Full Judgment
It is not a surface active agent." 1.3 On or about 28-3-1987, Assistant Collector filed an application under Section 35E of the CE & S Act, 1944 to the Collector (Appeals) for review of the said order dated 29-10-1986 and classifying the said product under sub-heading 3402.90.
1.4 The lower appellate authority allowed the application of the Revenue under Section 35E. After setting out the respective headings, Chapter Notes, the lower appellate authority has held as follows :- "...Therefore the product RLFW is correctly classifiable as washing preparation including auxiliary washing preparations. As the liquid fabric whitener does not impart any colour to the fabric which is washed its classification under T.I. 3206.90 is not correct. For this reason only, the order of the Assistant Collector is erroneous and the same is set aside..." 1.5 On a Miscellaneous Application No. 1339/92-C in the subject appeal filed by the Revenue raising a new plea that on the basis of a test report of Chief Chemist on a sample, the product would be classifiable under sub-heading 3204.30 pertaining to "synthetic organic products of a kind used as fluorescent brightening agents or as luminophores" the Tribunal vide its Miscellaneous Order No. 44/93-C, dated 18-2-1993 allowed the application without considering the merits of the plea and also observing therein that the interest of the appellants, on account of higher rate of duty under the said classification may be taken care of at the time of disposing of the subject appeal.
1.6 It is appropriate to set out the report of the Chief Chemist given in his letter dated 17-2-1992 addressed to the Assistant Collector :- "The sample is in the form of blue coloured liquid put up in unit plastic container with printed label written as 'Robin liquid fabric whitener'. It is an aqueous preparation based on synthetic organic fluorescent product, ultramarine blue, synthetic organic colouring matter (dye), clayey matter, perfume and preservative.
The sample imparts fluorescent brightening property when applied on the fabric.
Though the product is an aqueous preparation containing fluorescent brightening agent, synthetic organic colouring matter (dye) and ultramarine blue, the essential character of the product is to impart a brightening fluorescent effect to the fabric when used.
Hence the product under reference merit consideration as a preparation containing synthetic organic product of a kind used as fluorescent brightening agents or as a luminophores." 1.7 We may also set out the ingredients and the manufacturing process and the purpose of the ingredients as given by the appellants and conveyed by the respondents in their aforesaid miscellaneous applications :-"Manufacturing process of Robin Liquid Fabric WhitenerProduct: Robin Liquid Fabric Whitener is a blue coloured suspension of Ultramarine Blue.Formulation : Raw Material Weight to Weight (%) Ultramarine Blue 16.4Method of Quantity of Ultramarine Blue is added to water in aManufacture: mixing vessel and then stirred with a stirrer.
To this, Bentonite soaked in Spirit is added and stirred well till Bentonite is dispersed well.
Ranipal and Methyl Violet are added to this and again stirred. Finally, this is followed byPurpose of In- Ultramarine blue - to give whitening effectgradients : to the fabric Ranipal and Methyl - to enhance the effect of Violet ultramarine blue in 2.1 Learned advocate, Shri Jatin Ghosh for the appellants has urged that RLFW is a mixture, and not a chemical compound, based on inorganic substance, ultramarine blue, though some of the ingredients are organic substances. Ultramarine Blue is not only the major ingredient amongst solid substances but also constitutes the active ingredient from the purpose of ingredients set out above. He submits that correct classification of the product RLFW is Heading 32.06, as is evident from the HSN Explanatory Notes under Heading 32.06. It is specifically mentioned as under sub-heading 3206.41 of the HSN Explanatory Notes in the following terms :- "Ultramarine" has been further explained as follows in HSN Explanatory Notes :- "Ultramarine - Ultramarine blue is a complex compound formerly obtained from lapis lazuli but now prepared artificially by treating mixtures of various silicates, aluminates, sodium carbonate, sulphur etc. Green, pink and violet ultramarines are also covered by this heading but certain unmixed chromates, sometimes known as yellow ultramarine, are excluded from Heading 28.41.
2.2 He further submits that effect of ultramarine blue is to impart whitening effect by giving a bluish tint to overshadow yellow undertones in ageing clothes. A very small quantity of Ranipal used in less than the recommended dosage by its manufacturer is to enhance the brightening effect of whiteness of the fabric. Use of a small quantity of organic luminescent agent in the presence of an inorganic substance, ultramarine blue, cannot bring the product under the latest proposal of the Revenue to sub-heading 3204.30. On the analogy of HSN Explanatory Notes under S. No. 12 at page 458 under Heading 32.06 which states - Inorganic pigments with added organic colouring matter are also classified in this heading - ld. advocate has submitted that use of a small quantity of organic fluorescent brightening agent in the presence of much larger quantity of inorganic colouring matter - ultramarine blue will not detract from the latter's characteristic.
2.3 Explaining further the uses and application of ultramarine blue, based on several other authorities, the ld. advocate has further strengthened his proposition on the following pieces of evidence :- (i) Condensed Chemical Dictionary by C.G. Hawley - Tenth Edition -Page 1063.Uses : Colorant for machinery and toy enamels White baking enamels; printing inks, rubber compounds; soaps and laundry blues; Cosmetics, textile printing.Note : Used in very low percentage to intensify whiteness of -- laundered clothing etc. by off setting yellowish ingredients; gives a blue rather than a 'yellow' white.
(ii) Kirk-Othmer Encyclopedia of Chemical Technology (Second Edition) - Vol. 15 page 51 Ultramarine (blue) find uses in many industries - frequently as a toner or 'whitener' for white flats and enamels; special kinds of printing inks... Their whitening properties are also used in laundry bleaches and paper making.
(iii) ISI Specification for Ultramarine Blue for use in Textile Industry (IS: 11217-1984) :- In para 0.2, it is stated that ultramarine blue is used extensively in textile industry as a tinting material. It is also used in laundry industry. Use of ultramarine blue enhances the appearance of white, bleached textiles.
2.4 Inviting attention to HSN Explanatory Notes under Heading 34.02 - S. No. (B), ld. advocate has urged that washing preparations (including auxiliary washing preparations) and cleaning preparations referred to in that heading of the CETA, 1985 have a basis of soap or other organic surface active agents. This is clear from the relevant extracts of HSN Explanatory Notes at page 485 as reproduced below :- "(B) Washing preparations (including auxiliary washing preparations) and cleaning preparations, having a basis of soap or other organic surfaceactive agents.
This category covers washing preparations, auxiliary washing preparations and certain cleaning preparations. There 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." RLFW does not, admittedly, contain either soap or surface active agent.
He, therefore, submits that Heading 34.02 is ruled out.
2.5 Apart from having submitted on the inapplicability of Heading 32.04, as set out above, ld. advocate has also submitted that this heading should not be considered at this stage, when it was not the subject of consideration before lower authorities. Consideration of Heading 32.04 would need enquiry into questions of fact which are not on record. Question of this heading's application to the product is not one purely of law. This is apart from the fact that acceptance of this heading at this stage would saddle the appellants with a still higher liability than what would be under Heading 34.02 CETA, 1985.
3.1 Learned JDR, Shri Somesh Arora, on the other hand submits that it is not disputed by the appellants that the product is used as a laundry preparation for imparting whitening and brightening effect. He further submits that plain reading of the Heading 34.02 washing preparations (including auxiliary washing preparations) does not envisage soap or a surface active agent as an essential constituent of such preparations.
In fact surface active preparations are separately mentioned in the said heading. He submits that Heading 34.02 is more specific for the product RLFW than heading 32.06.
3.2 He further submits that Heading 32.04 would be still more suitable than Heading 34.02 because of the presence of synthetic organic brightening agent 'Ranipal', as opined by the Chief Chemist.
Classification being essentially a question of law because of interpretation of various entries in the tariff, it can be raised before, and decided by the Tribunal. This is a position which is legally well settled by now. It is only the question of classification before the Tribunal; no question of higher liability arises because the question of confirmation of a certain demand of duty for a certain period is not before the Tribunal.
4.1 We have carefully considered the pleas advanced from both sides. In classification of a product under CETA, 1985, first and foremost exercise is to determine the nomenclature, character and function of the product. With reference to the cumulative consideration of these factors, we have to identify it with one or the other heading/sub-headings of the tariff with reference to the relative Section Notes and Chapter Notes and the Interpretative Rules. CETA 1985 being a statute, well settled statutory rules of interpretation would further govern the interpretation of headings, sub-headings, Section Notes, Chapter Notes and Rules of Interpretation.
4.2 The product RLFW from its composition and method of manufacture is a preparation with a basis of ultramarine blue, an inorganic substance.
As rightly pointed out by the appellants' learned counsel ultramarine blue constitutes the major active ingredient in the product, after excluding the quantity of 'water' which simply acts as a medium.
Character of the product, in our view is imparted by the ultramarine blue. Its function is to impart whiteness to the fabric. This is done by bluish tinting of the fabric by over-shadowing of the yellow undertones in a white fabric through the phenomenon of light and optics. The foregoing becomes apparent from a number of authorities/technical literature already set out and relied upon by the appellants' ld. counsel. It is, therefore, clear that ultramarine blue is a colouring matter, howsoever weak it might be. This is fortified by HSN Explanatory Notes where preparation of ultramarine has been spelt out specifically under sub-heading 3206.41. CETA, 1985 and HSN Explanatory Notes different in specific sub-headings in that some of the sub-headings in HSN Explanatory Notes have been clubbed into sub-headings "other" under 3206.19 and 3206.90. This rearrangement adopted in the Schedule of CETA, 1985 does not and cannot detract from the classification of preparation of ultramarine blue under the Heading 3206 CETA, 1985 - there being no difference at all in the wordings of Heading 32.06 of Schedule of CETA, 1985 and of HSN Explanatory Notes.
(iii) Synthetic organic products of a kind used as fluorescent brightening agents or as luminiphores.
Product RLFW as found above is a preparation with a basis of inorganic substance ultramarine blue. It is not identifiable with any of three products mentioned in Heading 32.04. There is no synthetic organic colouring matter present in the product RLFW. Chief Chemist's opinion for classification of the product under Heading 32.04 because of presence of about 3 per cent of Synthetic Organic product, brightening agent (i.e. Ranipal) is not tenable. The Heading 32.04 inter alia speaks of Synthetic Organic products of a kind used as fluorescent brightening agent; this heading would be applicable to a product which is purely a S.O. product used as fluorescent brightening agent or as luminiphores or whose essential character is imparted by such S.O.product.
4.4 Heading 34.02 pertaining, inter alia, to washing preparations (including auxiliary washing preparations), under which the lower authorities have upheld the classification is also not appropriate. HSN Explanatory Notes, as set out above, under this heading clearly indicate that surface active agent or soap is an essential constituent of such washing preparations. It is well settled that where the statutory tariff is aligned to the International Nomenclature (HSN here), HSN Explanatory Notes have a high persuasive value in determining classification of a product. We notice that Headings 34.02 of HSN and of CETA1985 are pari materia. In these circumstances, there is no adequate ground to differ from HSN Explanatory Notes that washing preparations including auxiliary washing preparations should contain surface active agent or soap as an essential constituent. The product RLFW does not contain any soap or surface active agent. This heading will also not be applicable to the product under consideration. Learned JDR, however, submits that we should not rely on HSN Explanatory Notes because these are not of binding character and the plain language of Heading 34.02 does not envisage that there should be either soap or surface active agent as an essential constituent of washing preparations including auxiliary washing preparations. We are of the view that this argument is misconceived. It stems from an inadequate understanding of the term 'washing preparations'. This expression implies a preparation which removes dirt or impurities from the object subjected to washing. Dirt or impurity removing ingredient would be normally either 'soap' or surface active agent. In any case in the product RLFW, there is no ingredient which removes the 'dirt' or 'impurity'. It cannot, therefore, be covered by the expression 'washing preparation'. The expression vised in Tariff Heading 34.02 is not "auxiliary preparation" but it is "auxiliary washing preparation". In other words, even auxiliary preparation must contain a 'washing agent' to remove dirt and soil etc. which is the function of a washing preparation.
4.5 In view of the foregoing discussion, we allow the appeal and set aside the impugned order with consequential relief to the appellants.