TaxTMI 
TaxTMI 
2026 (9) TMI 1388
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....ane and having their registered office at Kolkata. For the purpose of import and clearance of the goods described as 'Alcohol Ethoxylate' (Lauryl Alcohol EthoxylateLAE)', of Two Moles of Ethylene Oxide bearing brand name - Ecolat S24-2 Alcohol Ethoxylate (of CAS No.68439-50-9), from the overseas supplier M/s Ecogreen Oleo Chemicals (Singapore) Pte Limited, Singapore. The appellants had filed various Bills of Entry (B/Es) before customs authorities at JNCH, Nhava Sheva 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 Notification No.46/2011Customs dated 01.06.2011, as amended. However, intelligence developed by the department indicated that the appellants have mis-classified the imported goods and as per correct classification identified by them under CTI 3402 1300, such imported goods are liable to pay BCD at the rate of 5% vide Serial No.399(I) of said Notification dated 01.06.2011. 2.3 Live consignment of impugned goods covered by B/E No.4988518 dated 09.08.2021, in five containers, were put on hold by Customs Special Intelligence & Investigation Branch (SIIB-....
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....ion 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 above OSAA definition has twin conditions i.e., (a) water solubility and (b) reduction in water surface tension. Both these conditions are to be satisfied cumulatively, for a product to be classified under Heading 34.02. Since the imported goods satisfy OSAA condition of reduction in water surface tension as per Note 3(b) of Chapter 34, and not the first condition of Note 3(a), as per the test reports of department and those undertaken by them in Bombay Test House Pvt. Ltd., he stated that these cannot be classified under CTH 34.02. In this regard, learned Counsel highlighted that the Test Reports dated 27.08.2021 & 30.08.2021 given by Dy.CC, CRCL, JNCH confirm that the sample in water "produces translucent liquid with separation of insoluble matter". Therefore, he emphasized that the impugned goods are not water insoluble. 3.2 Learned Counsel further stated that the phrase "without separation of insoluble matter" appearing in Chapter Note 3(a) above, equally applies to transparent or translucent liquid when these word....
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....d by one another importer M/s Godrej Industries Limited, involving similar goods wherein the Commissioner of Customs had decided the issue in favour of importer, the learned Commissioner of Customs in the impugned order had recorded that such order of the Commissioner of Customs in the case of M/s Godrej Industries Limited has been reviewed by the competent authority and an appeal has been filed before the Tribunal, and therefore he is deciding the issue independently without reference to such order in the case of M/s Godrej. In this regard, we find that on an Writ Petition No.4657 of 2025 filed by the appellants, the Hon'ble Bombay High Court had vide order dated 26.08.2025 had allowed the withdrawal of such petition, with directions to the Tribunal to decide the case of the appellants as expeditiously as possible, without adverting to the issue of limitation. 4.1 On the other hand, Learned Authorized representative appearing for Revenue stated that impugned goods are classifiable as Organic SurfaceActive 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 tha....
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....ue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; relevant entries in the First Schedule to the Customs Tariff Act, 1975 and rules framed thereunder, for consideration of proper and appropriate classification of the subject goods under dispute. "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (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 speci....
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.... (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. ... 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub headings and any related sub headings Notes and, mutatis mutandis, to the 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 readin....
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....which are mixtures or combinations of different materials, its classification shall be determined as provided under 2(a) (b) (GIR 2) (iii) if the goods are found to be classifiable under two or more headings, then the classification shall be effected as per the rules provided under 3(a), 3(b) and 3(c) [GIR 3] (iv) Goods which cannot be classified in accordance with the aforesaid rules, then the same shall be classified under the heading appropriate to the goods to which they are more akin. (GIR 4) ... (vi) For legal purposes, the classification of goods in the sub-headings shall be determined according to the terms of those sub-headings and any related sub-heading Notes (GIR 6) 8.4 In the impugned order, the learned Commissioner has given the following findings in arriving at the conclusion of classification of the impugned goods under CTI 38249090/ CTI 3824 9990. The relevant paragraphs of the said impugned 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, mainly on the basis of chemical....
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.... --- Cationinc 3402 1300 --- Non-ionic 3402 1900 --- Other And CHAPTER 38 Miscellaneous chemical products Notes: 1.Except where the context otherwise requires, the headings of this Chapter apply only to : (a) separate chemical elements and separate chemically defined compounds, whether or not containing impurities; xxx xxx xxx xxx xxx Tariff Item Description of goods (1) (2) 3823 Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols xxx xxx 3824 PREPARED BINDERS FOR FOUNDRY MOULDS OR CORES; CHEMICAL PRODUCTS AND PREPARATIONS OF THE CHEMICAL OR ALLIED INDUSTRIES (INCLUDING THOSE CONSISTING OF MIXTURES OF NATURAL PRODUCTS), NOT ELSEWHERE SPECIFIED OR 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 bromi....
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....tries under the two contending sub-headings, we would like to examine the HS explanatory notes of the WCO, which describe in detail the scope and coverage of goods under Customs classification. The extract of HS classification in respect of relevant headings 3402 and 3824 are given in the following paragraphs. 9.5 In terms of HSN explanatory notes to heading 3402, Organic surface-active agents may be anionic, cationic, non-ionic or ampholytic. While detailed explanations have been given about various types of OSAA, certain exclusions from this chapter have also been provided. 'Waterinsoluble surface-active agents/products and their preparations' is one such product, which is classifiable under heading 3824, and therefore in terms of HSN explanatory notes are excluded from the scope of classification of OSAA under heading 3402. 9.6 On reading of the above technical details and the technical literature available in case records, it transpires that 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, j....
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....re synthesized by reacting lauryl alcohol (C12 fatty alcohol) with ethylene oxide (EO), forming a molecule with a hydrophobic tail and a hydrophilic poly oxyethylene chain. Poly oxyethylene lauryl ether, is non-ionic surfactant produced by ethoxylation of lauryl alcohol. It is used in various applications due to its excellent surface activity, emulsifying properties and foaming ability. 10.1 On chemical testing of the representative samples drawn by the Customs authorities, the departmental/CRCL chemical test reports provide the following details about the imported goods. The extract of such five test reports dated 27.08.2021 and 30.08.2021 are given below: As per the above test reports, the samples have been considered as an organic surface-active agent on the basis that it reduces surface tension to the desired levels. Further in respect of testing the characteristics for compliance with Chapter Note 3(a) and 3(b) to Chapter 34, it states that "the sample in water produce translucent liquid with separation of insoluble matter". However, in terms of the aforesaid Chapter Note, the transparent liquid or translucent liquid or stable emulsion should be without separation of ins....
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....uble in water. (iv) The surface tension of aqueous solution was found to be 23.61 dyne/cm, 24.5 dyne/cm, 24.09 dyne/cm, 32.72 dyne/cm and 34.02 dyne/cm. (v) The sample produces translucent liquid with separation of insoluble matter. (vi) As per HSN chapter Note-34.02, the compound/products which are not capable of reducing the surface tension of distilled water to 45 dyne/cm or less at a concentration of 0.5% at 20 degree Celsius are not considered as 'Surface Active Agents'. However, all the five samples reduces the surface tension of distilled water to 23.61 dyne/cm, 24.5 dyne/cm, 24.09 dync/cm, 32.72 dyne/cm and 34.02 dync/cm respectively and each of them individually to less than 45dyne/cm. Therefore, sample may be considered as 'Organic Surface Active Agents'. XXX xxx XXX In the instant case, the products imported by M/s. Sai Fertilizers & Phosphates Pvt Ltd. were Surface Active agent as evident from the evidences available on record and DYCC, JNCH. The word 'ALCOHOL ETHOXYLATE' is not specifically mentioned either under CTH 3402 or CTH 3824. However, Fatty Alcohol Ethoxylate which are also known as "Surface Active Agent" are cat....
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....ith water at a concentration of 0.5% at 20° C and left to stand for one hour at the same temperature, it should give: (a) (i). . . ' either a "transparent liquid", or (五) "translucent liquid", or (iii) "stable emulsion without separation of insoluble matter"; and (b) reduce the surface tension of water 4.5 X 102 N/m (45 dyne/Cm) or less" It appeared from the above Chapter Note & HSN explanatory note that as per condition (a), if the product gives translucent liquid then also it satisfies the condition (a) as there are three alternative conditions envisaged in chapter note 3 (a) i.e. (i) transparent liquid (ii) translucent liquid (iii) stable emulsion without separation of insoluble matter. If any one of the conditions out of these three conditions is satisfied, the condition (a) can be read as complied. If the product gives stable emulsion then only the condition of "without separation of insoluble ve ableemulsion translucent liquid, the condition of "without separation of insoluble matter" does not appear to apply. If the wordings of condition (a) of Chapter Note 3 of Chapter 34 are framed as "either a transparent or translucent or stable emulsio....
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....ods "ALCOHOL ETHOXYLATE" are classifiable under Tariff Heading 34021300. Further, since the benefit under Sr. No. 449(I) of Customs Notification No.46/2011, is not available to goods under Tariff Heading 34021300, I hold that the duty benefit under aforesaid serial numbers of exemption notifications are not available to the impugned goods. 5.22 I have determined in the preceding paras that the Noticee had evaded correct Customs duty by intentionally mis-stated the facts & wrongly availed Customs duty exemption benefit of Serial No. 449(I) of Cus Not. No.46/2011, where the BCD is NIL instead of correct Sr. No.399(I) of the Cus Not. No.46/2011, where the BCD is 5%. By resorting to this deliberate suppression of facts and willful mis-classification, the Noticee has not paid the correctly leviable duty on the imported goods resulting in loss to the government exchequer. Thus, this willful and deliberate act was done with the fraudulent intention to claim ineligible lower rate of duty. is not a simple case of bona-fide wrong availment of. Notification benefits by claiming lower rate of duty. Instead, in the instant case, the Noticee deliberately availed Customs duty exemption bene....
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.... 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), which is why they are usually known as "surfactants". However, products which are not capable of reducing the surface tension of distilled water to 4.5 x 10-2 N/m (45 dyne/cm) or less at a concentration of 0.5 % at 20 ℃ are not regarded as surface-active agents and are therefore excluded from this heading. xxx xxx xxx xxx 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 (headings 34.03, 34.05, 38.08, 38.09, 38.24, etc., as the case may be). (d) Abrasive preparations containing surface-act....
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....ading 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 manufacture of other substances (this applies, for example, to naphthenic acids) or prepared directly. The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of Chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading. The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents (see, for example, paragraph (23) below). However, the heading does not cover mixtures chemicals with or other substances with nutritive value, of a kind used in the preparation of certain human foodstuffs either as ingredients or to improve some of their characteristics (e.g., improv....
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....gly fall to be treated as preparations of this heading. The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents (see, for example, paragraph (23) below). However, the heading does not cover mixtures chemicals with or other substances with nutritive value, of a kind used in the preparation of certain human foodstuffs either as ingredients or to improve some of their characteristics (e.g., improvers for pastry, biscuits, cakes and other bakers' wares). These products generally fall in heading 21.06. xxx xxx xxx xxx (48) Mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats (so- called "biodiesel") and used, in particular, as fuel for compression-ignition internal combustion piston engines. Blended products containing by weight 70 % or more of petroleum oils or of oils obtained from bituminous minerals fall in heading 27.10. The heading also excludes : (a) Finishing agents and other products or preparations, of a kind used in the textile, paper, leather or like industries (heading 38.09). (b) Mixtures of heat- or sound-insulating or ....
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....¤¾à¤¯à¤¨ पराकà¥à¤·à¤• वरà¥à¤— ॥ Jawaharlal Nehru Custom जवाहरलाल a shaya नà¥à¤¹à¤¾à¤µà¤¾ शेवा BIG Nhava रावा. Chemical Examiner/Dy. Chief Chemist Annexure - 6C RUD-4 TEST REPORT No. TEST REPORT No. Lab No. 312 SILB (1) Lab Date: 13/8/2/ Exanubed Id: Report , The sample is in the form of colourles liquid . Query No Query no. 3 : Product face to " soluble in water. ily No. Query No. dyn/cm the dyne de produces translucent liquid reducing the at a ja , surface of maybe are not je 4/2 Than on Theresent. Date: 0 Chetuical Examiner/Dy. Chief Chemist Annexure - 6D Test Result RUD-I TEST REPORT No. TEST REPORT No. Lab No. 310 SIB (I) Lab Date: 23/8/2/ Exanubed Id: ist- The sample as received is in the form of colourles Query No. 2@ and 1 could not be verified neod avery NO. 3, product is partially soluble in water. 32.72 dyne/ cm. query No. , The sample produce translucent liquid with Technical Separation of insoluble man. 02. Query No. 6, As per HSN chapter Note 34.02....