TaxTMI 
TaxTMI 
2024 (2) TMI 1638
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.... availing exemption from payment of GST under Notification 01/2017 dated 28.06.2017. DRI on the basis of information investigated the matter and issued a show cause notice alleging misclassification as well as evasion of duty. 1.1 Learned counsel waived the ground of jurisdiction of DRI to issue show cause notice. He argued that the matter can be argued solely on the merits of the case. Hence, the matter is being taken up. 2. Learned counsel pointed out that the main function of the imported goods is that of a DEDUSTER. The tariff entries relevant to the dispute are as follows: Period Tariff Item Description June 2015- 2017 38099140 (Appellant's claim) Finishing agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs and other products and preparations (for example, dressings and mordants), of a kind used in the textile, paper, leather or like industries, not elsewhere specified or included"; "Of a kind used in textile or like industries"; "Textile assistants emulsifying agents". July 2017December 2020 27101990 (Appellant's claim) "Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere s....
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....ve a transparent or translucent liquid or stable emulsion without separation of insoluble matter; and (b) reduce the surface tension of water 4.5 X 10-2 N/m (45 dyne/Cm) or less." The test report received from the chemical laboratory read as follows: TEST REPORT The sample is in the form of brownish liquid free from visible impurities. It is a preparation based on organic surface active agent (cationic in nature) having following properties: (i) Test for cationic +ve (ii) Surface tension of the sample 'when mixed with water at a concentration of 0.5% at 20˚C and left to stand for one hour at same temperature gives white stable emulsion without separation of insoluble matter is 31.4 dyne/cm. (iii) Specific gravity at 27˚C = 0.87790 (iv) Ash content = 0.6% by wt. (v) Test for mineral oil = negative (vi) PH (1:10) = 7.5 The finding CRCL was that the product is a "preparations based on Organic Surface Active Agent (Cationic in Nature)". 2.2 Learned counsel pointed out that earlier also the material was tested two times. The communications are reproduced below: The sample sent on 16.10.2017 ....
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....report. 2.6 Learned counsel pointed out that a copy of test report was never provided to them before issue of show cause notice and therefore the question of seeking retest within 10 days does not arise. The test report was only shown to them at the time of recording statement. The said report was not given to them before issue of Show Cause Notice. He further pointed out that the report sought from the chemical examiner only in terms of Note 3 chapter 34 without seeking the exact composition of the product. He further pointed out that the earlier test report of same agency CRCL dated 24.10.2017 and 12.10.2018 clearly indicate that the product contain mineral oil to the extent of 70% or more and the fact that in the instant case the test report indicated that there is no mineral oil is totally contradictory. He argued that since there was total contradiction, the retest should have been allowed at the time. The test report should not be relied upon in these circumstances. 2.7 Learned counsel argued that the imported goods are correctly classified under heading 2710 1990. He argued that the said heading reads as follows: Tariff Item Description of goods 2710....
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....report relied by the Revenue indicates that it does not contain any mineral oil. He argued that the impugned order has totally disregarded the earlier test reports of same agency CRCL dated 24.10.2017 and 12.10.2018. 2.8 Learned counsel argued that the global classification supports the classification of goods adopted by the appellants. He relied on the classification issued by Ms Jeniffer Kirkman, Regulatory Affairs Manager of the Supplier, vide e-mail dated 15.12.2020 which clarifies that the goods are correctly classifiable under tariff heading 2710 19 4590. He further argued that the certificates dated 01.05.2020 and 12.10.2020 issued by supplier also clearly indicate that the goods are correctly classifiable under heading 2710. 2.9 Learned counsel argued that the credibility and correctness of the test report dated 31.07.2020 relied in the impugned notice is doubtful and conclusion drawn therein is contrary to the earlier test report given by the same authority and also by various other testing agencies. He argued that the test report dated 31.07.2020 arrives at a diametrically opposite conclusion by stating that the sample has tested negative mineral oil whereas the ear....
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....g of statement but no such copy was supplied by the revenue. The said test report dated 31.07.2020 was only provided to the appellant as part of the relied upon document in the Show Cause Notice which was issued on 15.12.2020 and received on 17.12.2020. For this reason, the appellant could not contest the test report of the sample of imported goods before show cause notice. He further argued that the time limited prescribed for seeking retest by an importer under Circular 30/2017-Cus dated 18.07.2017 cannot be strictly applied as after considering COVID restrictions, the Hon'ble Apex Court vide order dated 10.01.2022 extended the period of limitation provided under any general or special law in respect of all judicial or consequential proceeding till 31.05.2022. In that respect, the request made for retesting cannot be considered as delayed. 2.13 Learned counsel further argued that the imported goods cannot be classified under tariff item 3402 9019. He argued that the said heading covers preparations of organic surface active agents. Note 3 to Chapter 34 describe the goods which can be classified as "organic surface active agents" in following terms: "3. For the purpose....
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....ll of Entry was approved under heading 2710 1990. 4.2 In letter dated 16.10.2017 the purpose of testing was described as to whether the goods are "TWITCHELL DEDUSTER" of custom tariff heading 2710 1990 and whether these are other than LDO, Fuel Oil, Base Oil, Lubricant Oil. The test report from the importer was as follows: "The sample is in the form of brownish coloured liquid. It is mainly composed of mineral hydrocarbon oil more than 70% by wt having following constants - Ash Content = Nil Density at 150˚C = 0.8698 Exact identification/ characterfication could not ascertained. Therefore, party may be asked to provide authentic pointed literature, physio-chemical components, if required. Sealed remnant returned herewith." The purpose of testing was described in letter dated 28.08.2018 as to whether the goods are (i) TWITCHELL 6808 DEDUSTER or otherwise (ii) Chemical composition of the goods. The test report received from CRCL was as follows: "The sample is in the form of brownish coloured oily liquid. It is mainly composed of mineral hydrocarbon oil more than 70% having following constants - ....
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....re gives white stable emulsion without separation of insoluble matter is 31.4 dyne/cm. (iii) Specific gravity at 27˚C = 0.87790 (iv) Ash content = 0.6% by wt. (v) Test for mineral oil = negative (vi) PH (1:10) = 7.5 According to test report, the goods qualify as preparations of surface active productions. 4.4 A statement of Mr. Subramaniam Iyer, DGM (Procurement) was recorded under section 108 on 23.09.2020 wherein he was confronted with the test report. The appellant vide E-mail dated 23.09.2020 requested for a copy of the test report dated 31.07.2020. The appellant wrote to DRI and clarified that the imported goods contained white mineral oil in the range of 70-90% and therefore are classifiable under heading 2710. They also pointed out that the said heading has been approved by customs from time to time after subjecting the imported goods to test prior to home clearance. They also submitted a certificate dated 12.10.2020 from supplier which clarified that the goods contained 70-90% of mineral oil and that the product is not a surface active agent. Vide E-mail they also provided a copy of test report from Bombay Test House Private Li....
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....id. Since majority of emulsions contain water as one of the phases, it is customary to classify emulsion into two types: the oil-in-water (O/W) type consisting of droplets of oil dispersed in water and the water-in-oil (W/O) type in which the phases are reversed." From above definition, it is clear that to form emulsion there has to be a mix of water and oil. If there is no oil, as the report says, there cannot be any emulsion. Thus, there is obvious contradiction in the report. 4.6 It has been asserted by the appellant that the test report was not made available to the appellants before issue of Show Cause Notice. It was only shown to Shri Nair during recording of his statement. The appellant had pointed out that defects in the test report and requested retest vide their letter dated 28.01.2021. Show cause notice has been issued on 15.12.2020 and retest was sought within a reasonable period. More over at that time due to corona pandemic Hon'ble Apex Court had directed that the period of limitation would extend to 31.05.2022 in all cases. We consider this benefit should have been allowed. Moreover during this period the appellant obtained test report from Bombay test house da....
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.... ---- Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface active agents kg. 10% - 3402 90 12 ---- Cleaning or degreasing preparations not having a basis of soap or other organic surface active agents kg. 10% - 3402 90 19 ---- Other kg. 10% - 3402 90 20 --- Sulphonated 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 kg. 10% - 3402 90 30 --- Penetrators kg. 10% - --- 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 kg. 10% - 3402 90 42 ---- Cleaning or degreasing preparations not having a basis of soap or other organic surface active agents kg. 10% - 3402 90 49 ---- Other kg. 10% - ....
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.... (ii) Reduce the surface tension or water 4.5X10² N/,(45 dyne/Cm) or less. Or (B) Whether the product possesses the properties of Surface-active agent (surfactant). OR (C) Whether the product is 'wetting agent' for other chemicals. OR (D) If none of the above please confirm the identity of the sample." The test report received from the chemical laboratory read as follows: TEST REPORT The sample is in the form of brownish liquid free from visible impurities. It is a preparation based on organic surface active agent (cationic in nature) having following properties: (i) Test for cationic +ve (ii) Surface tension of the sample 'when mixed with water at a concentration of 0.5% at 20˚C and left to stand for one hour at same temperature gives white stable emulsion without separation of insoluble matter is 31.4 dyne/cm. (iii) Specific gravity at 27˚C = 0.87790 (iv) Ash content = 0.6% by wt. (v) Test for mineral oil = negative (vi) PH (1:10) = 7.5 The test report even if, relied answers to the definition of "Organic Surface-Active Agents" and not to "prepara....
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....ATIONS (INCLUDING AUXILIARY WASHING PREPARATIONS) AND CLEANING PREPARATIONS, WHETHER OR NOT CONTAINING SOAP, OTHER THAN THOSE OF HEADING 34.01 This group comprises three categories of preparations: (A) Surface-active preparations. These include: (1) Intermixtures of the surface-active agents of Part (1) above (e.g., sulphoricinoleates mixed with sulphonated alkylnaphthalenes or sulphated fatty alcohols). (2) Solutions or dispersions of the surface-active agents of Part (1) above in an organic solvent (e.g., of a solution of sulphated fatty alcohol in cyclohexanol or in tetrahydronaphthalene). (3) Other mixtures based on a surface-active agent of Part (1) above (e.g., surface- active preparations containing a proportion of soap, such as alkylbenzenesulphonate with sodium stearate). (4) Solutions or dispersions of soap in an organic solvent such as cyclohexanol. (Solutions of soap in water, which may have a small quantity (generally not exceeding 5%) of alcohol or glycerol added, are liquid soaps of heading 34.01). Surface-active preparations are used for their cleansing, wetting, emulsifying or dispersing proper....
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...."Surface tension of the sample when mixed with water at a concentration of 0.5% at 20˚C and left to stand for one hour at same temperature gives white stable emulsion without separation of insoluble matter is 31.04/dynes/CM". The explanatory note to Chapter heading 3402 also prescribes the exclusion from the said heading. The said Note which prescribes exclusions reads as follows: "This heading does not cover: (a) Shampoos or preparations for foam baths, whether or not containing soap or other surface-active agents (Chapter 33) (b) Paper, wadding, felt and nonwovens, impregnated, coated or covered with detergent (heading 34.01) (c) Preparations, containing surface active agents where the surface-active function is either not required or is only subsidiary to the main function of the preparation (heading 34.03, 34.05, 38.08, 38.09, 38.24 etc., as the case may be). (d) Abrasive preparations containing surface-active agents (scouring pastes and powders) (heading 34.05). (e) Water-insoluble naphthenates, petroleum sulphonates and other water-insoluble surface-active products and preparations. They fall in heading 38.24, prov....
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....he classification adopted by the supplier. The supplier was also clearing such goods under same classification to other countries. The facts were all revealed to the revenue. The samples were tested twice by revenue. The classification issue was also examined by the Deputy Commissioner during March 20 (19.03.20). In this background, we do not find any merit in allegation of deliberate suppression or mis-declaration. In that background, we find that the notice is also barred by limitation. 7. The impugned order is therefore, set aside and appeals are allowed. (Pronounced in the open court on 28.02.2024) ============= Document 1 OFFICE OF THE DEPUTY/ASSISTANTCOMMISSIONER OF CGST & CE, DIV-II, SURAT 181 Dated. 15/10/17 F No 1×1001|20 1) * Sarype No. The representative samples have been drawn by the Inspector of CGST & CE, Range-I, Div-11. Surat In the presence of representative of Importer. The samples are sealed in our presence; details of samples are as under: 1 Sample Number 17-1/ 16-10-2017 Date of drawn samples : 04-09-2017 Description of goods : TWITCHELL 6808 DEDUSTER Bill of Entry/ shipping Bill number 2911403 5 Date 19.08.201....
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....Deduster is from the family of Hydrocarbon/Mineral oil which made of 70% to 90% Mineral Oil. The Mineral oil is an aliphatic hydrocarbon. hydrocarbon. Components in Twitchell 6808 Deduster are as follows: Chemical Name CAS No. White mineral oil (petroleum) 8042-47-5 Concentration (% w/w) Sulfonic acids, petroleum, sodium salts 68608-26-4 >=70 -Propane-1,2-diol 57-55-6 >=5 -=1 - >=5 -=1 -Document 4 CERTIFIE 9001:514 0 14001 : 2015 5.45001 12018 Col laboratory: Fourth Floor, Unit No. 1. Are Complex Il Plot No 9 & 10, Sector 19-A. DMC Market 2 , Vashi, Navi Mumbai 400 703. India. BOMBAY TEST HOUSE SVT4TD Testing | Inspection | Certification www.bombaytesthouse.com Email: [email protected] [email protected] CIN : U74900TZ2011PTC017261 Tel. : +91 22 41239185 / 27831910 Fax : +91 22 27831911 Mob. : +91 98677 91055 / 81690 66785 TEST REPORT Date : 23 Oct 2020 No. BTH/TR/000544/1076/20-21 M/S. Colourtex Industries Pvt Ltd Survey No. 91, Opp. Navin Flourine, Udhna- Navsari Road, Bhetan, Surat 395 023 Gujarat E.mail: [email protected] Sample submitted by ; Party Received by us On : 26 Oct 2020 Analysis Started On : 20 O....
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....or cosmetic products. ** (B) Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surface-active agents. This category covers washing preparations, auxiliary washing preparations and certain cleaning preparations. These various preparations generally contain essential constituents and one or more subsidiary constituents. The presence of these latter constituents distinguishes, in particular, these preparations from those described in Part (A) above. The essential constituents are synthetic organic surface-active agents or soaps or mixtures thereof. ******** Washing preparations based on surface-active agents are also known as detergents. This type of preparation is used for washing clothes and also dishes or kitchen utensils. ******** (C) Cleaning or de-greasing preparations, not having a basis of soap or other organic surface-active agents. ******** This heading does not cover: (c) Preparations, containing surface-active agents where the surface-active function is either not required or is only subsidiary to the main function of the preparation (headings 34.03, 34.05, 38.....
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....actually aids in dispersing the dyestuff and Improves Its rate of solution. This ability reduces the tendency of many dyestuffs to float during the dissolution process. TWITCHELL® 6808 has achieved con- siderable popularity as deterrents to the dusting broblems commonly encountered with many powdered dyestuffs. The oil dedusters are generally added to the dyestuff during the grinding or blending operation, normally in amounts from 1,2% to 1.5% depending on parti- cle size, density, and the degree of freeflow required. It is important to use as little of the oil as possible because excessive amounts can cause blending problems in subsequent remixing. it has also been reported that some dyestuff manufacturers add the TWITCHELL? 6808 earlier in the manufacturing process. In textiletechnology TWITCHELL 6808 DYESTUFF DISPERSANT Twitchell 6808 is used to dedust dispersed polyester dyestuffs, and is particularly effective with acid dyes . chrome dyes, direct dyes, fiber reactive dyes, and other dyes containing a sulfonate group. Twitchell 6808 can also be used in other areas where dust is a problem, such as in powdered soaps, floor sweeping compounds, glues, sizing agent....