9911796707
Advanced Search 
TMI Blog2023 (6) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned counsel representing all the parties made categorical statement at the bar that he is not pressing on the point of proper officer for D.R.I. Officers not being competent to issue show cause notice for entire bunch and would like the matter to be decided on its own merits by making concession on point of jurisdiction of "proper officer" and competence of D.R.I., Appeal No. C/10335/2021, was chosen by him for the purposes of reference and for narration of specific brief facts etc. The period involved of 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 als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, nonwovens, cellular plastics or cellular rubber, impregnated, coated or covered with such preparations), excluding waxes of heading 3404 CTH alleged by the department in the SCN and confirmed in the Impugned OIO 2.3. The 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r retail sale. Further, the products of CTH 3405 is dispersed in or dissolved in a liquid medium i.e., impregnated with spirits of turpentine or emulsified in an aqueous 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 30 --- Slack wax 2712 90 40 --- Paraffin wax containing by weight 0.75% or more of oil 2712 90 90 --- Other 3. Chapter note 5 of Chapter 34, while dealing with CTH 3404 makes it clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 less than 80. This heading does not, however, include petroleum jelly, suitable for use for the care of the skin, put up in packings of a kind sold by retail for such use (heading 33.04). (B) Paraffin wax, microcrystalline petroleum wax, slack wax, ozokerite, lignite wax, peat wax, other mineral w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned 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. Thus, the imported product on account of relatively higher oil content, more appropriately fits into the definition of slack wax compared to paraffin wax. ii. HSN explanatory notes to CTH 3404 at para (A) clarifies the position as to classification of a product having produced synthetically through Fischer Tropsch Process. It says „Waxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Chemical Examiner, Grade-I, Customs House, Kandla For Tank no. 113 "petroleum Oil more than 70%". For Tank No. 205: It was reported that as facility of oil determination in petroleum wax is not available and the same may be referred to CRCL, PUSA, New Delhi Inconclusive 16 Test Report Dated 13.10.2015 [Para 5 of the OIO] [RUD-6] Chemical Examiner Grade-II, CRCL, New Delhi (i) samples for the goods stored in Tank No. 205 is a clear colourless oily liquid having a char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 falls under the chapter 3405.20 as reported earlier. [These remarks are not based on testing of the product and are text book attributes of polishes in which carriers are used and thus are irrelevant reamrks] (i) HSN explanatory notes to CTH 2712 states that petroleum jelly must have a congealing point as determined by rotating thermometer method of not less than 30 degree centigrade and the imported product is not petroleum jelly. (ii) Appellant never sought CL under Petroleum gelly category. (iii)testing authority is not a competent authority to determine the classification. (iii) without proper testing of the product the Joint Director has given his opinion on classification 24-25 Test Report dated 24.07.2020 for Waksol 9-11A [For other importer M/s KLJ Resources Limited] Joint Director (NFSG), CRCL, New Delhi (i) The sample is composed of Paraffin wax wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance was placed on the following case laws in this regard by the learned advocate. i. Northern Plastic Ltd. v. Commissioner [1998 (101) E.L.T. 549 (S.C.)] [Para 23] ii. O.K. Play (India) Ltd. v. Commissioner [2005 (180) E.L.T. 300 (S.C.)] [Para 38] iii. National Radio & Electronics Co. v. Commissioner [2000 (119) E.L.T. 746] [Para 3] 16. The learned advocate further submitted that the imported goods were not concealed in any way. Nowhere in the SCN it was alleged that goods were concealed. The goods were correctly described and were always available before the department for examination. So, the confiscation proposed under section 111(j) is not sustainable at all. Further, the goods were correctly declared in terms of description and value hence the same is not liable to confiscation under section 111(m) as proposed in the SCN and no redemption fine can be imposed. 17. That in the case of SATRON Vs. COMMISSIONER OF CUSTOMS (IMPORTS) JNCH, NHAVA SHEVA 2020 (371) E.L.T. 565 (Tri. - Mumbai) [Para 5] the Hon'ble Tribunal has held that in absence of any evidence of misdeclaration of description or value of goods, confiscation not sustainable for mere misclassification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been accepted by the authorities below. 25. Learned AR on the other hand justified the order and findings contained in the order as also the classification on the ground that the classification initially sought of Tariff Heading No. 2710 was rejected as product imported at less than 70% of weight of petroleum oil as was confirmed during testing and which report was accepted and a claim of 27010 was given up by the importers. He also referred to the findings in para 21 of the impugned order as reproduced below:- CLASSIFICATION OF WAKSOL SERIES PRODUCTS VIZ. WAKSOL 9-11A, WAKSOL 9-11B, ETC.:- 21. As per supplier manufacturer M/s. Sasol, South Africa, Waksol 9-11A is a blend comprising of between 70% to 80% Waksol A and at least 20% C9-C11 n-paraffins and it is liquid at 20 Deg C. Similarly, Waksol 9-1 1B is produced from Waksol-B. Whereas, M/s. Sasol explained the manufacturing process of Waksol A as under:- "The product of Fischer Tropsch synthesis known as reactor wax, which has been separated from water and liquid (at room temperature) condensates, is distilled into a number of components in a vacuum distillation column. There are four main products of this column namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products eg surface-active agents, surface active preparations and artificial waxes. 21.2. The Heading No. 34.05 of Customs Tariff, covers "Polishes and creams, for footwear, furniture, floors, Coachwork, Glass or Metal, Scouring pastes and powders and similar preparations (whether or not in the form of paper, wadding, felt, nonwovens, cellular plastics or cellular rubber, impregnated, coated or covered with such preparations), excluding waxes of heading No. 34.04". The General HSN explanatory notes to Heading No. 34.05 clarifies that 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 polishes preparations with preservative properties. These preparations may have a basis of wax, abrasives or other substances. 21.3. From the above parameters of ascertaining classification of any product under Ch. 34, heading 34.05, manufacturing process of Waksol 9-11A and Waksol 9-11B, their end uses as confirmed by the representatives of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done under CTH 27101990, by M/s. PIIPL with intent to evade payment of differential Customs Duties as the Duty rate under CTH 3405 was higher than that under CTH 2710. It, thus, appeared that the subject products are liable to be classified in the residual entry of the said heading at 34052000 and the classification of such products done by M/s. PIIPL under CTH 27101990 is liable to be rejected. 26. He also emphasized that product, despite knowing all details, having been misclassified by the appellants, penalties were rightly imposed. He, therefore, emphasised that the classification under Tariff Heading 3405 and rejection of CTH 2710 was justified. In rejoinder, the Learned Advocate drew our attention to para 26.2 of order in original to emphasise that not only technical opinion of Customs House Laboratory has been taken on classification but also the opinion has been relied upon to justify classification under CTH 3405. The relevant findings are reproduced below: "26.2. The other importers/notices who have filed the Ex.-Bond Bills of Entry in respect of import of Waksol-A, Waksol 9-11A, Waksol 9-11, Waksol C9-11A tc. misdeclared the subject goods by way of mis-classifying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility of their being used as such, will not make the product of the nature specified in Tariff Heading 3405 specifically when product used and specified in Tariff Heading 3405 are in the nature of end products and not in the nature of raw-materials. 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' as is the requirement laid down in HSN explanatory notes to CTH 3405 (2017 edition referred). The argument of the appellant that classification under chapter 3404 cannot be justified as the Fisher/Tropsch Technology was used and which excluded its classification under 3404 is a mutually accepted position and needs no discussion from us. 28. We are, therefore, of the view that a detailed examination abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
