Organic surface-active agent classification under Chapter 34 upheld where chemical test evidence outweighed contrary free-oil claims.

A product marketed as "Poleyol FSO" was examined under Chapter 34 of the Central Excise Tariff. Chemical testing showed that a 0.5% solution formed a stable emulsion and reduced water surface tension below 45 dynes/cm, satisfying the statutory test for an organic surface-active agent under Note 3 to Chapter 34. The test report did not establish the presence of free oil, and a later clarificatory letter based on the sample's physical form was not treated as sufficient to override the chemical evidence. The material was therefore classifiable under Heading 34.02, and the Revenue did not prove that any surface-active function was only subsidiary to the alleged fat-liquoring function.

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Issues: Whether the product marketed as "Poleyol FSO" was correctly classifiable under Heading 34.02 of the First Schedule to the Central Excise Tariff Act, 1985 as an organic surface-active agent, or whether it fell under Heading 34.03 as a preparation used for the oil or grease treatment of leather.

Analysis: The product was found on chemical test to answer the statutory test for an organic surface-active agent under Note 3 to Chapter 34, since a 0.5% solution formed a stable emulsion and reduced the surface tension of water to below 45 dynes/cm. The test report did not establish the presence of free oil, and the later clarificatory letter based on the physical form of the sample was not considered reliable enough to displace the chemical test results. The material was therefore within Heading 34.02. The Revenue also failed to prove that the surface-active function of the product was not required or was only subsidiary to its alleged fat-liquoring function so as to attract Heading 34.03.

Conclusion: The product remained classifiable under Heading 34.02, and the claim for classification under Heading 34.03 failed, in favour of the assessee.

Final Conclusion: The appellate authority's view was upheld and the Revenue's challenge to the classification was rejected.

Ratio Decidendi: Where a product satisfies the statutory test of an organic surface-active agent under Chapter 34, it cannot be shifted to Heading 34.03 unless it is shown, on reliable evidence, that its surface-active function is not required or is merely subsidiary to the alleged treatment function.

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