Classification of de-mineralised water cleared from factory upheld under tariff entry for distilled or similar purity water.

De-mineralised water cleared from the factory was held classifiable as distilled water or water of similar purity under Heading 2851.19, because the treatment process produced extremely pure water used for industrial consumption and altered its character and application. Although the same product used captively within the factory was recognised under Heading 2851.11 with nil duty, removal from the factory attracted duty under the applicable tariff entry. The assessee failed to show that the goods fell outside the tariff description or to displace the view taken in its own earlier case. Classification under Heading 2851.19 was upheld and the demand sustained.

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Issues: Whether de-mineralised water cleared from the factory was correctly classifiable under Heading 2851.19, and whether the demand raised on such clearance was sustainable.

Analysis: The goods were found to be extremely pure water used for industrial consumption. The treatment process materially changed the character and application of the water, and the product answered the description of distilled water, conductivity water, or water of similar purity under Heading 2851. Water used captively within the factory was recognized as falling under Heading 2851.11 and attracting nil duty, but the same product when removed from the factory was held to be classifiable under Heading 2851.19 and liable to duty. The assessee did not show that the product escaped the relevant tariff description, nor did it displace the earlier view taken in its own case for an earlier period.

Conclusion: The classification under Heading 2851.19 was upheld and the demand was sustained against the assessee.

Ratio Decidendi: De-mineralised water cleared outside the factory, though captively exempt when used within the factory, is classifiable as distilled water or water of similar purity under Heading 2851.19 and is exigible to duty.

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