Judgment:
1. Being aggrieved with the order of refund of the additional duty to the Respondent, the department have filed the present appeal.
2. Factual backdrop :- The respondent imported a consignment of 'Myristic Acid 95% from Malaysia and the same was assessed to duty under Heading 29.01/45(1) of the C.T.A. 1975 with levy of additional duty under Heading 68 of the C.E.T. After clearance of the goods importers respondent herein preferred a claim for refund of the additional duty paid by them on the ground that Myristic Acid was a fractionated Fatty Acid which should be classified and assessed under Heading "15.08/13 of the C.E.T. and that the same were exempted from payment of additional duty in terms of the Customs Notification No.48/79, dated 1-3-1979. The Assistant Collector of Customs rejected the said refund claim of the respondent holding that the imported goods were classifiable as a chemical and not as Fatty Acid as claimed by the respondent. On appeal the Collector of Customs (Appeals), Bombay by his impugned order set aside the order of the Assistant Collector of Customs holding that the imported Myristic Acid being a Fatty Acid was correctly assessable to customs duty under Heading 15.08/13 of C.T.A.75 and was correctly assessable to C.V.D. under Heading 68 of the C.E.T. and since in the instant case C.V.D. was not at all leviable in terms of Notification No. 48-Cus., dated 1-3-1979, the respondent is entitled for the refund of additional duty paid by them. Aggrieved, the Department has filed the present appeal.
3. We have heard Shri L.C. Chakraborti, learned JDR for the appellant and Shri Babu Iyer, Assistant Legal Manager of the respondent Company.
4. Shri Chakraborti, learned JDR while attacking the impugned order vehemently contented that Fatty Acid are covered under Chapter 15 and also under Chapter 29 of the first schedule of the C.T.A. 1975. He further submitted that the classification whether under Chapters 15 and 29 is decided as per the purity of the Acid as held by the Assistant Collector. In the process he contented that if the purity is less than 90%, the Fatty Acid would qualify to be Industrial Fatty Acid which is classifiable under Heading 15.08/13 of the C.T.A. 1975. Admitting that chapter notes of the B.T.N. does not form part of the C.T.A. 1975, the same do carry a lot of authority and since the scope of Heading 15.10 of the B.T.N. includes mixed Industrial Fatty Acids, it follows that the Fatty Acids which are included in the Heading 15.08/13 of the C.T.A. 1975 are Fatty Acids having purity less than 90%. And as a necessary corollary when the purity is more than 90%, the Fatty Acids become a separate chemically defined organic compound and in terms of Note l(a) to Chapter 29, this will have to be classified under Chapter 29 only. In view of this fact, the correct classification of the imported Fatty Acid should be under the Heading 29.01/45(10) of the C.T.A. 1975, since it has 95% purity and therefore, the Assistant Collector rejecting the refund claim was right in his order. In reply, Shri Babu Iyer, Assistant Legal Manager of the respondent Company vehemently countered the arguments of the learned JDR that the classification whether under Chapter 15 or 29 is to be decided as per the purity of the Acid and cited the case of Collector of Customs, Bombay v. Hico Products Ltd. 1984 (18) ELT 645. Shri Babu Iyer, Assistant Legal Manager also contented that - (i) B.T.N. and C.C.N.being not in pari .materia with the Customs Tariff Act, the same should not be relied upon for the purpose of classification and cited the decisions rendered in Haldyn Glass Works (P) Ltd. v. M.L. Badhwar 1980 ELT 291 (Bom.); Collector of Customs, Bombay v. Hico Products Ltd. (Supra)Keltron Power Devices Ltd. v. Collector of Customs 1987 (9) ETR 227; 1985 (20) ELT 328; and (ii) no reliance should be placed on Note No. l(a) Chapter 29 as held in Dunlop's case, 1983 ELT 1566 (S.C.) and Hico's case, Supra. In the alternative, he submitted that assuming, but not admitting that Fatty Acid is covered by both Chapters 15 and 29, then in terms of Rule 3(a) of the Rules for the interpretation of the schedule the heading,, which provides for the most specifically description shall be preferred to headings providing a more general description and since contented the Assistant Legal Manager, Chapter 15 specifically mentions and covers "Fatty Acid" under Heading 15.01/13, Chapter 29 which deals with the "Organic Chemicals" should not be applied. To substantiate his contention he cited the case of Dunlop India Limited v. Union of India and Ors. (Supra). On merits, it was further submitted that the department has relied upon some technical opinion about specifying whose technical opinion is going to be relied upon and even without furnishing a copy of the said technical opinion to the respondent to enable the respondent to counter the same. Since the said technical opinion was' not furnished to the respondent it has to be excluded from consideration as held by this Tribunal in the case of Steel Rolling Mills of Bengal Limited v. The Collector of Central Excise, Calcutta 1984 (16) ELT 541. He also added that the Assistant Collector had relied upon the technical opinion given by the Deputy Chief Chemist which has been reproduced by the appellant in the memorandum of appeal under the heading brief facts of the case. From the said opinion as reproduced by the appellant, it would appear that the Deputy Chief Chemist proceeded on the basis that the classification under Chapter 15 or Chapter 29, is decided by the purity and since this criteria of purity stands, rejected by this Tribunal in Hico Products case, Supra, the technical opinion given by the Deputy Chief Chemists is of no avail.
5. After giving our due consideration to the submissions made by the party, we are of the considered view that the appeal has no force and is to be rejected. At the outset it may be stated that the Assistant Collector had rejected the refund claim of the respondent solely on the ground that the classification either under Chapter 15 or Chapter 29, is decided by the purity and since the imported Myristic Acid's purity percentage is 95% as per the technical opinion, it has to be considered as chemical. This approach of the Assistant Collector is in direct conflict with the Law laid down by this Tribunal in the case of Collector of Customs, Bombay v. Hico Products Ltd., Supra. In that case while dealing with the question as to whether Fatty alcohol of all sorts are covered by Chapter 15 or by chapter 29 of the C.T.A., 1975, this Tribunal held that the criteria of 90% purity adopted by the Chief Chemist as a workable solution for classifying Fatty Alcohol under Chapter 15 or 29 seems to be not well founded on any authority. Thus the order of the Assistant Collector which is based only on the technical opinion which is again based on the criteria of 90% purity cannot be upheld. The contention of the learned JDR that chapter notes of B.T.N. though does not form part of the C.T.A., 1975, do carry a lot of authority and since Heading 15.10 of the B.T.N. includes mixed Industrial Fatty Acids, it follows that the Fatty Acids which are included in Heading 15.08/13 of the C.T.A. are Fatty Acids having purity less than 90% also cannot be accepted in view of the decision of this Tribunal rendered in the case of Hico Products Ltd., Supra. In that case it was held that C.C.N. explanatory notes have no legal force (though they may be of pursuasive value), and therefore classification has to be determined according to terms of headings of Custom Tariff Schedule read with Section and Chapter notes. From the impugned order we find that the Collector of Customs (Appeals), Bombay after referring to the literature concluded that since the imported products is nothing but Fatty Acid and it has been specifically mentioned under Heading 15.08/13, there was no scope for its assessment under Heading 29.01/45(1). For the ready reference his findings may be extracted as below :- "2. On a reference to the literature "The Condensed Chemical, Disctionary", by Gessner G. Halley, Tenth Edition, it is found that Myristic Acid, otherwise known as (Tetra Decanoic Acid) is derived by fractional distillation of Coconut Acid and other Vegetable Oils and occurs in Sperm Oil and is used for Soaps, Shaving Creams, Shampoos, Synthetics, 'etc. According to Bayley's Industrial Oil and Fat Products, Volume-I, Fourth Edition, Myristic Acid is a minor constituent of the mixed Fatty Acids of most animal and vegetable fat, which constitutes 8-12% of the Fatty Acid of milk fats and 15-30% of Coconut Oil. This is a major component of the Seed Fatts of the Myristicaccae, such as nutmag and uchuhube fats, where it may constitute as much as 80% of the total fatty-acids.
According to Fatty Acids, their chemistry, property, production and uses Part-I - 1960 Edition, by K.S. Markley, Myristic Acid is present in almost all vegetable and animal fats, usually in relatively small amounts (1 to 5%).
In view of the above quoted literatureon the subject, which is more authentic, the Assistant Collector's contention that the imported Myristic Acid, being 95% pure, would not qualify as Appeal allowed Fatty Acid, does not appear to be correct. The importers have claimed assessment of the imported Myristic Acid under Heading 16.08/13, since according to them, the imported product is nothing but Fatty Acid and since Fatty Acid has been specifically mentioned under Heading 15.08/13, there was no scope for its assessment under Heading 29.01/45(1)." During the course of the arguments nothing was pointed out to us for taking a contrary view. Thus, we agree with the Collector of Customs (Appeals), that the imported Myristic Acid is covered by Chapter 15 of the Customs Tariff Act, 1975.
6. Before we part with the case it will be significant to mention that while setting aside the adjudicated order passed by the Assistant Collector of Customs, the Collector of Customs (Appeals) had also given an additional reason allowing the benefit of Notification No. 48-Cus., dated 1-3-1979 to the respondent which is extracted as under for ready reference :- "However, a queer aspect of this case is that even admitting the fact that according to the Technical Literature, the imported Myristic Acid is nothing but Fatty Acid and was assessable to Customs Duty under Heading 15.08/13 of CTA, 1975 is still would have discharged Basic Customs Duty at the rate of 60% in accordance with Notification No. 213-Customs, dated 24-9-1981. The Customs House had classified the imported product under Heading 29.01/45(1) and had charged basic Customs duty on the imported product at the rate of 60% ad valorem. Therefore, the appeal has not been filed about any controversy concerning the rate of Basic Custom Duty. The appellants were obviously convinced that as an imported product Myristic Acid being a Fatty Acid was in any case assessable to Custom duty under Heading 15.08/13 of CTA, 1975 and was eligible to the benefit of Notification No. 213-Customs, dated 24-9-1981 and therefore, they were also entitled to the benefit of Notification No. 48-Customs, dated 1-3-1979, as far as their CVD liability on the imported product was concerned. In other words, in order to be eligible to the concession under Notification No. 48-Customs, dated 1-3-1979, it was essential that the imported product should have been classified under Heading 16.08/13 of CTA, 1975 and correspondingly under Item 68 of the CET. Hence the appeal. But in retrospect, it would appear that the Assistant Collector has not put forward any reason as to why he had confirmed arbitrarily the assessment of the product to Custom duty earlier done in the Customs House under Heading 29.01/45(1) of CTA, 1975, even though the relevant literature embodying the export opinion on the imported product had been submitted to the concerned group in the Customs House. It is a patent case where the assessing authorities were not bothered to go through the literature on the product supplied by the importers to them and had resorted to the assessment of the product in a whimsical manner." 7. It is curious that the said additional reason has not been challenged by the appellants either in the memorandum of appeal or during the hearing of the appeal before us. Thus on this count also the appeal deserves to be dismissed.