1990 (8) TMI 246 - AT - Customs

Tribunal overturns classification of Hydroquinone, stresses evidence importance

KANTILAL MANILAL & CO. Versus COLLECTOR OF CUSTOMS

The Tribunal set aside the lower authorities' orders and allowed the appellants' claims regarding the classification of Hydroquinone. It concluded that ... Classification Issues:Classification of imported Hydroquinone under the Central Excise Tariff Act (CTA) and Central Excise Tariff (CET).Detailed Analysis:1. Classification Dispute:The appellants contested the rejection of their refund claims for nine consignments of Hydroquinone by the Collector of Customs (Appeals) Bombay. The Department classified the items as prepared rubber chemicals under Heading 38.01/19(7) CTA with additional duty under Item 65 CET. However, the appellants sought classification under the residuary heading 29.01/45(1) CTA and for additional duty under item 68 CET.2. Contentions of the Appellants:The appellants argued that the Hydroquinone consignments were suitable for photographic use and should be classified under the residuary heading as unmixed substances. They relied on the CCCN Explanatory notes and a test report from the Chemical Examiner, Bombay Customs Laboratory, which indicated the item's suitability for photographic use.3. Department's Position:The Department maintained that Hydroquinone could be classified as an antioxidant under Item 65 CET based on the Condensed Chemical Dictionary of Hawley. The Collector of Customs (Appeals) noted the general utility of Hydroquinone and its varied uses across industries and regions, leading to difficulty in ascertaining its predominant use.4. Judicial Analysis:The Tribunal analyzed the conflicting entries of Heading 38.01/19(7) and 29.01/45(1) CTA. It emphasized the importance of determining the predominant use of the imported item for accurate classification. The Tribunal observed that the Department failed to provide substantial evidence to classify Hydroquinone as a rubber chemical under Chapter 38.01/19(7).5. Precedents Considered:The Tribunal referred to previous judgments, including Hico Products Ltd. and Union Carbide India Ltd., emphasizing the burden of proof on the Department to establish the classification of goods. It highlighted that if an item has multiple uses and is not predominantly used as a specific type of chemical, it should not be classified as such.6. Decision and Rationale:After thorough consideration of the evidence presented by both parties, the Tribunal concluded that the Department had not substantiated the classification of Hydroquinone as a rubber chemical. The Tribunal noted the appellants' documentation, including invoices and test reports, supporting the item's use as a photographic chemical. Consequently, the Tribunal set aside the lower authorities' orders and allowed the appellants' claims based on the evidence provided.In conclusion, the Tribunal's decision focused on the necessity of establishing the predominant use of imported goods for accurate classification under the Central Excise Tariff Act. The judgment underscored the importance of evidence and expert opinions in determining the appropriate classification of chemical products, emphasizing the burden of proof on the Department to support its classification decisions.