The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the Central Board of Excise and Customs (CBEC) clarification issued shall have a retrospective effect and set aside the demand of excise tax on Chlorinated Paraffin in liquid form.
Gujarat Alkalies And Chemicals Ltd, the appellant engaged in the manufacture and clearance of chlorinated paraffin and classified the same under Tariff Item No. 38 12 2090. The case of the department is that the appellant’s product is chlorinated paraffin wax and the same is correctly classifiable under 2712 20 10 and the appellant is liable to pay the differential duty for December 2008 to February-2009.
Shri Dhaval K. Shah, counsel, appearing on behalf of the appellant submitted that they are not manufacturing Chlorinated Paraffin Wax but they manufacture and clear Chlorinated Paraffin in liquid form. Only the Chlorinated Paraffin Wax is classifiable under Tariff Item No. 2712 20 10 and not in liquid form.
Further stated that as per the Board Circular No. 950/01/2011-CX dated 01.08.2011, it was clarified that a Chlorinated Paraffin/Chloroparaffins (liquid form) classifiable under Sub Heading 3824 90 of Central Excise Tariff Act and Chlorinated Paraffin Wax (in solid form) are classifiable under Sub Heading 3404 90 of Central Excise Tariff Act after the Budget, 2010.
It was submitted that the Adjudicating authority interpreted Board Circular and contended that since the classification concerns Finance Budget, 2010 the same is applicable for the period after the date of clarification i.e. 01.08.2011 and for the past period the department’s claim of classification under Tariff Item No. 2712 20 10 is correct. It
Shri Ajay Kumar Samota, superintended (AR), appearing on behalf of the revenue reiterated the finding of the impugned order.
The Adjudicating authority found that the goods manufactured by the appellant i.e. Chlorinated Paraffin are in liquid form. As per the above Board Circular, it was clarified that the Chlorinated Paraffin liquid form is correctly classifiable under 3824 90. Though the appellant has declared classification under Tariff Item No. 3812 20 90 the goods in any case are not classifiable under Tariff Item No. 2712 20 10.
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that it is a settled law that any clarification about any Act will always have a retrospective effect for the reason that there is no change in the law but the existing law has been interpreted and clarified, therefore, the geneses of law remained intact.
Further held that any clarification issued shall have a retrospective effect right from the enactment of the relevant law, therefore the clarification issued by the board has a retrospective effect and accordingly, the purposed classification of goods under Tariff Item No. 2712 20 10 in respect of Chlorinated Paraffin in liquid form does not apply.
While allowing the appeal, the CESTAT set aside the order.
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