Intrinsic nature controls tariff classification for medicinal oxygen; repacking or end use does not change the product's heading.

Liquid oxygen conforming to Indian Pharmacopoeia standards was treated as medicinal grade oxygen and classified under Heading 2804.11, because classification depends on the intrinsic nature and established standard of the goods rather than their ultimate end use. The Department had not conducted any contrary test to disprove compliance with that standard, and compression or repacking into cylinders did not alter the identity of the product. On that basis, the goods were held eligible for the benefit of Notification No. 7/2000-C.E. dated 1-3-2000, and not classifiable under Heading 2809.19.

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Issues: Whether liquid oxygen conforming to Indian Pharmacopoeia standards was classifiable under Heading 2804.11 as medicinal grade oxygen and entitled to nil duty under Notification No. 7/2000-C.E. dated 1-3-2000, or under Heading 2809.19 as claimed by the Department.

Analysis: The goods were found to be one and the same liquid oxygen, part of which was cleared directly and part of which was later compressed and supplied through cylinders. The product was held to merit classification as medicinal grade oxygen because it conformed to the Indian Pharmacopoeia standard and no contrary test was conducted by the Department to disprove that standard. In the absence of a separate statutory definition of medicinal grade oxygen, the Indian Pharmacopoeia standard was treated as the governing benchmark. The fact that the oxygen was ultimately supplied for industrial or medicinal use did not alter its classification, since classification had to follow the nature and characteristics of the goods and not their end use. Compression and repacking in smaller cylinders did not change the identity of the product. Voluntary payment of duty on industrial supplies was held not to justify denial of the same tariff treatment for oxygen used for hospitals and clinics.

Conclusion: Liquid oxygen conforming to the Indian Pharmacopoeia standard was classifiable under Heading 2804.11 and entitled to the benefit of Notification No. 7/2000-C.E. dated 1-3-2000, not under Heading 2809.19.

Final Conclusion: The impugned orders were set aside and the appeals succeeded because the product retained its medicinal classification irrespective of the manner of supply or ultimate user.

Ratio Decidendi: Classification of a product depends on its intrinsic nature and established standard, and not on its ultimate end use; where the identity of the goods remains unchanged after compression or repacking, the same tariff classification and exemption apply at all stages.

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