TaxTMI 
TaxTMI 
2025 (1) TMI 1699
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....Applicant: 2.1 Detergeo Chem Private Limited (hereinafter referred to as the "Applicant") is a private limited Company duly incorporated under the provisions of the Companies Act, 1956, having its plant located at F-52, SIPCOT Industrial Complex, Gummidipoondi Industrial Area, Chennai, Tamil Nadu - 601 201 and registered office at A29 Block B1 Extension Mohan Cooperative Industrial Estate, New Delhi - 110044. The Applicant is the leading manufacturer of Sodium Lauryl Ether Sulphate (SLES) and Linear alkyl benzene sulphonic acid (LABSA) in India since 2021. In this respect, the Applicant imports raw materials from foreign suppliers. The Applicant is a part of the renowned New India Group. The Applicant is now proposing to import the product Fatty Alcohol Ethoxylates ('FAE') having 3 or more moles of Ethylene Oxide ('EO'). 2.2 Current Imports of FAE of 1 and 2 moles of EQ: The Applicant stated that they have already been importing goods namely, 'Fatty Alcohol Ethoxylates' having one mole and two moles of Ethylene Oxide and classifying the same under Heading 38.24 as these goods do not satisfy the twin-test provided for 'organic surface-active agent&#....
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.... 2. Unilever Asia Private Limited 3. Shell Easten Chemicals Singapore 4. Shanghai Binjia Industrial Co Ltd Thailand/Singapore/China 2.4 The Applicants further stated that as per their understanding, the suppliers are classifying FAE having 3 or more EO moles under Heading 34.02 as 'non-ionic surfactant'. Further, currently, no dispute whatsoever has been raised on classification or exemption with respect to FAE having 3 or more moles of ethylene oxide. 2.5 Specifications / Grades of the products in question: Physical/Chemical properties of the products in question available for few of the suppliers on their respective website, are mentioned in table below: TABLE-2 Brand / CAS Number Molecular Weight Moles of Ethylene Oxide Percentage of ethylene oxide Alcohol (C12-14) Ethylene Oxide Alcohol ethoxylate Laureth-3/Dehydol LS 3 TH 68439-50-9 191 44x3=132 323 3+/-0.2 40.5% Laureth-7/Dehydol LS 7 TH 191 44x7=308 499 7+/-0.2 61.8% Laureth-9/Dehydol LS 9 TH 191 44x9= 396 587 9+/-0.2 67.6% 2.6. The Applicant further submitted that they have been provided with information by Thai Ethox....
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....slucent', and 'stable emulsion', without separation of insoluble matter. These terminologies indicate that in order to fall under Heading 34.02, the goods should be "water soluble". HSN Explanatory Notes (I) to Heading 34.02 for 'Organic Surface-Active Agents (Other than soap)' defines non-ionic organic surface-active agents as under: "(3) Non-ionic, in which case they do not produce ions in an aqueous solution. Their solubility in water is due to the presence in the molecules of functional groups which have a strong affinity for water. Examples are : products of the condensation of fatty alcohols, fatty or alkylphenols with ethylene oxide; ethoxylates of fatty acid amides." 3.2 Alcohol ethoxylates is a non-ionic surfactant in technical and commercial understating. However, its solubility is dependent on number of ethylene oxide units in the molecule since ethylene oxide forms part of hydrophilic group. Thus, the surface tension of Alcohol ethoxylates solution increases with an increase in EO group units, and vice-a-versa, decreases with a decrease in EO units. The solubility is important test for classification under Heading 34.02. Relevant extract ....
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....learly establishes that the FAE having 3 or more moles of EO satisfy both the criteria specified under Note 3 of Chapter 34. 3.5 Therefore, the products in consideration under the present application satisfy the OSAA test under Note 3 of Chapter 34 and are classifiable under Heading 34.02. Further, as they are non-ionic, they are correctly classifiable under Tariff Item 3402 42 00 which covers 'non-ionic organic surface- active agents'. 3.6 Globally also these products are classified under Heading 34.02. Below are the various U.S. Customs Cross Rulings classifying similar products under Heading 34.02 : a. N300799 dated 18.10.2018; b. N274866 dated 10.05.2016; c. N274197 dated 20.04.2016; d. N249254 dated 06.02.2014; e. N247522 dated 29.11.2013; f. N237960 dated 16.04.2013. 3.7 The products in question are eligible for exemption benefit under Sr. No. 399 of Notification No. 46/11-cus., dated 01.06.11: For giving effect to the ASEAN India Free Trade Agreement, the Government of India issued the Notification No. 46/2011-Cus, whereby preferential treatment was to be given to certain goods imported from the ASEAN Cou....
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....with water and allowed to stand for one hour at 20° C, gives transparent or translucent liquid or stable emulsion without separation of insoluble matter and reduce the surface tension of water. It was further informed that a Show Cause Notice No.45/2023 was issued to the importer vide F.No.CUS/APR/SCN/29/2023-GR-2 dated 09.05.2023 for misclassification under CTH 3824 instead of 3402 and wrongful availment of benefit under SI. No. 449(I) of Notification No. 46/2011-Cus, vide No.45/2023 by the Commissioner of Customs, Chennai-II (Import). It was further opined that the classification of the goods can be decided only on testing the goods upon importation. It was further stated that as per the Literature / Material supplied by the Importer and the supplier website it appears that the goods merit classification as Organic Surface- Active Agent under CTH 3402. However, since there is a dispute regarding FAE with 2 moles and that the importer is stating that FAE with 2 moles is less water soluble and that with 3 or moles is more water soluble, the same is to be tested. Regarding applicability of SI.No.399 of Notification No.46/2011 Cus, it is informed that if the goods merit ....
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....er Note 3 of Heading 34.02. They further submitted that the above classification declared under Heading 38.24 for 'Fatty Alcohol Ethoxylates' having one mole and two moles of EO has been disputed by the Customs department on the basis that these goods fall under Heading 34.02. The Applicant has been issued with a Show Cause Notice No. 45/2023 dated 09.05.23 by the Commissioner of Customs, Chennai-II, No. 60, Rajaji Salai, Chennai and the same is pending adjudication. Thus, classification of FAE having 1 and 2 moles of EO is currently under litigation / dispute. However, in the present application, the Applicant is not seeking ruling for FAE of 1 & 2 moles of EO. They further submitted that they already have made the complete disclosure about this dispute in the Application filed. Further, the comments received from Port authorities also confirmed that those items in SCN was different from the items for which ruling has been sought in the present application. 6.2 The Applicants submitted that they would be importing FAE having 3 or more EO moles from various suppliers. The prospective suppliers are classifying these goods under Heading 34.02 as 'non- ionic surfactant&....
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....eryday Life' by Anthony Edward Hargreaves, Tony Hargreaves, published by RSC Paperbacks, explains non-ionic surfactants in chapter 2 at page 68, as under: "Non-ionic surfactants ...Non-ionic surfactants can be manufactured from a wide range of raw materials amongst which many are plant based and therefore have the advantage of using renewable resources. In the examples that follow the lipophile is the hydrocarbon chain, just as with the ionic surfactants. Ost of non-ionics have as their hydrophile a series of ethylene oxide groups in the forms of an ethoxylate chain. The more ethylene oxide group are present, the more hydrophilic the molecule, the greater its solubility in water. An ethoxylate with only two ethylene oxide groups will have virtually no water solubility but instead will be oil soluble whereas one with twenty such groups will have good water solubility but poor oil solubility. 6.5 They further submitted that in view of the above, more than 2 moles of ethylene oxide in FAE gives water solubility to the product whereas 2 or less moles of ethylene oxide will make FAE water insoluble. The products in question have 3 or more moles of ethylene oxide....
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....ling is unwarranted. In this regard, it is submitted that test report was duly provided along with the application. Further, the Customs department is always at liberty to test the goods on import to confirm whether Note 3 is satisfied or not. However, this reason cannot preclude ruling on classification of these items. If such reason is accepted, then, no ruling can be issued on classification. Therefore, reasoning of the Customs department in this regard is completely incorrect. 6.9 They further invited attention to CAAR Ruling issued in the case of Suraj Constructions & Chandrakala Associates (submitted vide email dated 06.01.25) wherein Ruling was issued in favour of the applicant with a rider that in each case of import, the applicant would have to produce evidence before the customs officer. In view of the above submissions, they submitted that FAE having 3 or more EO moles are correctly classifiable under Heading 34.02. 7. Discussions and Findings 7.1 I have considered all the materials placed before me in respect of the classification of subject goods. I have gone through the submissions made by the applicant during the personal hearing as well as the response rece....
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.... under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or exporting any goods to India; or with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under Section 28H. In this matter, the applicant holds a valid Importer-exporter Code Number and satisfies one of the criterions mentioned under the definition of the Applicant under Section 28E and therefore, is a valid applicant for filing application under Section 28H of the Customs Act, 1962. Further, I find that the product i.e. FAE with more than 3 moles of EO is different from the product i.e. FAE with 1 or 2 moles and therefore, no cause arise for rejection of the application under proviso of Section 281 (2) as the questions raised in the application are not currently pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court; nor the same as in a matter already decided by the Appellate Tribunal or any Court. In view of the above, I now take up the issue of classification of FAE with more than 3 moles of EO and applicability of Notification 46/2011 Sr. No. 399 on the rate of duty of the product. 7.5 Befor....
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.... or sulphated or oxidized or chlorinated castor oil; sulphonated or sulphated or oxidized or chlorinated fish oil; sulphonated or sulphated or oxidized or chlorinated sperm oil; sulphonated or sulphated or oxidized or chlorinated neats foot oil 3402 90 30 - - - Penetrators - - - Wetting agents: 3402 90 41 - - - - Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents 3402 90 42 - - - - Cleaning or degreasing preparations not kg. 10% having a basis of soap or other organic surface active agents 3402 90 49 - - - - Other - - - Washing preparations whether or not containing soap : 3402 90 51 - - - - Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents 3402 90 52 - - - - Cleaning or degreasing preparations not having a basis of soap or other organic surface active agents 3402 90 59 - - - - Other - - - Other : 3402 90 91 - - - - Washing preparations (including auxili....
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.... in the Note 3 to Chapter 34. It further clarifies that an emulsion should not be considered as having a stable character if, after being left to stand for one hour at 20℃, solid particles are visible to naked eye or it has separated into visually distinguishable phases or it has separated into a transparent part and a translucent part visible to the naked eye i.e. there should not be any visual separation of the emulsion visible to naked eye. Relevant HSN Explanatory notes for Heading 3402 are reproduced below: (I) ORGANIC SURFACE-ACTIVE AGENTS (OTHER THAN SOAP) The organic surface-active agents of this heading are chemical compounds, not chemically defined, which contain one or more hydrophilic or hydrophobic functional groups in such a proportion that, when mixed with water at a concentration of 0.5 % at 20 ℃ and left to stand for one hour at the same temperature, they give a transparent or translucent liquid or stable emulsion without separation of insoluble matter (see Note 3 (a) to this Chapter). For the purposes of this heading, an emulsion should not be considered as having a stable character if, after being left to stand for one hour at 20 ℃....
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....drophobic) fatty alcohol chain. Each ethoxy group (-CH2CH20-) increases the compound's affinity for water. Longer hydrocarbon chains reduce overall solubility whereas greater EO units improve water solubility by increasing the hydrophilic fraction of the molecule. 7.14 I have gone through a reference copy of the Product Catalogue, Material Safety Data Sheet, Certificate of Analysis, Supplier's Invoice and Test report submitted by the Applicant for one of the products 'Dehydol LS 3 TH (MB)'. From the document submitted, it is observed that the chemical name of the product is Polyoxyethylene (3) Lauryl ether. Further, from the Analysis report of the product carried out by InS Thai limited; it is observed that the product i.e. Dehydol LS 3 TH satisfies both the conditions mentioned in the Chapter Note 3 of the Chapter 34 as it decreased the surface tension of the water to 29.3654+0.268 and gives a stable emulsion without separation of insoluble matter. Reports submitted are as under: 1. Surface tension of Dehydol LS3 TH (Batch no. Z161030634) Table 2 summarized surface tension results of sample. the sample showed the surface tension of 29.364+0.268....
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....actant etc. It has further been observed that these FAEs are an alkyl polyglycol ether of lauryl alcohol, chemically defined as an alcohol ethoxylate having an average alkyl chain of 12-14 carbon atoms and an ethylene oxide chain of 3 / 7 / 9 ethylene oxide units and these are generally used as a surfactant. 7.16 From the data submitted by the applicant as well as information available on the websites of the suppliers, I observe that the products are non-ionic surfactants as per the description provided by the applicant and information available on open source. Non-ionic surfactants are a type of surface- active agents that have no net electrical charge in their formulations. That means the molecule does not undergo any ionization when it is dissolved in water. Accordingly, the product under consideration would merit classification under CTI 34024200 as a non-ionic organic surface-active agent. It is pertinent to mention that classification of any product is governed by General Rules of Interpretations as applicable. Rule 1 of GRI gives foremost importance to the Heading Text, Section Notes and Chapter Notes. Since there is a specific heading for Organic Surface-Active Agents un....