date the Classification List itself was effective. This was in conformity with the law. 12. We have carefully considered the appeal and perused the case record. The written submissions are a repetition of the grounds of appeal and we have taken them as well as the arguments of the learned SDR into consideration. It is true that no classification can be decided merely on the basis of the test report. In the case of the subject goods - Protective PX-2", the chemical test shows the composition to be resin, bituminous matter and volatile solvent which gives a tack-free transparent coating. The Defence Handbook cited by the appellants also confirms that the product gives tacky film resistant to rubbing when the solvent evaporates. The appellants claim is that the product is a temporary corrosion preventive compound which in their view is different from a varnish and should have been classified under the residuary Item 68. The learned SDR has cited the decision of the M.P High Court in the case of Akhtar Abbas (supra) according to which varnish is a generic name given to homogeneous solutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-1977 to 25-6-1982 on the ground that the appellants had suppressed the facts by giving wrong declaration in their Classification List that the product is not classifiable under Items 1 to 67 of the erstwhile central excise tariff. After considering the plea of the appellants which are similar to those in the proceedings relating to classification of Protective PX-2, the Assistant Collector decided that Rustillo 114 was a varnish classifiable under Item 14II(i). He also confirmed the demand of duty by holding that the allegation of deliberate suppression of facts and misdeclaration were established. On appeal, Collector (Appeals) upheld the Assistant Collector s orders. 17. On the question of classification of Rustillo-114, the appellants have taken the very same grounds as they have taken in the appeal about the classification of Protective PX-2. We have dealt with all these grounds in Paragraph 12 of our order. 18. The only other ground taken in the present appeal is about the applicability of Trade Notice 174(MP)/1975, dated 9th September, 1975 issued by the Bombay Central Excise Collectorate. As far as this is concerned, Smt. Ray read it out and submitted that it related t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was being used by them as rust preventive coating in lieu of oil coating for machine components. This certificate itself disproves their contention that their product is a rust preventive oil which is our own finding independently arrived at in the preceding paragraph. 21. There is no dispute that the products are not Temporary Corrosion Preventive Fluids or Rust Preventive Coating conforming to a particular ISI specification. The dispute is about their classification under the central excise tariff and we have discussed the whole matter in Para 12 in terms of the judgment of the M.P. High Court in the case of Akhtar Abbas (supra) and whatever are our findings about Protective PX-2 apply with equal force to Rustillo 114. 22. As far as the applicability of the commercial parlance test is concerned, no evidence has been brought on record to contradict the name character and use of the goods and these take both the products to fall under the generic name of varnish for which the correct classification is Item 14II(i) and not the residuary Item 68. The law is well settled that the classification of goods is to be done under the residuary entry only if they are found not to answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vague remark that the details had been already furnished. 25. Rule 173B requires every assessee to file with the proper officer for approval the Classification List in the prescribed form showing : (a) the full description of all excisable goods manufactured by him (b) the tariff item of the CET schedule (c) the rate of duty leviable. 26. Under sub-rule (2) of Rule 173B the proper officer is empowered to make such enquiry as he thinks fit before according his approval. It appears in the present case that the appellants had not indicated the details of the composition and end-use of the product in the Classification List but the Assistant Collector, instead of asking for the details, approved the same. He also did not locate the details said to have been submitted. In these circumstances, it would not be correct to lay the blame on the appellants and extend the period of demand beyond six months by alleging the charge of suppression of facts. We consider that in. these circumstances the demand should be restricted to a period of six months. This would be in conformity with the view taken by the Supreme Court in the case of Nat Steel Equipment Private Ltd. v. Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for exemption under serial No. 4 of Notification No. 101/66-C.E., dated 17th June, 1966 as wetting out agents intended for use in the metal quenching industry. She held that since the product Iloquench 179 had already been manufactured and cleared by the appellants, it was no longer possible to verify the duty-paid nature of surface active agent a condition subject to which exemption from duty was available to wetting out agents in terms of Notification No. 101/66. She, therefore, held that exemption in respect of past clearances of the product could not be accorded at that stage of the proceedings considering that the claim was made only at the time of personal hearing. She, however, decided that in respect of future clearances of the product, the appellants claim for exemption under Notification No. 101/66 would be considered if they filed a classification list under Rule 173B and claimed the exemption by fulfilling the prescribed conditions of the notification. She, therefore, held that the past clearances were rightly assessable to duty under Item 15AA of the tariff and exemption under Notification No. 101/66 was not available. 30. We now come to the question whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he product contains proprietory ingredients Noigen Pc-43/75 and antirust/anti-foam Additives. The product is water based and mode of application of the product is after dilution with water in desired proportion. The product is neither Surfactant nor Surface Active Preparation. The ingredients present in the product exhibits inverse solubility calibre thereby providing a blanket which offers slow cooling as explained in the product literature. The product is recommended for the actual application in the industries like Gear Induction Hardening etc. 33. We have considered the appeal. We observe that the appellants have themselves accepted the classification of the product Iloquench-179" under Item 15AA but made a claim for exemption under Notification No. 101/66 during the hearing with the Assistant Collector on the ground that the product was a wetting agent - a claim which is contrary to the Chemical Examiner s report according to which the product is a surface-active preparation . The exemption under the notification is available to surface active preparations if they are not manufactured with the aid of power. The appellants have not laid any such claim. They are, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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