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TMI Blog1985 (1) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... not be set aside and the Assistant Collector s order restored, etc. etc. 2. The dispute is the assessment of naphthalene imported by M/s Atul Products Limited and M/s. Atic Industries Limited. The Assistant Collector ordered assessment of the goods under heading 29.01/45(1) of the Customs Tariff. In the appeal, the Appellate Collector of Customs, Bombay ruled that the naphthalene should be assessed under heading 27.07 because he was of the opinion that as it had a melting point of 79.6oC, and as the crystallisation point of pure naphthalene was over 80oC, the goods would not qualify for assessment under Chapter 29. 3. The assessment centred around the interpretation of separate chemically defined organic compounds . The Appellate Collector recorded in his order dated 29-12-80 that it must be a substance whose purity was such that the commercial purpose of buying it was served without further chemical or other process to remove the impurities. He wrote that a substance must have a high degree of purity-that is, freedom from contaminating or interfering impurities-if it is to be classed as a separate chemically defined compound. He gave as his opinion that impurities like wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. The show-cause notice referred to the CCCN and ISI. It refers to the fact that only crude naphthalene is listed in the BTN under Chapter 27. This will not mean that a naphthalene like theirs which is not pure cannot fall under this chapter since, as found by the Appellate Collector, it cannot be classed as a separate chemically defined compound. The Indian Standard was not before the Appellate Collector and he had no opportunity to deal with it. 6. The learned counsel for the department pointed out that in the last paragraph of the order dated 30-11-78. The Appellate Collector referred to the overwhelming evidence produced by the appellants and from which the Appellate Collector came to his conclusion that in view of the fact that the melting point of the naphthalene imported was 79.6oC as indicated in the invoice and not 80oC which was the crystallisation point for pure naphthalene, the goods were correctly assessable under Item 27.07 of the Customs Tariff, 1975. He pointed out that the reference crude or refined which appears in the Explana-\, tory Notes of the CCCN under heading 27.07, must yield before the statutory definition that this Chapter excludes separate che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one fact that the naphthalene has a melting point of 79.6oC. 11. The CCCN does have a note in Chapter 29.01 that in order to fall under this chapter, naphthalene must have a crystallisation point of 79.4oC or more and that naphthalenes of lower purity were excluded to fall under heading 27.07. There is no such note in the Indian Tariff. It only speaks of separate chemically defined organic compounds (Chapters 27 and 29) and separate chemically defined compounds (Chapter 28). 12. The products imported by these two appellants are naphthalene with melting point of 79.6oC. The Encyclopaedia of Chemical Technology 3rd Edition Volume 15 by Kirk-Othmer gives the melting point of naphthalene at 80.29oC, and the normal boiling point is given as 207.993oC. The Encyclopaedia of Science Technology (McGraw-Hill) gives the melting point of naphthalene at 80.1oC and the boiling point 218oC. The Appellate Collector has taken 8oC as the dividing line to determine the purity of naphthalene and, to a point, nothing can be said against this because in terms of chemical structure naphthalene, that is, pure naphthalene, has a melting point of slightly over 80oC. The problem here, however, is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces deliberately added during or after its manufacture (including purification). The nomenclature also clarifies that the separate chemically defined compound falling within Chapter 29 may contain impurities. The term impurities is clarified as applying exclusively to single chemical compound substances whose association with the single chemical compound results solely and directly from the manufacturing process (including purification). The substances (impurities) may result from any of the factors involved in the process and are principally the following :- (a) Unconverted starting materials, (b) Impurities present in the starting materials, (c) Reagents used in the manufacturing process (including purification) and (d) By-products. 15. A substance that is deliberately left in the product to render it particularly suitable for a particular type of use or to improve its suitability for a specific use is not regarded as a permissible impurity for the purpose of the Chapter. As an example, a product of methyl acetate with methanol deliberately left in it to improve its solvent properties is not a substance containing permissible impurities. 16. From the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of fatty acids is permissible. However, these are to be considered as the impurities permitted by Chapter 28 or Chapter 29 Note 1(a). Those impurities must be only of a kind which will not affect the commercial purpose for which the product is bought and sold. 18. Chapter 28 has no relevance because it covers inorganic chemicals and naphthalene is not an inorganic chemical. We are unable to understand why the Appellate Collector brings in this Chapter into the discussion. Even the earlier reference to heading 27.07 as covering a product of distillation of high temperature coal-tar remains undeveloped and does not appear to have been relied upon for the conclusion. The only ground on which he seems to base his arguments is that pure naphthalene has a melting point of 80oC. Therefore, he would not consider naphthalene with a melting point of 79.6oC as pure naphthalene assessable under Chapter 29. The Appellate Collector has confused the purity of naphthalene with the provisions of the Customs Tariff. The Customs Tariff requires a product to be chemically defined organic compound in order to fall under Chapter 29, whether sush compound contains impurities or not. The Kirk-Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed to be refined (though not pure) naphthalene. There is little doubt in our mind that this naphthalene is a separate chemically defined organic compound that must be mandatorily classified under Chapter 29 and that it does not belong to the excepted category like methane and propane. 20. Chapter 27 has already been shown by us as a Chapter that does not cover separate chemically defined organic compounds. This being the case, the naphthalene before us, which is a separate chemically defined organic compound, cannot be covered by this Chapter, and that is all there is to be said about Chapter 27. 21. Much argument went into a note under heading 29.01 of the CCCN which says that to fall within Chapter 29, naphthalene must have a crystallisation point of 79.4oC or more and that naphthalene of lower purities is excluded and will fall under 27.07. The Indian Tariff has no such note. We have to go by the headings and notes that appear in it. And we will have to take the help of books and authorities that can throw light on the subject. There are the standard books, reference and encyclopaedias. The CCCN itself is an authority that is reliable and widely respected. And we c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a product should be chemically recognizable as a given chemical substance even if it contains some impurities. Obviously, if the substance contains a very high proportion of impurities, it will not be chemically defined or so easily recognizable as the substance it is said to be. Its very structure can vary. The main impurity in crude 78oC coal-tar naphthalene is sulphur which is present in the form of thionaphthane (1-3%). Methyl-and dimethyl naphthalenes also are present (1-2wt %) with lesser amounts of indene, methylindenes, tar acids and tar bases. But sulphur compounds are the most undesirable impurities for a number of uses to which naphthalene is put. 23. We are told by the Kirk-Othmer Encyclopaedia that naphthalene is usually sold commercially according to its freezing or solidification point, because there is a correlation between the freezing point and the naphthalene content of the product; the correlation depends on the type and relative amounts of impurities present. Because the freezing point can be changed appreciably by the presence of water, value, and specifications are listed on a dry, wet or as received basis using an appropriate method agreed upon between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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