Supreme Court confirms CESTAT Order Assigning CTH 2712 to Waksol Products: Notes Products Derived from Refining Petroleum [Read Order]
The CESTAT had affirmed that classification rests on product nature not possible end-uses.
The Supreme Court of India recently affirmed an order passed by the Customs, Excise and Service TaxAppellate Tribunal (CESTAT), classifying Waksol series products under Customs Tariff Heading 2712, noting the products are derived from petroleum refining and that there lies no error in the impugned CESTAT order.
The dispute preceding the civil appeal by the Commissioner of Customs House, Kandla against Panoli Intermediates India Private Limited & Etc. involves the import of Waksol A, Waksol B and blended grades such as Waksol 9-11A/9-11B which were warehoused by importers and cleared from customs bonded warehouses.
Importers originally used various tariff claims, but the department issued show-cause notices proposing classification under CTH 3405 and sought differential duty, confiscation and penalties. The matter was remanded by the Tribunal in April 2023 for the adjudicating authority to determine the true nature of the product with reference to chapter 2712 and its HSN explanatory notes.
On remand the adjudicating authority issued an order of classification that was again challenged before CESTAT.
Before CESTAT, the appellants urged before the Bench that Waksol products are synthetic paraffinic waxes that are derived through the Fischer-Tropsch process. The appellants also relied on manufacturer literature and multiple laboratory reports showing that the goods are mixtures of n-paraffins and paraffin wax with oil contents varying across samples.
The appellants maintained that the products derived from this process were primarily used as industrial raw materials, notably for manufacture of chlorinated paraffin wax and are therefore not coverable under the provisions of CTH 3405 pertaining to end-use polishes and similar preparations.
The Tribunal reviewed the testing reports, manufacturing process, HSN notes and established precedents and held that classification had to be based on the intrinsic nature and composition of the product, which established Waksol as a petroleum-derived wax under Heading 2712 and not as a polish preparation under Heading 3405.
Essentially, it was clarified that tariff classification is based on the intrinsic nature and composition of the imported product and on contemporaneous HSN guidance. Accordingly, the mere possibility of alternate uses is insufficient to dislodge a 2712 classification when technical tests and product literature establish the goods as petroleum-derived wax.
In the present appeal before the Supreme Court, a Bench of Justice Manoj Misra and Justice Ujjal Bhuyan perused the impugned Tribunal order and found no error with the order passed by the CESTAT.
Accordingly, the matter was dismissed against the Commissioner of Customs and in favour of Panoli Intermediates, thereby confirming that Waksol products are indeed paraffinic wax preparations properly classifiable under CTH 2712 and not under Chapter 34 entries for polishes and similar preparations.
The Revenue was represented by N.venkataraman, Gurmeet Singh Makker, V C Bharathi, Navanjay Mahapatra, Annirudh Sharma-ii, Rajeev Ranjan and Amit Sharma -ii while the respondent company was represented by Hemlata Rawat and Soham Bandopadhyay,
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