Polyethylene glycol classification under Chapter 39 was upheld, while extended limitation and penalty were rejected.

Polyethylene glycol with more than five monomer units was held classifiable under sub-heading 3907.20 as a synthetic polymer under Chapter 39, because test reports and the manufacturing process supported polymer classification and not residual chemical products under sub-heading 3823.00. The extended period of limitation was unavailable because the classification list and declarations had disclosed the product and process, with no suppression of material facts; the demand was therefore confined to the normal six-month period and penalty was set aside. Confiscation of the seized goods was upheld, as no sufficient ground was shown to disturb that order.

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Issues: (i) Whether polyethylene glycol of different grades was classifiable under sub-heading 3907.20 of the Central Excise Tariff Act, 1985 or as residual products of the chemical industry under sub-heading 3823.00; (ii) Whether the demand could be sustained for the extended period of limitation and whether penalty was warranted; (iii) Whether confiscation of the seized goods was liable to be upheld.

Issue (i): Whether polyethylene glycol of different grades was classifiable under sub-heading 3907.20 of the Central Excise Tariff Act, 1985 or as residual products of the chemical industry under sub-heading 3823.00.

Analysis: The goods were found to be polyethylene glycol with more than five monomer units. Note 3(c) to Chapter 39 applies to synthetic polymers with an average of at least five monomer units, and the material on record, including test reports and the stated manufacturing process, supported the view that the product was a polymer produced by chemical synthesis. The evidence therefore supported classification under Chapter 39 rather than as a residual chemical product.

Conclusion: The classification under sub-heading 3907.20 was upheld and the assessee's claim under sub-heading 3823.00 was rejected.

Issue (ii): Whether the demand could be sustained for the extended period of limitation and whether penalty was warranted.

Analysis: The classification list and related declarations had already disclosed the nature of the product and its manufacturing process. There was no change in the process during the relevant period, and the record did not establish suppression of material facts for the purpose of evading duty. On that basis, the extended period was unavailable. Since the dispute was one of classification and not of deliberate suppression, penalty was not justified.

Conclusion: The demand was restricted to the normal period of six months, and the penalty was set aside.

Issue (iii): Whether confiscation of the seized goods was liable to be upheld.

Analysis: No satisfactory ground was made out to disturb the confiscation order in respect of the seized goods.

Conclusion: The confiscation of the seized goods was upheld.

Final Conclusion: The appeal succeeded only to the extent of limitation and penalty, while the classification and confiscation findings were maintained.

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