TaxTMI 
TaxTMI 
2023 (6) TMI 317
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....through Kandla port and Hazira Port. The learned counsel representing all the parties made categorical statement at the bar that he is not pressing on the point of proper officer for D.R.I. Officers not being competent to issue show cause notice for entire bunch and would like the matter to be decided on its own merits by making concession on point of jurisdiction of "proper officer" and competence of D.R.I., Appeal No. C/10335/2021, was chosen by him for the purposes of reference and for narration of specific brief facts etc. The period involved of imports is from June, 2014 to April 2019. The product data sheet as produced at para 15 of the impugned order brings out the reason for probe by the department, same is as follows:- "15. As per the product date sheet, the Oil Content (% by mass) in Walsol A and Waksol B, which are main component to be blended with C9-C11 n-paraffin in a proprietary ratio to produce Waksol 9-11A and Waksol 9-11B, are 14% and 9% only and the overall percentage of oil content in the sample of Waksol 9-11A tested at CRCL, New Delhi comes to 15% by mass, which is lesser than the basic requirement of classification of a product under Ch. 27 of Custom....
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....powders and similar preparations (whether or not in the form of paper, wadding, felt, nonwovens, cellular plastics or cellular rubber, impregnated, coated or covered with such preparations), excluding waxes of heading 3404 CTH alleged by the department in the SCN and confirmed in the Impugned OIO 2.3. The paraffin Oil content in the imported product is less than 70% so classification under CTH 2710 is therefore ruled out by them. The department has not sought classification under CTH 3404 so, this is also ruled out. The competing classification is reduced to CTH 2712 & CTH 3405. CTH 3405 2.4. CTH 3405 covers consumer products/end products like polishes and creams for footwear, furniture etc. It does not cover raw materials for manufacturing of polishes or creams for furniture. The imported product is an industrial raw material for manufacture of another industrial raw material i.e. chlorinated paraffin wax and thus cannot be covered under CTH 3405. 2.5. The HSN explanatory notes to CTH 3405 (stated to be of 2017 edition by the advocate on query) is reproduced below: This heading covers polishes and creams for footwear, furniture, floors, coachwork, glas....
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....s imported by the appellant. The product imported by the noticee is an industrial raw material for manufacture of Chlorinated Paraffin waxes (CPW) and is not a finished product put up for retail sale. Further, the products of CTH 3405 is dispersed in or dissolved in a liquid medium i.e., impregnated with spirits of turpentine or emulsified in an aqueous medium.. It is neither dispersed nor dissolved in a liquid medium. So, the classification under CTH 3405 is ruled out. CTH 2712 2.7. CTH 2712 specifically covers all type of paraffin waxes irrespective of their oil content, Fischer-Tropsch waxes etc. CTH 2712 of the Customs Tariff Act, 1975 is reproduced below: Tariff Item Description of article 2712 Petroleum jelly, paraffin wax, microcrystalline petroleum wax, slack wax, ozokerite, lignite wax, peat wax, other mineral waxes, and similar products obtained by synthesis or by other processes, whether or not coloured 2712 10 - Petroleum jelly : 2712 10 10 --- Crude 2712 10 90 --- Other 2712 20 00 - Paraffin wax containing by weight less than 0.75% of oil 2712 90 - Other : 2712 90 10 --- Micro-crystalline petroleum wax 2712 90 20....
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....34.02). (B) ................................ (C) ................................ 5. HSN explanatory notes (2017 edition) to CTH 2712 needs to be seen in above context, which reads as under. (A) Petroleum jelly. Petroleum jelly is unctuous to the touch. It is white, yellowish or dark brown in colour. It is obtained from the residues of the distillation of certain crude petroleum oils or by mixing fairly high viscosity petroleum oils with such residues or by mixing paraffin wax or ceresine with a sufficiently refined mineral oil. The heading includes the jelly, whether crude (sometimes called petrolatum), decolourised or refined. It also covers petroleum jelly obtained by synthesis. To fall in this heading petroleum jelly must have a congealing point, as determined by the rotating thermometer method (ISO 2207 equivalent to the ASTM D 938 method), of not less than 30 °C, a density at 70 °C of less than 0.942 g/cm3, a Worked Cone Penetration at 25 °C, as determined by the ISO 2137 method (equivalent to the ASTM D 217 method), of less than 350, a Cone Penetration at 25 °C, as determined by the ISO 2137 method (equivalent t....
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.... obtained by the chemical modification of lignite wax or other mineral waxes. (b) Mixtures, not emulsified or containing solvents, consisting of : (i) Waxes of this heading mixed with animal waxes (including spermaceti), vegetable waxes or artificial waxes. (ii) Waxes of this heading mixed with fats, resins, mineral substances or other materials, provided they have a waxy character. 6. The learned Advocate pointed out that revenue has referred to congealing point under Petroleum jelly category (A) of HSN, which was never claimed by them, for seeking exclusion from CTH 2712. Appellant has claimed category(B) of HSN i.e., Paraffin wax/slack wax to be covered under CTH 2712. 7. It was submitted by the advocate for the appellants that Waksol is correctly classified under Tariff Entry 2712 90 30 in view of the following: i. It is obtained from a synthetic route by Fischer Tropsch process where starting material is natural gas, reformed into synthesis gas. After the Synthetic Tropsch process, the synthetic gas is distilled to get paraffinic hydrocarbons with oil content of 15% (Para 5 of SCN). In paraffin wax of 2712 the oil content is gene....
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..... Thirdly, the reference is not of the product in question rather a different form of waksol A which is in Powder form and thus not relevant for the case. Product in question is in liquid form. Fourthly even this website says that this powder for Waksol A is used for preparing paint strippers and other coating products as a raw material. Pain strippers ensure that wood surface is not harmed and remains protected during the stripping process. Website nowhere suggests that Waksol A in Powder form will be used as a wood polish, rather it says that it is a FT micronized wax and used as input in a number of products. Paint strippers basically act as solvents (for which Waksol A powder is an input), in which paint is dissolved. Thus, this literature also does not suggest classification under CTH 3405.(See pg 28 of this synopsis) 9. On merits therefore, the learned advocate submitted that the appropriate classification is under CTH 2712 and not under 3405. 10. The learned advocate also referred to various test reports as follows:- Test Report Date Testing Agency Result Remarks Pg number of synopsis Test Report dated 31.08.2015 (RUD-4) (Para 4 of the OIO) The Che....
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.... is not obtained by industrial treatment of Fats, Oils or waxes rather it is Synthesised by FT process. (iii) testing authority is not a competent authority to determine the classification 22-23 Test Report Dated 14.05.2019 [Para 11 of the OIO] Joint Director, Customs House Laboratory, Kandla (i) it was stated that the product Waksol 9-11A does not fall under CTH 2712 as the sample is having a congealing point less than 30 degree centigrade (ii) Other parameters mentioned in HSN 2712 not tested. (iii) Paraffin C9-C11 is a ingredient used as carrier to improve consistency of polishes in which the WAKSOL A is a principal component used to import water proof, wear resistant and other properties of polishes and thus the blend of paraffin C9-C11 and WAKSOL A to get the preparation "WAKSOL 9- 11 A" is correctly falls under the chapter 3405.20 as reported earlier. [These remarks are not based on testing of the product and are text book attributes of polishes in which carriers are used and thus are irrelevant reamrks] (i) HSN explanatory notes to CTH 2712 states that petroleum jelly must have a congealing point as determined by rotating thermometer method of no....
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....n. The Customs House Laboratory can opine only on chemical and physical properties of the product and not on the classification of product which is a legal exercise, therefore Joint Director has exceeded its jurisdiction and adjudicating authority has erred by relying on the classification part. 14. Learned advocate further submitted that the present case is purely an issue of classification/legal interpretation for which allegation of suppression and mis-declaration cannot hold good and therefore the demand is time barred beyond the normal period of limitation i.e., two years. 15. Reliance was placed on the following case laws in this regard by the learned advocate. i. Northern Plastic Ltd. v. Commissioner [1998 (101) E.L.T. 549 (S.C.)] [Para 23] ii. O.K. Play (India) Ltd. v. Commissioner [2005 (180) E.L.T. 300 (S.C.)] [Para 38] iii. National Radio & Electronics Co. v. Commissioner [2000 (119) E.L.T. 746] [Para 3] 16. The learned advocate further submitted that the imported goods were not concealed in any way. Nowhere in the SCN it was alleged that goods were concealed. The goods were correctly described and were always available before the depa....
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....cases where the only dispute is with respect to classification, penal provisions of Section 112 cannot be invoked. 23. That likewise in the case of Sirthai Superware (Supra) [para 4.9 & 4.10], the Hon'ble CESTAT Mumbai held that in cases where description of goods matches the actual content of the consignment and if the issue is with respect to classification, penalty cannot be imposed either under Section 112 or 114A of the Customs Act, 1962. 24. In view of the foregoing the Learned Advocate for the parties submitted that the appropriate classification of the product is 271290507 as other Slack wax and same should have been accepted by the authorities below. 25. Learned AR on the other hand justified the order and findings contained in the order as also the classification on the ground that the classification initially sought of Tariff Heading No. 2710 was rejected as product imported at less than 70% of weight of petroleum oil as was confirmed during testing and which report was accepted and a claim of 27010 was given up by the importers. He also referred to the findings in para 21 of the impugned order as reproduced below:- CLASSIFICATION OF WAKSOL SERIES P....
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....ustries, Polish, Lubricant additives etc, as stated by Shri K.C. Goyal, Director, M/s. PIIPL, Shri Vishnu P. Naykar, Manager (Import) of M/s. PIIPL and Shri Mohammad Jamalbhai Angolia, Technical Adviser (Process), M/s. PIIPL. The literature of product Waksol 9-11A provided by the supplier manufacturer states that the Waksol 9-11A is produced by blending Waksol A and C9-C11 Paraffins in proprietary ratio. The General note to HSN for Ch. 34 states that this chapter covers products mainly obtained by the industrial treatment of fats, oils or waxes (eg soap, certain lubricating preparations, prepared waxes, certain polishing or scouring preparations, candles). It also includes certain artificial products eg surface-active agents, surface active preparations and artificial waxes. 21.2. The Heading No. 34.05 of Customs Tariff, covers "Polishes and creams, for footwear, furniture, floors, Coachwork, Glass or Metal, Scouring pastes and powders and similar preparations (whether or not in the form of paper, wadding, felt, nonwovens, cellular plastics or cellular rubber, impregnated, coated or covered with such preparations), excluding waxes of heading No. 34.04". The General HSN exp....
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....ry for home consumption was not correct, as was required from them under Section 46(4) of the Customs Act, 1962 read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 and Rules 11 & 14 of the Foreign Trade (Regulation) Rules, 1993. The facts and evidences suggest that the said importers had failed to furnish correct classification of the goods in question. The Test Reports of the goods in question and Technical Opinion of the Custom House Laboratory clearly indicates that the goods, viz., Waksol-A, Waksol 9-11A and Waksol 9-11B etc. appeared to be aptly classifiable under Customs Tariff Heading 34052000 instead of CTH 27101990. It further appeared that the classification of the goods in question was done under CTH 27101990, by M/s. PIIPL with intent to evade payment of differential Customs Duties as the Duty rate under CTH 3405 was higher than that under CTH 2710. It, thus, appeared that the subject products are liable to be classified in the residual entry of the said heading at 34052000 and the classification of such products done by M/s. PIIPL under CTH 27101990 is liable to be rejected. 26. He also emphasized that product, despite knowing all detail....
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....atory notes to CTH 3405 (2017 edition) as well as the finding of the learned adjudicating authority, in para 45.2 point to the effect that Waksol 911-A, Waksol 911-B, is not exclusively used for Chlorination and can also be used for other purposes like Polishes, cream and similar preparations for the maintenance of wooden furniture, floors for other wooden work. The findings therefore only show the possibility and do not conclusively decide the nature of the product or its classification as the product literature and material on record shows that Waksol products are used in Chlorination and therefore do not appears in the nature of product of Tariff Heading 3045. We find that simply some alternate usage existing of the product or the possibility of their being used as such, will not make the product of the nature specified in Tariff Heading 3405 specifically when product used and specified in Tariff Heading 3405 are in the nature of end products and not in the nature of raw-materials. The department has to conclusively bring on record the predominant usage of the product with evidence to discharge burden of classification. Further, in view of the trite law, learned adjudicating aut....