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Issues: (i) Whether Exxsol Hexane RD was classifiable under Chapter 29 of the Customs Tariff Act, 1975 or under Chapter 27 of the Customs Tariff Act, 1975; (ii) Whether the Customs authorities could disregard the DGFT clarification issued under the import policy.
Issue (i): Whether Exxsol Hexane RD was classifiable under Chapter 29 of the Customs Tariff Act, 1975 or under Chapter 27 of the Customs Tariff Act, 1975.
Analysis: The product was examined in the light of the test reports and the import policy materials. The decisive consideration was that the Director General of Foreign Trade had clarified, after examining the issue, that import of Hexane was covered in Chapter 29 of the ITC(HS) classification. The Court treated that clarification as controlling for import-policy classification. On that basis, the product imported by the assessees was held to fall in Chapter 29 and not in Chapter 27.
Conclusion: The issue is answered in favour of the assessee.
Issue (ii): Whether the Customs authorities could disregard the DGFT clarification issued under the import policy.
Analysis: Paragraph 2.3 of the Export and Import Policy, 2002-2007 provides that doubts about interpretation or classification under the policy are to be referred to the DGFT and that the DGFT's decision is final and binding. The Court relied on this framework, together with the settled position that import-policy clarification by the DGFT binds Customs authorities, to hold that Customs could not take a contrary view on classification.
Conclusion: The issue is answered against the Revenue.
Final Conclusion: The appeals by the assessees succeeded and the departmental appeals failed, with the imported product held classifiable under Chapter 29 for import-policy purposes.
Ratio Decidendi: Where the import policy makes the DGFT the final authority on classification questions, a DGFT clarification on the imported item is binding on Customs authorities for deciding import-policy classification.
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