Judgment:
1. The classification of the product "Rustodine" and its eligibility for exemption from payment of duty under the provisions of Notification 101/66 dated 17-6-1966, are the issues for determination in this appeal.
2. The respondents herein manufacture Rustodine, a pre-treatment chemical, composed of inorganic acids, organic surface active agents, solvents and water and containing less than 5% by weight of the principal active ingredients. The Department's claim for classification under T.I. 68 on the basis that the product is predominantly inorganic in nature, was rejected by the Collector of Central Excise, who upheld the respondents' claim for classification under T.I. 15AA, of the erstwhile Central Excise Tariff and eligible to the benefit of Notification 101/66. Hence this appeal.
3. We have heard Shri L, Narasimha Murthy, learned DR for the appellants and Shri N. Mukherjee, learned advocate for the respondents.
4. The contention of the department is that the product is predominantly inorganic in nature as seen from the Chemical Examiner's report and the technical literature of the respondents and the respondents' letter dated 23-8-1984 stating that the proportion of organic surface active agents is less than 5% by weight in the total composition, and that the product is not a surface active agent which is a formulation to bring about a homogeneous suspension of the solvent in water and acid. Rustodine brings about a chemical reaction by conversion of oxides into water soluble compounds, which rules it out from being considered either as a surface active agent or surface active preparation in which the surface activity is purely a physical phenomenon. The learned DR also submits that the extended period of limitation can be invoked in this case, as the assessee had misdeclared their product as falling under T.I. 15AA when it was within their knowledge that the identical products known by different names were being classified by other manufacturers under T.I. 68.
5. The test report of the product in question reveals that it is composed mainly of phosphoric acid, organic compounds, water and organic solvents, and possesses surface active properties (emphasis supplied). The difference in surface tension in terms of Notification 208/69 is less than 20, dynes/cm. Therefore the product is entitled to the benefit of complete exemption from payment of duty under Notification 208/69 dated 27-8-1969 which exempts surface active preparations wherein the difference in surface tension does not exceed 20 dynes/cm. The plea of the Dept. that the product is neither a surface active agent nor a surface active preparation owing to the predominance of inorganic matter, cannot be accepted in the face of the test report which certifies the possession of surface active properties. It is not in dispute that the product contains less than 5% by weight of the principal active ingredient. The product is thus classifiable under T.I. 15AA which covers organic surface active agents and surface active preparations, and is covered by Serial No. 3 of Notification 101/66 which covers surface active preparations and washing preparations containing less than 5% by weight of the principal active ingredients.
6. Having held in favour of the respondents on the merits of the matter, we do not consider it necessary to go into the limitation aspect.
7. We hold that the product Rustodine is classifiable under T.I. 15AA of the erstwhile Central Excise Tariff and eligible to the benefits of Notification Nos. 101/66 and 208/69.
8. We uphold the order of the adjudicating authority and dismiss the appeal.