1994 (8) TMI 97 - AT - Customs

Tribunal upholds 'Morarfloc' classification under Tariff Item 15A post-1982

The Tribunal upheld the classification of 'Morarfloc' under Tariff Item 15A post-1982, rejecting the appellants' claim for classification under Tariff ... Classification Issues Involved:1. Classification of the product 'Morarfloc' under Central Excise Tariff.2. Validity of the Show Cause Notice issued on 17-7-1985.3. Applicability of the amended Tariff Item 15A post-1982 Budget.4. Rejection of the refund claim by the appellants.5. Non-supply of the full report of the Deputy Chief Chemist to the appellants.Detailed Analysis:1. Classification of the product 'Morarfloc' under Central Excise Tariff:The appellants contested the classification of 'Morarfloc' under Heading 15A of the Central Excise Tariff, arguing it should be classified under Tariff Item 68. They described 'Morarfloc' as a solution of resin with a high water content (80%) and solid content varying from 10-20%, used as a flocculating agent. The appellants argued that the product remains a solution of resin and never becomes a resin, as it does not undergo dehydration. The Tribunal noted the significant change in Tariff Item 15A post-1982, which included liquid or pasty forms (including emulsions, dispersions, and solutions) under its ambit. The Tribunal held that the product 'Morarfloc' falls under the amended Tariff Item 15A(1) due to this inclusion, rejecting the appellants' claim for classification under Tariff Item 68.2. Validity of the Show Cause Notice issued on 17-7-1985:The appellants argued that the Show Cause Notice was invalid as it contradicted the final and binding order of the Collector (Appeals) dated 16-7-1984, which classified the product under Tariff Item 68. The Tribunal found that with the change in the Tariff Item 15A in 1982, the classification issue could be reopened. Therefore, the Show Cause Notice was deemed valid and within the jurisdiction of the authorities.3. Applicability of the amended Tariff Item 15A post-1982 Budget:The Tribunal emphasized the substantial change in Tariff Item 15A post-1982, which now included materials in liquid or pasty forms (including emulsions, dispersions, and solutions). The Tribunal referenced the Delhi High Court's judgment in Indian Plastics & Chemicals Pvt. Ltd. v. Union of India, which differentiated between 'liquid resin' and 'solution of resins' under the erstwhile Tariff Item 15A. The Tribunal concluded that the amended Tariff Item 15A(1) post-1982 explicitly included 'resin in solution form,' thus justifying the classification of 'Morarfloc' under this heading.4. Rejection of the refund claim by the appellants:The Assistant Collector partially rejected the refund claim filed by the appellants for the period from 1-3-1982 onwards, which was upheld by the Tribunal. The Tribunal agreed with the lower authorities that the subject product was correctly classified under the amended Tariff Item 15A, and thus the rejection of the refund claim was justified.5. Non-supply of the full report of the Deputy Chief Chemist to the appellants:The appellants contended that the full report of the Deputy Chief Chemist was not provided to them, only an extract. The Tribunal noted that this report was previously used in the earlier adjudication proceedings, and the appellants did not contest it at that time. The Tribunal found that the non-supply of the full report did not significantly affect the case, as the classification issue was based on the amended Tariff Item 15A post-1982, which the report supported.Conclusion:The Tribunal upheld the impugned orders, holding that 'Morarfloc' is classifiable under Tariff Item 15A. The appeal was rejected, with the Tribunal finding that the case law cited by the appellants was not applicable to the present case, as it pertained to the description of goods under the earlier Tariff Item 15A, prior to the 1982 amendment.