TMI Blog2023 (6) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... H 3405 (2017 edition) as well as the finding of the learned adjudicating authority, in para 45.2 point to the effect that Waksol 911-A, Waksol 911-B, is not exclusively used for Chlorination and can also be used for other purposes like Polishes, cream and similar preparations for the maintenance of wooden furniture, floors for other wooden work. The findings therefore only show the possibility and do not conclusively decide the nature of the product or its classification as the product literature and material on record shows that Waksol products are used in Chlorination and therefore do not appears in the nature of product of Tariff Heading 3045. The department has to conclusively bring on record the predominant usage of the product with evidence to discharge burden of classification. Further, in view of the trite law, learned adjudicating authority should have given his own findings on the classification sought and not relied on one given by the Chemical analyst. To justify classification under 3405 department will need to show that the product imported was not essentially in the nature of intermediate product or raw material and was not, often 'Put up for retail sale' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports is from June, 2014 to April 2019. The product data sheet as produced at para 15 of the impugned order brings out the reason for probe by the department, same is as follows:- 15. As per the product date sheet, the Oil Content (% by mass) in Walsol A and Waksol B, which are main component to be blended with C9-C11 n-paraffin in a proprietary ratio to produce Waksol 9-11A and Waksol 9-11B, are 14% and 9% only and the overall percentage of oil content in the sample of Waksol 9-11A tested at CRCL, New Delhi comes to 15% by mass, which is lesser than the basic requirement of classification of a product under Ch. 27 of Customs Tariff Act, 1975, i.e., 70% by weight as also confirmed in the Technical Opinion dated 14.05.2019, of Joint Director, Custom House Laboratory, Kandla. Thus, it appeared that the product Waksol A, Waksol 9-11A, Waksol 9-11B, Waksol-B, Waksol 9-11, Waksol C9-11A, etc., are not classifiable under CTH 27101990 as done by M/s. PIIPL in the instant case. Submissions of the Advocate: 2. Advocate for the appellants agreed that CTH of 2710 proposed and claimed initially by them (after the same was tested by the department through chemical analysis) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paraffin Oil content in the imported product is less than 70% so classification under CTH 2710 is therefore ruled out by them. The department has not sought classification under CTH 3404 so, this is also ruled out. The competing classification is reduced to CTH 2712 CTH 3405. CTH 3405 2.4. CTH 3405 covers consumer products/end products like polishes and creams for footwear, furniture etc. It does not cover raw materials for manufacturing of polishes or creams for furniture. The imported product is an industrial raw material for manufacture of another industrial raw material i.e. chlorinated paraffin wax and thus cannot be covered under CTH 3405. 2.5. The HSN explanatory notes to CTH 3405 (stated to be of 2017 edition by the advocate on query) is reproduced below: This heading covers polishes and creams for footwear, furniture, floors, coachwork, glass or metal (silverware, copper, etc.) and prepared pastes or powders for scouring cooking utensils, sinks, tiles, stoves, etc., and similar preparations such as polishes and creams for leather. The heading also includes polishing preparations with preservative properties. These preparations may have a basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous medium.. It is neither dispersed nor dissolved in a liquid medium. So, the classification under CTH 3405 is ruled out. CTH 2712 2.7. CTH 2712 specifically covers all type of paraffin waxes irrespective of their oil content, Fischer-Tropsch waxes etc. CTH 2712 of the Customs Tariff Act, 1975 is reproduced below: Tariff Item Description of article 2712 Petroleum jelly, paraffin wax, microcrystalline petroleum wax, slack wax, ozokerite, lignite wax, peat wax, other mineral waxes, and similar products obtained by synthesis or by other processes, whether or not coloured 2712 10 - Petroleum jelly : 2712 10 10 --- Crude 2712 10 90 --- Other 2712 20 00 - Paraffin wax containing by weight less than 0.75% of oil 2712 90 - Other : 2712 90 10 --- Micro-crystalline petroleum wax 2712 90 20 --- Lignite wax 2712 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties are also excluded (heading 34.02). (B) .. (C) .. 5. HSN explanatory notes (2017 edition) to CTH 2712 needs to be seen in above context, which reads as under. (A) Petroleum jelly. Petroleum jelly is unctuous to the touch. It is white, yellowish or dark brown in colour. It is obtained from the residues of the distillation of certain crude petroleum oils or by mixing fairly high viscosity petroleum oils with such residues or by mixing paraffin wax or ceresine with a sufficiently refined mineral oil. The heading includes the jelly, whether crude (sometimes called petrolatum), decolourised or refined. It also covers petroleum jelly obtained by synthesis. To fall in this heading petroleum jelly must have a congealing point, as determined by the rotating thermometer method (ISO 2207 equivalent to the ASTM D 938 method), of not less than 30 C, a density at 70 C of less than 0.942 g/cm3, a Worked Cone Penetration at 25 C, as determined by the ISO 2137 method (equivalent to the ASTM D 217 method), of less than 350, a Cone Penetration at 25 C, as determined by the ISO 2137 method (equivalent to the ASTM D 937 method), of not les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waxes. (b) Mixtures, not emulsified or containing solvents, consisting of : (i) Waxes of this heading mixed with animal waxes (including spermaceti), vegetable waxes or artificial waxes. (ii) Waxes of this heading mixed with fats, resins, mineral substances or other materials, provided they have a waxy character. 6. The learned Advocate pointed out that revenue has referred to congealing point under Petroleum jelly category (A) of HSN, which was never claimed by them, for seeking exclusion from CTH 2712. Appellant has claimed category(B) of HSN i.e., Paraffin wax/slack wax to be covered under CTH 2712. 7. It was submitted by the advocate for the appellants that Waksol is correctly classified under Tariff Entry 2712 90 30 in view of the following: i. It is obtained from a synthetic route by Fischer Tropsch process where starting material is natural gas, reformed into synthesis gas. After the Synthetic Tropsch process, the synthetic gas is distilled to get paraffinic hydrocarbons with oil content of 15% (Para 5 of SCN). In paraffin wax of 2712 the oil content is generally lower and paraffin waxes with higher oil content are generally covered as slack wax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm and thus not relevant for the case. Product in question is in liquid form. Fourthly even this website says that this powder for Waksol A is used for preparing paint strippers and other coating products as a raw material. Pain strippers ensure that wood surface is not harmed and remains protected during the stripping process. Website nowhere suggests that Waksol A in Powder form will be used as a wood polish, rather it says that it is a FT micronized wax and used as input in a number of products. Paint strippers basically act as solvents (for which Waksol A powder is an input), in which paint is dissolved. Thus, this literature also does not suggest classification under CTH 3405.(See pg 28 of this synopsis) 9. On merits therefore, the learned advocate submitted that the appropriate classification is under CTH 2712 and not under 3405. 10. The learned advocate also referred to various test reports as follows:- Test Report Date Testing Agency Result Remarks Pg number of synopsis Test Report dated 31.08.2015 (RUD-4) (Para 4 of the OIO) The Chemic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by the industrial treatment of Fats, Oils or waxes were covered under CTH 3405 (i) general notes to HSN 3405 nowhere states that product obtained by the industrial treatment of Fats, Oils or waxes are to be specifically covered under 3405 (ii) As a matter of fact product is not obtained by industrial treatment of Fats, Oils or waxes rather it is Synthesised by FT process. (iii) testing authority is not a competent authority to determine the classification 22-23 Test Report Dated 14.05.2019 [Para 11 of the OIO] Joint Director, Customs House Laboratory, Kandla (i) it was stated that the product Waksol 9-11A does not fall under CTH 2712 as the sample is having a congealing point less than 30 degree centigrade (ii) Other parameters mentioned in HSN 2712 not tested. (iii) Paraffin C9-C11 is a ingredient used as carrier to improve consistency of polishes in which the WAKSOL A is a principal component used to import water proof, wear resistant and other properties of polishes and thus the blend of paraffin C9-C11 and WAKSOL A to get the preparation WAKSOL 9- 11 A is correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of correct classification by the assessing officer. Thus, the report, giving classification and that too without any kind of testing or empirical data and being contrary to High Court judgment has to be ignored. 13. It was submitted that the opinion of the Joint Director, Customs House Kandla regarding classification of the imported product was vague and without conducting any testing of the imported product as polishes and thus cannot be relied upon. The Customs House Laboratory can opine only on chemical and physical properties of the product and not on the classification of product which is a legal exercise, therefore Joint Director has exceeded its jurisdiction and adjudicating authority has erred by relying on the classification part. 14. Learned advocate further submitted that the present case is purely an issue of classification/legal interpretation for which allegation of suppression and mis-declaration cannot hold good and therefore the demand is time barred beyond the normal period of limitation i.e., two years. 15. Reliance was placed on the following case laws in this regard by the learned advocate. i. Northern Plastic Ltd. v. Commissioner [1998 (101) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be imposed. 21. He also relied on the case of Commissioner of Customs vs. Vodafone Essar Gujarat Ltd. 2020 (373) ELT 421 [para 7], the Hon'ble CESTAT held that in cases of classification penalty under Section 112 cannot be imposed. 22. He submitted that in the case of the case of Kores (India) Ltd. vs. Commissioner of Customs (I), Nhava Sheva 2019 (370) ELT 1444 [para 5.6], the Hon'ble CESTAT Division Bench held that in cases where the only dispute is with respect to classification, penal provisions of Section 112 cannot be invoked. 23. That likewise in the case of Sirthai Superware (Supra) [para 4.9 4.10], the Hon'ble CESTAT Mumbai held that in cases where description of goods matches the actual content of the consignment and if the issue is with respect to classification, penalty cannot be imposed either under Section 112 or 114A of the Customs Act, 1962. 24. In view of the foregoing the Learned Advocate for the parties submitted that the appropriate classification of the product is 271290507 as other Slack wax and same should have been accepted by the authorities below. 25. Learned AR on the other hand justified the order and findings contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Fischer Tropsch waxes. Waksol A's main uses are as a refinery cracker feed and as a heavy paraffin component in liquid paraffin blends for solvents applications. 21.1. The product Waksol 9-11A and Waksol 9-11B are admittedly used in manufacturing of Chlorinated Paraffin which is used in PVC/PVC pipe/rubber pipes Industries, Shoe Industries, Oil Paint, Marine paint Industries, Polymer Industries, Polish, Lubricant additives etc, as stated by Shri K.C. Goyal, Director, M/s. PIIPL, Shri Vishnu P. Naykar, Manager (Import) of M/s. PIIPL and Shri Mohammad Jamalbhai Angolia, Technical Adviser (Process), M/s. PIIPL. The literature of product Waksol 9-11A provided by the supplier manufacturer states that the Waksol 9-11A is produced by blending Waksol A and C9-C11 Paraffins in proprietary ratio. The General note to HSN for Ch. 34 states that this chapter covers products mainly obtained by the industrial treatment of fats, oils or waxes (eg soap, certain lubricating preparations, prepared waxes, certain polishing or scouring preparations, candles). It also includes certain artificial products eg surface-active agents, surface active preparations and artificial waxes. 21.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Warehouse Bills of Entry and corresponding Ex-Bond Bills of Entry Bills of Entry for Home Consumption are not correct as the goods have been mis-classified. REJECTION OF CLASSIFICATION DECLARED BY M/S. PIIPL:- 22. The classification of the goods in question, at the time of filing Warehouse Bills of Entry and their corresponding ex-bond Bills of Entry Bill of Entry for home consumption was not correct, as was required from them under Section 46(4) of the Customs Act, 1962 read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 14 of the Foreign Trade (Regulation) Rules, 1993. The facts and evidences suggest that the said importers had failed to furnish correct classification of the goods in question. The Test Reports of the goods in question and Technical Opinion of the Custom House Laboratory clearly indicates that the goods, viz., Waksol-A, Waksol 9-11A and Waksol 9-11B etc. appeared to be aptly classifiable under Customs Tariff Heading 34052000 instead of CTH 27101990. It further appeared that the classification of the goods in question was done under CTH 27101990, by M/s. PIIPL with intent to evade payment of differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Heading 2712, on the ground that the product cannot be classified under Tariff Heading 3405. We find that TH 3405, pertains to various end products and excludes waxes of heading 3404. Also the product is an Industrial Raw Material for manufacturer of another Industrial Raw Material i.e. Chlorinated Paraffin Wax and cannot be covered under Tariff Heading 3405 and that even explanatory notes to CTH 3405 (2017 edition) as well as the finding of the learned adjudicating authority, in para 45.2 point to the effect that Waksol 911-A, Waksol 911-B, is not exclusively used for Chlorination and can also be used for other purposes like Polishes, cream and similar preparations for the maintenance of wooden furniture, floors for other wooden work. The findings therefore only show the possibility and do not conclusively decide the nature of the product or its classification as the product literature and material on record shows that Waksol products are used in Chlorination and therefore do not appears in the nature of product of Tariff Heading 3045. We find that simply some alternate usage existing of the product or the possibility of their being used as such, will not make the product o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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