IMPORTANT POINT
In excise matter Test Report of Chemical Examiner and Chief Chemist of the Revenue unless demonstrated to be erroneous cannot be lightly brushed aside.

Headnote:Central Excise Act, 1944—Tariff—Sub-heading No. 3402.90—Assessee-appellant was in manufacture of Penetrator-4893 and filed a fresh classification test based on Report of Chemical Analyst classifying product under item No. 3402.90 as a wetting agent, an auxiliary aid for improving the penetration process of dye solvent—Adjudicating Authority concluded that classification by assessee was correct and show cause was discharged—Collector (Appeals) upheld the order—Tribunal set aside the order holding that goods manufactured by assessee were not commercially and popularly known as service active agent and were different products—Appeal—Chief Chemist CRCL had given a positive opinion that the Penetrator 4893 manufactured by assessee was “composed of organic solvent, non volatile residence having surface active properties and water”—Goods possessing surface-active properties were classifiable under tariff item No. 3402.90—Tribunal had completely ignored the report of Chemical Examiner—Test report of Chemical Examiner unless demonstrated to be erroneous, could not be lightly brushed aside—Impugned judgment was liable to be set aside.
Held : It is clear that the Chief Chemist, CRCL vide his letter dated 2.4.1992 had given clear and positive opinion that the Penetrator 4893 manufactured by the assessee and forwarded to the Laboratory by Assistant Collector, Hyderabad, vide letter dated 20.7.1991 was “composed of organic solvent, non-volatile residue having surface active properties and water”. From the said opinion of the Chief Chemist, it cannot be disputed that the goods manufactured by the assessee possessing surface-active properties are classifiable under tariff item No. 3402.90. The Collector (Appeals) in his order observed that no evidence has been led by the Revenue to show that Penetrator 4893 manufactured by the assessee acts as a finishing agent to be classified under Chapter heading 38.09 and the contention of the Revenue that the product is not wetting agent was not found supported by any evidence. The Tribunal has completely ignored the Report of the Chemical Examiner dated 6.10.1981 and the Final Opinion of the Chief Chemist dated 2.4.1992 coupled with the classification issued by the Department regarding use of wetting agents in the textile industries falling under tariff item No. 3402.02. Test Report of the Chemical Examiner and Chief Chemist of the Revenue unless demonstrated to be erroneous, cannot be lightly brushed aside. The Revenue has not made any attempt to discredit or to rebut the genuineness and correctness of the Reports of the Government, Chemical Examiner and Chief Chemist. Thus, the Reports are to be accepted along with other documentary evidence in the form of classification issued by the Department regarding use of wetting agents in the textile industries to hold that the product Penetrator 4893 possessed surface active properties and, therefore, is covered by Exemption Notification No. 101/66 dated 17.6.66 as amended from time to time.(Para 7)

JUDGMENT

Lokeshwar Singh Panta, J.—M/s. Quinn India Limited - the appellant-assessee has filed the present Statutory appeal under Section 35L of the Central Excise Act, 1944 (for short “the Act”) against the Final Order No. 1860/2000 dated 22.12.2000 recorded by the Customs, Excise, Gold (Control) Appellate Tribunal, South Zone Bench, Chennai (hereinafter referred to as “the Tribunal”) in Civil Appeal Nos. E/1299/94-C and E/CO/366/94-C. By the impugned order, the Tribunal has allowed the appeal filed by the Commissioner of Central Excise, Hyderabad (hereinafter referred to as “the Revenue”) and set aside the order - Appeal No. 2/94(H)(D) CE dated 28.2.1994 of the Collector of Central Excise (Appeals).

2. The assessee was engaged in the manufacture of Penetrator - 4893 falling under tariff item No. 68 of the old tariff since 1980 to 1986. The assessee was paying the excise duty on the product till the new tariff was introduced. After the new tariff, the product was being cleared under sub-heading No. 3801.19 as finishing agents, Dye Carriers to accelerate the dying or fixing of dyestuff and other products and preparations of kind used in textile, paper, leather or like newspapers not elsewhere specified or included. On 6.5.1986, the assessee filed a new classification list under the Chapter - sub-heading No. 3402.90 and claimed that the earlier classification was under a wrong impression. The classification list dated 6.5.1986 was approved by the Assistant Collector on the basis of the note given by the Chemical Examiner in his Report dated 6.10.1981 which came to the knowledge of the assessee in the year 1986. Therefore, the assessee changed the classification to the appropriate tariff item.

3. A Show Cause Notice (SCN) dated 4.6.1991 was issued by the Revenue directing the assessee to pay a sum of Rs. 1,24,094.45p. as central excise duty for the period May, 1986 to September, 1990 invoking larger period under Section 11A of the Act. During pendency of the proceedings, the Revenue drew another sample of the product of the assessee and sent it to the Central Revenue Control Laboratory (CRCL) at Delhi to the Chief Chemist for his opinion. The Chief Chemist vide his Report dated 2.4.1992 opined that the samples had surface active properties. The assessee filed its reply to the show cause notice, inter alia, contending that prior to 28.2.1986 they were classifying their product Penetrator 4893 under tariff item No. 68 and with the introduction of new tariff it was classified under heading 3801.19. On 5.5.1986, the assessee filed a fresh classification list based on the Report of the Chemical Analyst classifying the product under item No. 3402.90. They explained the process of manufacture of the product clarifying that the product is a wetting agent. Further, it was contended that the product was only an auxiliary aid for improving the penetration process of dye solvent. The Adjudicating Authority vide other dated 4.6.1991 relying upon the opinion of the Chemical Examiner’s Test Report came to the conclusion that the classification of Penetrator manufactured by the assessee would fall under heading 3402.90. The show cause notice was, accordingly, discharged and the proceedings initiated in OR No. 74/91 Adjn. were dropped.

4. Being aggrieved by the order of the Adjudicating Authority, the respondent-Revenue filed an appeal before the Collector (Appeals), who vide his order dated 28.2.1994 rejected the said appeal relying upon the documentary evidence produced by the assessee in its defence. The Revenue then filed an appeal before the Tribunal challenging the correctness and validity of the order of the Collector (Appeals). The Tribunal, however, allowed the appeal of the Revenue and set aside the original order in appeal as also the Order-in-Original holding that the goods manufactured by the assessee were not commercially and popularly known as service active agents and they were different products, commercially having different names,

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2006 Supreme(SC) 478

IMPORTANT POINTIn excise matter Test Report of Chemical Examiner and Chief Chemist of the Revenue unless demonstrated to be erroneous cannot be lightly brushed aside.

Cases Referred (2)

IMPORTANT POINT
In excise matter Test Report of Chemical Examiner and Chief Chemist of the Revenue unless demonstrated to be erroneous cannot be lightly brushed aside.