Glycerine classification and valuation turn on proved purity and genuine contract price, not assumptions of higher market value.

Classification of glycerine depended on whether the evidence established a reliable distinction between crude or unrefined glycerine and refined glycerine. On the facts, the product description, contract specification and reported purity did not justify disturbing the assessee's classification, as the Chemical Examiner's report lacked a glycerol percentage and the recorded purity of 97.3% did not conclusively place the product in the refined category. Valuation also failed: the agreed contract price was not shown to be invalid, artificial or affected by flow-back, and duty could not be raised merely on a presumption that refined glycerine should fetch a higher price. Consequential relief followed.

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Issues: (i) Whether the impugned product was classifiable as crude or unrefined glycerine under sub-heading 1506.11, or as refined glycerine under sub-heading 1506.12; (ii) Whether the contract price could be rejected for valuation and differential duty demand sustained on the assumption that refined glycerine must fetch a higher price.

Issue (i): Whether the impugned product was classifiable as crude or unrefined glycerine under sub-heading 1506.11, or as refined glycerine under sub-heading 1506.12.

Analysis: The product description, the contractual specification and the reported glycerol content were examined against the available indicia for distinguishing crude and refined glycerine. The Chemical Examiner's report did not state the percentage of glycerol, while the Indian Standard specification treated refined glycerine as having purity above 98%. The recorded purity was 97.3%, and the existing tariff differentiation did not supply a reliable demarcation on the facts proved.

Conclusion: The classification adopted by the assessee could not be faulted.

Issue (ii): Whether the contract price could be rejected for valuation and differential duty demand sustained on the assumption that refined glycerine must fetch a higher price.

Analysis: The price was fixed under a contractual arrangement that was not shown to be invalid or influenced by any flow-back. No material was found to displace the agreed transaction value, and the demand rested only on an assumption that refined glycerine must necessarily command a higher price than crude or unrefined glycerine.

Conclusion: The contract price could not be rejected and the differential duty demand was unsustainable.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief, as both the classification challenge and the valuation-based demand failed.

Ratio Decidendi: Where the evidence does not establish the tariff demarcation between crude and refined product with sufficient certainty, and the agreed contract price is not shown to be invalid or artificial, valuation cannot be rejected on a mere presumption of higher market value.

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