TaxTMI 
TaxTMI 
2026 (8) TMI 1621
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.... respondents-importer M/s Godrej Industries Limited, Mumbai. 2.1 Brief facts of the case, leading to this appeal, are summarized herein below: 2.2. The respondents herein is inter alia engaged in the manufacture of goods in their factory situated in Burjorji Nagar, Plot No.3, Village Kanorao, Taluka-Vallia, District-Bharuch, Gujarat and having their registered office at Chemical Division, 2ndFloor, Godrej One Building, Pirojshanagar, Eastern Express Highway, Vikhroli, Mumbai. For the purpose of import and clearance of the goods described as 'Dehydol LS1 TH (One Mol Alcohol Ethoxylate 1214)', Dehydol LS2 TH (Two Mol Alcohol Ethoxylate 1214)', from the overseas supplier M/s Thai Exthoxylate Co. Ltd., as well as for import of 'Lauryl Alcohol Ethoxylate 2 Mole LS2 (LAE 2 Mole)', from the overseas supplier M/s Shell Eastern Chemicals, Singapore/Thailand, the respondents had filed various Bills of Entry (B/Es) before the customs authorities at Custom House, Nhava Sheva (17B/Es) and at JNCH, Nhava Sheva (45 B/Es) by classifying the goods under Customs Tariff Item (CTI) 3824 9090/ 3824 9990 and claimed the benefit of 0% Basic Customs Duty (BCD) exemption vide Serial No.449(I) of Noti....
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....d 31.12.2021 has classified the goods under CTI 38249090/ 3824 9990, as declared by the respondents-importer and dropped the proceedings initiated in the said SCNs. Feeling aggrieved with the impugned order, the appellant department have filed this appeal before the Tribunal. Respondents have also filed cross objection against the appeal filed by the department. 3. Learned Authorized representative appearing for Revenue stated that impugned goods are classifiable as Organic Surface-Active Agent (OSAA) as it fulfil the conditions specified under Chapter Note 3(a) and 3(b) of Chapter 34 of the Customs Tariff. In explaining the chapter note 3(a), he reiterated that it has to be read as fulfilling any one of the conditions viz., (i) a 'transparent liquid'; or (ii) a 'translucent liquid'; or (iii) 'stable emulsion without separation of insoluble matter; and for chapter 3(b) he stated that it should 'reduce the surface tension of water 4.5 x 10-2 N/m (45 dyne/Cm) or less'. Since the chemical test reports indicate that such conditions are fulfilled and that such goods are non-ionic in nature, these are rightly classifiable as Fatty Alcohol Ethoxylates havi....
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....e result as "Translucent solution with layer" and "Translucent liquid with separation of insoluble matter in upper layer". Therefore, he emphasized that the impugned goods are not water insoluble. 4.2 Learned Counsel further stated that the phrase "without separation of insoluble matters" appearing in Chapter Note 3(a) above, equally applies to transparent or translucent liquid when these words are appearing in a company of the words i.e., 'transparent' or 'translucent liquid' are accompanied by the phrase 'stable emulsion without separation of insoluble matter'. The common thread applied to all three expressions is complete water solubility. This test of water solubility is qua the imported goods and not water. He further submitted that first part of Note 3(a) "transparent or translucent liquid or stable emulsion" is on appearance, and later part "without separation of insoluble matter" is on stability; both appearance and stability are two inseparable aspects of water solubility in built into Note 3(a), and the same cannot be read in isolation. Therefore, he stated that imported goods do not satisfy condition of water solubility as stipulated in Note 3(a) of the Chapter 34 (OS....
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....y, learned counsel submitted that Section 3 of the Customs Tariff Act 1975, under which additional duty of customs (CVD/IGST) is levied, has not adopted/borrowed the provisions relating to interest and penalty. Therefore, interest under Section 28AA of the Customs Act 1962 and penalty under Section 114A of the Customs Act 1962 cannot apply in relation to additional duty of customs (CVD/IGST). Hence, demand of interest and imposition of penalty is completely bad in law. In this regard, he relied upon the decision of Hon'ble High Court of Mumbai in Mahindra and Mahindra Vs. Union of India - 2022 (10) TMI 212 which was also maintained by Hon'ble Supreme Court in 2023 (8) TMI 135, by dismissing the Revenue's Review Petition - 2024 (1) TMI 1277 - SC Order. Therefore, he prayed that the present appeal of Revenue is liable to be dismissed. 5. We have heard both learned Authorized Representative of the Department and the learned Counsel appearing for the respondents and perused the case records and the synopsis given in the form of written submissions. 6. The following issues arise for determination before the Tribunal: (i) whether the importer has mis-declared the classific....
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.... (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Section 2. Duties specified in the Schedules to be levied. - The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules. xxx xxx xxx xxx THE FIRST SCHEDULE - IMPORT TARIFF (Refer Section 2) THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF (GIR) Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfini....
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....above rules, on the understanding that only sub headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires." 8.2 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., 'Harmonized Commodity Description and Coding System' (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the....
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....ed order are extracted and given below: 8.5 From the above, we find that the issue under dispute was examined in detail in the impugned order for determination of proper classification of the impugned goods, either under CTI 3824 9090/3824 9990 as claimed by the respondents, or, under CTI 3402 1300 as proposed by the department in the SCNs, for the purpose of determining appropriate duty of customs payable thereon. However, since the issue is under appeal before us, we are also examining independently by undertaking the exercise of proper classification of imported goods in terms of the legal provisions of the Customs Tariff Act, 1975 and the General Rules of Interpretation of the said tariff. 9.1 As regards the issue of dispute in classification, in the case before us, the contending classification of imported goods discussed in the impugned order are either under CTI 3824 9090/3824 9990 or CTI 3402 1300 of the First Schedule to the Customs Tariff Act. Thus, it clearly transpires that at the Chapter level itself, there is a difference of opinion among the department and the respondents. The dispute in classification therefore lies in the narrow compass of analysis of the app....
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....INCLUDED 3824 1000 - Prepared binders for foundry moulds or cores 3824 3000 - Non-agglomerated metal carbides mixed together or with metallic binders xxx xxx 3824 9031 - Mixtures containing per halogenated derivatives of acrylic hydrocarbons containing two or more halogens other than chlorine and fluorine; ferrite powder; capacitor fluids - PCB type; dipping oil for treatment of grapes; Poly brominated biphenyls, poly chlorinated biphenyls, Poly chlorinated terphenyls, crocidolite; goods of a kind known as "hazardous waste"; phosphor gypsum: 3824 9031 ---- Mixtures containing per halogenated derivatives of acrylic hydrocarbons containing two or more halogens other than chlorine and fluorine 3824 9032 ---- Ferrite powder 3824 9033 ---- Capacitor fluids - PCB type 3824 9034 ---- Dipping oil for treatment of grapes 3824 9035 ---- Poly brominated biphenyls, poly chlorinated biphenyls, Poly chlorinated terphenyls, crocidolite 3824 9036 ---- Goods of a kind known as "hazardous waste" 3824 9037 ---- Phosphor gypsum 3824 9038 ---- Phosphonic Acid, Methyl-compound with (aminoimino methyl) urea (1:1) 3824 9090 ----....
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....2.20 - Preparations put up for retail sale 3402.90 - Other (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℃, (1) solid particles are visible to the naked eye, (2) it has separated into visually distinguishable phases or (3) it has separated into a transparent part and a translucent part, visible to the naked eye. Organic surface-active agents are capable of adsorption at an interface; in this state they display a number of physico-chemical properties, particularly surface activity (e.g., reduction of surface tension, foaming, emulsifying, wetting),....
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.... ethane or propane : 3824.71 -- Containing chlorofluorocarbons (CFCs), whether or not containing hydrochlorofluorocarbons (HCFCs), perfluorocarbons (PFCs) or hydrofluorocarbons (HFCs) 3824.72 -- Containing bromochlorodifluoromethane, bromotrifluoromethane or dibromotetrafluoroethanes 3824.73 -- Containing hydrobromofluorocarbons (HBFCs) 3824.74 -- Containing hydrochlorofluorocarbons (HCFCs), whether or not containing perfluorocarbons (PFCs) or hydrofluorocarbons (HFCs), but not containing chlorofluorocarbons (CFCs) 3824.75 - - Containing carbon tetrachloride 3824.76 -- Containing 1,1,1-trichloroethane (methyl chloroform) 3824.77 -- Containing bromomethane (methyl bromide) or bromochloromethane 3824.78 -- Containing perfluorocarbons (PFCs) or hydrofluorocarbons (HFCs), but not containing chlorofluorocarbons (CFCs) or hydrochlorofluorocarbons (HCFCs) 3824.79 -- Other - Mixtures and preparations containing oxirane (ethylene oxide), polybrominated biphenyls (PBBs), polychlorinated biphenyls (PCBs), polychlorinated terphenyls (PCTs) or tris(2,3-dibromopropyl) phosphate : 3824.81 -- Contain....
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....n carbide, molybdenum carbide, etc.) mixed together or with metallic binders (such as cobalt), for the manufacture of the tips or the like for tools of heading 82.09. This heading covers : (A) PREPARED BINDERS FOR FOUNDRY MOULDS OR CORES The heading covers foundry core binders based on natural resinous products (e.g., rosin), linseed oil, vegetable mucilages, dextrin, molasses, polymers of Chapter 39, etc. These are preparations for mixing with foundry sand to give it a consistency suitable for use in foundry moulds or cores, and to facilitate the removal of the sand after the piece has been cast. However, dextrins and other modified starches, and glues based on starches or on dextrins or other modified starches are classified in heading 35.05. (B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS With only three exceptions (see paragraphs (7), (19) and (31) below), this heading does not apply to separate chemically defined elements or compounds. The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as by-products of the manufactur....
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....thylene oxide groups 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. The basic structure of lipophile attached to an ethoxylate chain represents the most important class of non-ionics, the fatty alcohol ethoxylates and alkyl phenyl ethoxylates. Usually in the naming of these substances the number of moles of ethylene oxide per mole of lipophile is indicated by the number followed by EO. Most recent developments in surfactants have led to the amphoteric, which have a positive and negative change with the same molecule. These surfactants offer good detergency coupled with high foaming capacity and mild action on the skin. The latter makes them particularly valuable in products such as baby shampoo, shower gel and frequent use of shampoos where they act as the secondary surfactant. The primary one generally being an ionic such as sodium laurel ether sulphate. 9.7 It is also noted that chemical compounds are described in many ways, inclu....
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.... aforesaid test report it cannot be said that the imported goods have fulfilled the requirements of Chapter Note 3 for classification under sub-heading 3402. 10.2 We also find that the overseas suppliers had referred the details of the product to the Singapore Customs authorities and they have vide letter dated 22.04.2015 and 02.09.2020 had clarified about the composition of the exported product and its appropriate classification and about the eligibility to ASEAN India FTA benefits. The relevant extracts are given below: The afore mentioned references, though may have persuasive value, clearly state that the classification of imported goods as per Harmonized System of nomenclature is under sub-heading 3824.90/3824.99 and not under sub-heading 3402.13 as claimed by the department. 11. In view of the above discussions and analysis of the factual matrix of the case, we are of the considered opinion that the impugned goods are appropriately classifiable under CTI 3824 9090/3824 9990 and not under CTI 3402 1300. Therefore, the impugned order dated 31.12.2021 passed by the learned Principal Commissioner of Customs in classifying the goods under CTI 3824 9090/3824 9990 does not ....
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....ed unde ection 18 is the date of adjustment of duty after the final asted therest ou re assessment as the pression of facts or otherwise, the same is. demanded in terms of provisions of Section 28(1) or 28(4) the case may be. This is clearly borne out from the definition of "relevant date" given under this on, Which specifies that the relevant date in a case where duty is Provision tion assessment thereof or re-assessment, medabad enHence, invoking provisions of Section 28(4) in the Show. Cause Notice issued by is not tenable. Her Show Cause Notices tamationof these two Sho. Cause Notices relating to the main issue of mis- : Allegations of thevenus The Importer deliberately mis-declared the description of the goods in as try as Per . . 38.24 instead under T.H 34 02 2. As per the Customs Laboratory Test reports Dehydol LS1 TH as well as Dehydol LS 2 TH were. sample was tested 'non-ionic'. Ltd Various website materials including the website of supplier company M/s. Thai Ethoxylate Co. lol emory tates are non-ionic surfactants. 34.02. Organic surface active agents are defined under Chapter 34 as chemical compounds, not hydrophobic functie group hem....
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....ion in C12-14. 4. These documents are submitted along with Bas and are in the domain of Customer officer both at classification of the impugned goods will not get altered, if the description is given as "Fatty alcohol noxylates rather than "Alcohol ethorylates" red, if-the ware the description was mis-declared in order to isclassify the goods is unfounded and not tenable. When lessified as per the understand and reasoning of! the int the goods are described correctly and nderstanding of the Deparment From the beginning the imer has been classifying the impugned 5. Let me now examine the main issue of classification dispute as to whether the Dehydol LS1 TH, eodol L.M 2, two Mole Lauryl Alcohol Ethoxylatelare classifiable under Tariff Heading 3402 or under Tariff Heading 3824. Organic Surface Agents have been statutorily defined in Note 3 to chapter 34 of the Customs & Tariff Act. The definition is as follows: surface-active agents" are products which when for the purposes of heading 3402, "organic + 20 C and left to stand for one hour at the same temperature: Nature; a) give a transparent or translucent liquid or stable emulsion without separation of insoluble When th....
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....after 10 minutes of addition dar ceneration within 15 minutes with insoluble mass sons and ayer/phasc. 7.2 Emulsion is described as a mixture of two or more liquids in which one is present as droplets, of microscopic or ultramicroscopic ar MorAte fenid lavere size, distributed tusenout . an parate into two liquid layers. Some familiar emulsions are milk (a dispersion of fat droplets in a Therefore whenever two lavers are formed separated into two phases, it is rather an unstable 7.3 Therefore, layers formed/separated mulsion. Because of the translucent nature, the test reports appeared to have preferred to call it as sion. report definition of surface activ gent is any "isubstance that when dissolved in water for aqueous solution reduces its surface tension socialtension between it and another ce meterore dissomou in Water Butif i separates Issolved in water the whole quantity, will be either asparent of transitcent liquidavers ut into layers it cannot be a single translucent and upper insoluble matter laver are translucent,i ven if each of these layers i.e. lower aqueous ore when two translucent liquid layers are formed, they innot be called as a translucent que whereand ....
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....iscussed above, I am of the considered opinion that the cortter XXX XXX Strice the charges of mis-classification and Heading 3824 9090 of the Customs Tariff Company and on the individuals also fail. 4. In view of my above findings, I pass the following order (a) Dehydol LS 2 TH (Two Mol Alcohol FREE THE One Mol Alcohol Ethoxylate (1214)", nd "Lauryl Alcohol Ethoxylate 2 Mole (LAB: 2 -14)" from M/s. Thai Exthoxylate Co. Ltd Noticees in the Show Cause Notice. (b) duty personally, the proposals in the Show Cause Notice relating to demand of differential imposition of penalties Ity, recovery of interest, confiscation of goods and important Enterprise Private Ltd., and proposed personal penalties on Medaliar, fail to sustain. (C The pending provisional assessments are to be finalized in terms of the findings of this order. xxx xxx xxx" XXX (iv) eparate layer as floating droplets of insoluble matter may be formed Que fatty alcohols or goods . ation of 0.5% at 200C ferent websites wie w acturing industry of his the settled position of law. Even the SCNs do not dispute this legal position. All the tests got conducted by the Department as well as by the I....
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....f 0.5% at 20℃ and left to stand for one hour at the same temperature. 4 Although the product is a surface active agent, it is excluded from HS heading 3402 as it does not fulfil Note 3(a) to Chapter 34. Therefore, the product is not considered as an "organic surface active agent" of HS heading 3402. In 55 Newton Road #07-01. Revenue House, Singapore 307987 Tel: (65) 6355 2000 Fax: (65) 5337 6351 E-mail: [email protected] Website: www.customs gov.sg accordance to the General Interpretative Rules 1 & 6 of the HS, the product is classified under HS code 3824.90.99 of the Singapore Trade Classification, Customs & Excise Duty 2012. 5 This Customs ruling is made in exercise of the powers conferred under Section 29 of the Customs Act (Chapter 70). 6 This Customs ruling is valid at the time of issuance based on the Customs Act and its subsidiary legislation in force at the time of the issuance of this customs ruling. All matters within this customs ruling do not apply three years after the date of issuance, or the date a provision of the Customs Act (including its subsidiary legislation) is repealed or amended to the extent that the repeal or amendm....