M/S. QUINN INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, HYDERABAD

Citation: [2006] SUPP. 2 S.C.R. 334 · Decided: 11-05-2006 · Supreme Court of India · Bench: ASHOK BHAN

Judgment (excerpt)

A 
MIS. QUINN INDIA LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE, HYDER.ABAD 
MAY 11, 2006 
B 
[ASHOK BHAN AND LOKESHWAR SINGH PANTA, JJ.] 
c 
D 
E 
Central Excise Tariff Act, 1985-Tarijf Headings 3402. 90 and 3809. 19-
Classification-'Penetrator 4893' manufactured by assessee--Possessed 
surface active properties~Hence classifiable as wetting agent under Chapter 
Heading 3402. 90 as claimed by assessee who adduced cogent and convincing 
evidence--Department failed to discharge its burden of proof by adducing 
contrary evidence--Tribunal erred in allowing the appeal of Department by 
ignoring the reports placed by Chemical Examiner and Chief Chemist as also 
the classification used by Department regarding use of wetting agents in 
textile industries under tariff no. 3402.90. 
From 1980 to 1986, Appellant-assessee classified its product, namely 
'Penetrator 4893' under old tariffitem No. 68attracting15% ad valorem 
duty. With the introduction of new tariff in 1986, 11ssessee started 
classifying its product as finishing agent under tariff heading 3801.19. 
Subsequently, assessee filed a new classification list classifying its product 
as wetting agent under heading 3402. 90 attracting nil rate of duty on the 
basis of the Exemption Notification No. 101/66 dated 17.6.66 as amended 
from time to time. It was claimed that the earlier classification had been 
made under a wrong impression. 
The subsequent classification was approved by the Assistant Collector 
F 
on the basis of the report given by the Chemical Examiner. But 
Respondent-Revenue issued show cause notice against the assessee. During 
pendency of the proceedings, Chief Chemist of the Central Revenue 
Control Laboratory (CRCL) gave report that 'penetrator 4893' had 
surface active properties. Adjudicating Authority relying upon report of 
G 
H 
the Chemical Examiner discharged the notice and the proceedings were 
dropped. Aggrieved, Revenue filed appeal before the Collector (Appeals) 
which was rejected but the Tribunal allowed further appeal of the Revenue 
holding that 'Penetrator 4893' could not be considered as a surface active 
agent for excise purpose. Hence the present appeal. 
Allowing the appeal, the Court 
334 
QUINN INDIA LTD. v. COMMR. OF CENTRAL EXCISE, HYDERABAD 
335 
HELD: 1. On careful consideration of the Order-in-Original of the 
Collector as well as the Order-in-Appeal recorded by the Collector 
(Appeals), it is clear that the Chief Chemist, CRCL vide his letter had 
given clear and positive opinion that the Penetrator 4893 manufactured 
by the assessee and forwarded to the Laboratory by Assistant Collector, 
Hyderabad, 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. [339-D-E] 
Reliance Silicon (!) Pvt. Ltd v. Collector, Central Excise, Chennai, 
[1977] 1 sec 215, referred to. 
2. The Tribunal has completely ignored the Report of the Chemical 
Examiner and the Final Opinion of the Chief Chemist coupled with the 
classification issued by the Department regarding use of wetting agents 
in the textile industries falling under tariff item No. 3402.90. Test Report 
of the Chemical Examiner and Chief Chemist of CRCL 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 
A 
B 
c 
D 
and Chief Chemist. Thus, the Reports are to be accepted along with other 
documentary evidence in the form of classification issued by the 
E 
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. [339-G-H, 340-A-B] 
3. The assessee had adduced cogent and convincing evidence to 
show that the expression occurring in tariff item No. 3402.90 of the Act 
should be understood in the sense in which the persons who deal in such 
goods understand it normally. The Revenue has failed to adduce contrary 
evidence in support of its claim that the classification of the penetrator 
manufactured by the assessee is not covered under tariff item No. 3402.90. 
It is also settled la

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