TaxTMI 
TaxTMI 
2012 (2) TMI 12
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....n that Arteco NV, Belgium develops and manufactures anti-freeze coolants and heat transfer fluids for automotive and industrial applications. It proposes to manufacture and sell antifreeze coolants in India through its subsidiary company i.e. the applicant. 4. The process of manufacture of the antifreeze coolants, as set out in the application, involves the blending of the base fluid, demineralized water and the super concentrates in the required proportions. The base fluid is mono ethylene glycol (MEG), which transfers the heat from internal combustion engine to the radiator where the fluid is cooled by airflow. Thus the heat transfer property of the antifreeze coolant it determined by the base fluid. It increases the boiling point of the solution. Super concentrate is a highly concentrated mixture of inorganic and organic chemicals and contributes to corrosion resistance. The corrosion protection property of any antifreeze coolant is determined by the type and level of corrosion inhibition additives in the antifreeze coolant. Super concentrate has physico-chemical properties like anti-foaming and oxidation stability. While it does not directly contribute to heat transfer, it h....
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....hemical compounds the composition of which is defined. Therefore classification under Chapters 28 or 29 of the Schedule to the Custom Tariff Act is ruled out. 3. For the same reasons the appropriate classification would appear to be under Chapter 38 of the said schedule. 4. Under the Chapter 38 the two possible headings for classification are either heading 3820 00 00, which covers anti-freezing preparations and prepared de-icing fluids or heading 3824 90 90 which covers, inter alia, products and preparations of the chemical or allied industries not elsewhere specified or included. 5. A perusal of headings 3801 to 3823 shows that they cover chemical preparations which are classifiable by reference to their properties or the fields of industry where they are used. The only entry that covers mixtures of chemicals not elsewhere specified or included is 3824.90.90 - Others. 6. As far as the possible classification under heading 38.20 is concerned. The relevant HSN note under Chapter 38 states, "This heading covers anti-freezing preparations and prepared de-icing fluids (e.g. mixture with a basis of glycol derivatives). Some anti-freezing preparat....
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....the appropriate classification according to the applicants will have to be under the residuary entry 3824 90 90. 8. The applicant has also submitted a copy of a "binding tariff information" issued by Federal Public Service Finance, Central Administration for Customs and Excises, Brussels, clarifying to M/s Arteco NV, Belgium that super concentrate would be classifiable under heading 3824909799 based on General rules 1 and 6 for the interpretation of the Combined Nomenclature and the text of heading 3824, GS code 3824 90 GN code 3824 907 and TARIC code 3824 90 97 99. This entry reads: Chemical preparations, not mentioned separately, of the sort to make coolants (after mixing with ethylene glycol and water) for combustion engines, containing no amines. 9. In his comments on the application, the concerned Commissioner, i.e. Commissioner of Customs (Imports), Jawaharlal Nehru Custom House, Nhava Sheva, pointed out that heading 3824.90.90 was a residuary entry and could be resorted to only on the basis of test results indicating the ingredients, composition, nature and end use of the product and observed that advance ruling may not be possible in the absence of these....
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....er as the information contained in the technical reports submitted by them was confidential and the sole proprietary information of the company. Its uses for any purpose other than assessment of application by the Authority would be detrimental to the company's interest. As the department had not had time to examine the additional information submitted by the applicant, the case was adjourned. 12. The matter was finally heard on November 25, 2011. During the hearing the applicant reiterated his earlier submissions. He particularly emphasized that super concentrates, in the form in which they are imported, could not be used as antifreeze coolants. This is evident not only from the technical literature submitted by them, but also from the technical opinion given by the department's own laboratory, vide the letter dated 03.11.2011 from the Chemical Examiner Grade-I at Jawaharlal Nehru Custom House, Nhava Sheva, which the department had obtained based on the material furnished by the applicant. He also submitted that the manufacturing process for the antifreeze coolants involved something more than mere dilution as the blending of the various constituents had to be done to pr....
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....ion did not alter its basic characteristic which was that of antifreeze preparation. He referred to the product datasheet of M/s Chevron Technology, Ghent, Belgium which spoke of two types of antifreeze coolants - one requiring dilution to be used and other (pre-diluted) to be used as such. This is to according to him showed that super-concentrate even in the form in which it is imported clearly had all characteristic of anti-freeze preparation and merited classification under heading 38.20. 3. He also relied upon the technical opinion of the Chemical Examiner Grade I of Nhava Sheva Custom House which, inter alia, stated that the ingredients of the said products are being used in the preparation of anti-freeze coolant. Based on this he argued that the product had both anti-freeze and corrosion inhibiting properties and was nothing but incomplete or unfinished anti-freeze having essential character of anti-freeze. It was nothing but anti-freeze concentrate requiring to be diluted for use as engine coolant and was an anti-freezing preparation specifically mentioned in heading 3820 00 00. 4. He referred to the notes (A) and (B) under heading 3824 and argued that th....
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....ppropriate excise duty. 16. The contention of the Authorized Representative for the department on the other hand is that the super concentrates CSC-GEN and CSC-QFB already have all the constituents required for antifreeze coolant and the fact that they need to be diluted cannot alter the classification as the products have all the constituents required and possess the essential character of anti-freeze coolant. Hence by application of rule 2(a) of the Rules for Interpretation, they are appropriately classifiable under heading 38.20. The entry is for anti-freeze preparations and there is nothing in the heading to suggest that only fully ready to use antifreeze coolants can be classified in that heading. It is a more specific heading than the residuary heading claimed by the applicant and is to be preferred to the more general heading i.e. 3824. As far as the product CIP-FG was concerned, it was true that it did not contain any MEG/Glycol and its classification could be decided on merits. 17. According to the technical literature, MEG is a widely used heat transfer agent (coolant) for automotive and industrial applications. It is used in combination with water and....
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....coolant. The applicant on the other hand argues that the case is not covered by rule 2(a) and by virtue of rule 2(b) the classification will have to be determined in accordance with rule 3, specifically rule 3(c). 20. A perusal of rules 2(a) and 2(b) of the General Rules for Interpretation of Import Tariff shows that while the former refers to "an article", the latter refers to "a material or substance". The former deals with incomplete or unfinished articles and articles presented unassembled or disassembled while the latter deals with mixtures and combinations of materials or substances. What is at issue is the classification of a chemical mixture. Hence, prima facie, it would appear that rule 2(a) would not apply to this case. The examples given in the relevant HSN explanatory notes to the General Rules for Interpretation of the Harmonized System seem to bear this out (e.g. bicycle without saddle or tyres, bicycle, unassembled or disassembled, with all components presented together). Equally importantly, notes (III) and (IX), under rule 2(a) state that in view of the scope of headings of Sections I to VI, the provisions of rule 2(a) do not normally apply to goods of th....