As per case facts, the Respondent-Assessee imported n-Hexane, self-classifying it under Customs Tariff Heading 2901.10 as a pure hydrocarbon. The Appellant-Revenue, based on a chemical test report showing a distillation ...
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2026 INSC 536 Civil Appeal No.569 of 2012 Page 1 of 49
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 569 OF 2012
COMMISSIONER OF CUSTOMS,
KANDLA, GUJARAT …APPELLANT (S)
VERSUS
M/S RELIANCE INDUSTRIES
LIMITED … RESPONDENT (S)
J U D G M E N T
ARAVIND KUMAR, J.
1. The Appellant – Revenue is knocking the doors of this Court
calling in question, the decision of Customs Excise and Service
Tax Appellate Tribunal (hereinafter referred to as ‘CESTAT’),
Ahmedabad delivered on 15.07.2011 in Order
No.A/1280/WZB/AHD/2011 in Appeal No. C/588/04
whereunder CESTAT dismissed the appeal. The principal issue
Civil Appeal No.569 of 2012 Page 2 of 49
for consideration in the instant appeal is whether the imported
product, viz, “n-Hexane” or “Exxsol Hexane”, is to be treated
as a Petroleum Oil and is to merit classification under Customs
Tariff Heading 2710.00 (hereinafter referred to as ‘CTH
2710.00’) and Central Excise Tariff Heading 2710.12
(hereinafter referred to as ‘CETH 2710.12’) as contended by
the Appellant-Revenue, or as a Pure Hydrocarbon existing as a
Separate Chemical Compound under Customs Tariff Heading
2901.10 (hereinafter referred to as ‘CTH 2901.10’) and Central
Excise Tariff Heading 2901.90 (hereinafter referred to as
‘CETH 2901.90’) as claimed by the Respondent – Assessee.
2. At the outset, we deem it pertinent to clarify that the imported
products are “Exxsol Hexane RD/ Hydrosol n-Hexane” which
also bear the common chemical nomenclature of “n - Hexane”
or “Normal Hexane”. Henceforth, the imported product shall
be referred to as “n – Hexane” for convenience.
I. FACTUAL MATRIX AS IN THE CASE OF
COMMISSIONER OF CUSTOMS, KANDLA v. M/S
RELIANCE INDUSTRIES LTD.
3. The Respondent-Assessee filed Bill of Entry claiming
clearance of n-Hexane under Customs Tariff Heading 2901.10
Civil Appeal No.569 of 2012 Page 3 of 49
(‘CTH 2901.10’) and Central Excise Tariff Heading 2901.90
(‘CETH 2901.90’) by self-classifying the same as a Saturated
Acyclic Hydrocarbon existing as a compound in pure
commercial form. The imported product was subject to
Chemical Test and pending the report, provisional assessment
was undertaken. Pursuant to the result of the test report of the
samples provided by SGS Redwood Test Analysis Report
dated 10.05.2000, the Appellant-Revenue issued Show Cause
Notice dated 21.03.2001 to the Respondent-Assessee for
clearance of the goods under the heading of Chapter 27, i.e,
CTH 2710.00 and CETH 2710.12 deeming the imported
product to be an admixture of various hydrocarbons and not a
pure compound. The Respondent- Assessee was called upon to
show cause as to why n-Hexane ought not be classified under
CTH 2710.00 and CETH 2710.12.
4. The Show Cause Notices referencing to the test report stated
that the distillation range of n-Hexane is between 67°C to 70°C
indicating that it is an admixture of various hydrocarbons.
Further, it also stated that the flash point of n-Hexane is less
than 25°C and as it falls under the category of Motor Spirit used
in spark ignition engine it is thus, rightly classifiable under
Chapter 27, i.e., CTH 2710.00 and CETH 2710.12.
Civil Appeal No.569 of 2012 Page 4 of 49
II. FINDINGS OF THE ADJUDICATING AUTHORITY ,
ASSISTANT COMMISSIONER OF CUSTOMS
5. Before the Assistant Commissioner of Customs, the
Respondent-Assessee contended that the Show Cause Notice
was extremely vague, unspecific, and unsustainable inasmuch
as it does not bring on record any evidence to classify the
imported product under Chapter 27. They further submitted
that since n-Hexane is a colourless volatile liquid soluble in
water and as it is a saturated hydrocarbon, it is to be correctly
classified under Chapter 29 wherein its specific entry is found.
Mere consideration of the flash point, boiling point alone to
justify classification under Chapter 27 without considering the
chemical composition, nature of the imported product and the
satisfaction of the express conditions/stipulations mentioned
under the Customs Tariff Headings and Central Excise Tariff
Headings which ultimately makes the classification under
Chapter 27 is erroneous and illegal.
6. After awarding due consideration to the replies, submissions,
and both oral and documentary evidence, and after hearing the
parties, the adjudicating authority passed Order-in-Original
No. KDL/AC/SB/03/2003 dated 01.09.2003/25.09.2003. In the
said order, n-Hexane was classified under Customs Tariff
Civil Appeal No.569 of 2012 Page 5 of 49
Heading 2710.00 and Central Excise Tariff Heading 2710.12.
This conclusion was primarily based on the chemical test
results delivered by SGS Redwood Services, which indicated
that the flash point of n-Hexane is less than 25°C and its
distillation range lies between 64°C and 70°C. Consequently,
it was held that the imported substance is not a pure compound
but a mixture of various hydrocarbons, and is therefore
appropriately classifiable under Chapter 27.
7. Finally, the Adjudicating Authority came to a finding that since
the flash point of imported material was less than 25°C, it is a
Motor Spirit falling under CTH 2710.00 and CETH 2710.12
under the broad heading of Chapter 27. In view of the
foregoing reasoning, the Adjudicating Authority rejected the
claims of the Respondent - Assessee and ruled that the
imported substance was liable to be classified under CTH
2710.00 and CETH 2710.12.
8. On being aggrieved by the said order passed by the
Adjudicating Authority, the Respondent - Assessee preferred
an Order-in-Appeal before the Office of the Commissioner.
Civil Appeal No.569 of 2012 Page 6 of 49
III. FINDINGS OF THE COMMISSIONER IN ORDER -IN-
APPEAL PREFERRED BY THE RESPONDENT -
ASSESSEE
9. The Commissioner (Appeals), having gone through the factual
matrix, noted that the Assistant Commissioner principally
relied upon the Chemical Test Report to arrive at a conclusion
that n-Hexane must be classified under Chapter 27 of the
Customs Tariff Act and Central Excise Tariff Act as the flash
point was below 25°C.
10. However, before the Commissioner (Appeals) the preliminary
point raised and duly considered by the Commissioner was that
the Harmonized System Nomenclature Notes (hereinafter
referred to as ‘HSN Notes’) are guiding light to the
interpretation of the Customs Tariff in case of any dispute with
regard to classification. Accordingly, reference was made to
the judgment of this Court in CCE v. M/s Wood Craft Products
Limited
1
, which in substance, rightly provided so that the HSN
Notes are an internationally accepted nomenclature aimed at
resolving tariff classification. As such, HSN Chapter Heading
29.01 deals with acyclic hydrocarbons which are both saturated
1
(1995) 3 SCC 454
Civil Appeal No.569 of 2012 Page 7 of 49
and unsaturated. It was held that there is a specific mention of
Hexane under heading 2901.10.
11. The Commissioner (Appeal) was of the view that the original
analytical report issued by SGS Redwood Services dated
10.05.2000 is congruent to the HSN heading which specifically
mentions Hexane under HSN Heading 2901.10 having 6 atoms
of Carbon with Hydrogen bond. Thus, on combined reading of
Chapter 29.01 of the Central and Customs Excise Tariff, n-
Hexane ought to be classified under CTH 2901.10 and under
CETH 2901.90.
12. Thus, the Order-in-Appeal No. 134/2004/101(KDL) Commr
(A)RAJ was allowed and the order dated 01/25.02.2003 passed
by the Adjudicating authority was set aside prompting the
Appellant-Revenue to file an appeal before the CESTAT.
IV. FINDINGS OF THE CESTAT UNDER THE
IMPUGNED ORDER
13. Succinctly, CESTAT substantiated the said issue in few
distinct points. Essentially, the CESTAT dismissed of the
appeal of the Appellant-Revenue and consequently allowed the
claim of the Respondent- Assessee thereby upholding the order
Civil Appeal No.569 of 2012 Page 8 of 49
of the Commissioner of Appeals. The findings of CESTAT are
summarised below.
14. The instant appeal filed by the Appellant-Revenue was
squarely covered by the decision in the case of Unimers India
Limited v. Commissioners of Customs, Mangalore
2
wherein
the classification of consignment of n-Hexane and several
questions inter alia was decided by the Commissioner of
Appeals by placing emphasis on the Foreign Trade Policy
regarding the classification of any item in the Indian Trade
Classification based on Harmonized System [hereinafter
referred to as ‘ITC (HS)’], more particularly para 2.3 which
specifically provided that the any doubt in respect of
classification of any item shall be referred to the Directorate
General of Foreign Trade (hereinafter referred to as ‘DGFT’)
and the decision of the DGFT shall be final. In pursuance to
doubts raised, the DGFT had clarified that the classification of
Hexane shall be under Chapter 29 of the Customs Tariff vide
Policy Circular dated 14.07.2004.
15. The SGS Report stated that the Distillation Range is at 67.2°C
and that as per the Kirk-Othmer Encyclopedia, wherein the
chemical characteristics of Hexane in Table 10 categorically
2
2009 SCC OnLine CESTAT 5021
Civil Appeal No.569 of 2012 Page 9 of 49
provides that the Distillation Range is 68.3°C and the Flash
Point at -23°C which is less than 25°C. On comparison
between the two, there appears not much difference in the
composition of the product. Pure hexane, being derived from
the method of fractional distillation of crude petroleum oil and
is not possible to completely remove certain impurities such as
benzene, polythene, compounds of sulfur, oxygen and chlorine
and the same is reflected in the Kirk-Othmer Encyclopedia.
Furthermore, CESTAT noted that the purity of Hexane is
63.91% as per the Table in the Encyclopedia and as per the
SGS Report, the purity stands recorded at 63.93% and the same
matches.
16. CESTAT then referred to the HSN explanatory Note which
expressly named Hexane under the heading 29.01. Pertinently,
the explanatory note under Chapter 27 primarily deals with
coal, natural minerals, petroleum oils, crude oils and its
fractions and their distillation products and thus expressly
excludes compounds such as ethane, benzene, phenol, pyridine
as they fall under Chapter 29 due to their specific purity
criteria.
17. Accordingly, CESTAT held that a separate chemically defined
organic compound in its pure or commercial state is
Civil Appeal No.569 of 2012 Page 10 of 49
particularly placed under Chapter 29 and not under Chapter 27
as it correctly matches the chemical composition and
description of commercially available pure Hexane. Thus, the
imported product existing in pure form with admitted
impurities shall not be classified as an isomer but as an
independent compound.
18. Further, with regard to the impurities, CESTAT was of the
view that it is not possible to remove all impurities and that the
presence of impurities such as sulfur, oxygen, chlorine are also
referred in the Kirk-Othmer Encyclopedia. However, it appears
in the table, the purity of n-Hexane is 63.91%.
19. Furthermore, CESTAT relied upon the DGFT circular dated
14.07.2004 issued under ITC (HS) which categorically stated
that the import of Hexane is covered under Chapter 29 of the
ITC (HS) Classifications of Export and Import Items, 2002-07.
20. In conclusion, the CESTAT also noted that the Appellant-
Revenue has not placed any evidence to show that the imported
good which are used as solvents are used as spark engine and
thus, the very contention of the product falling under Chapter
27 falls bereft of any evidence to the same.
Civil Appeal No.569 of 2012 Page 11 of 49
V. SUBMISSIONS CANVASSED BY THE APPELLANT –
REVENUE
21. Mr. S Dwarkanath, the Learned ASG appearing for the
Appellant-Revenue has taken this Court through the
following arguments –
22. The filing of the Bill of Entry by the Respondent-Assessee
was subject to provisional assessment and a Chemical Test
ought to be conducted. The SGS Chemical Test Report of
the imported goods recorded that the imported good is a
“mixture of saturated hydrocarbons in the form of clear
colourless liquid flashing below 25°C and having boiling
point between 66°C to 69°C”. Hence, the Learned ASG
submitted that factually, the nature of the product was that
of an isomer with impurity.
23. On the legal aspects, the Learned ASG submitted that the
main point for consideration is that the product imported by
the Respondent-Assessee is excluded from Chapter 29 of
Customs Tariff Act. He refuted the reliance of the CESTAT
on CCE v. Woodcrafts Products Limited (supra) by
contending and submitting that the Tariff Act is dependent
on HSN Notes only to the extent of a dispute and if
warranted so. However, if the Tariff Act is explicit on the
Civil Appeal No.569 of 2012 Page 12 of 49
classification of a product, HSN Notes need not be employed
to determine the heading under which the imported product
ought to be placed.
24. Thus, it was submitted that in the instant case, once the
Tariff Act was clear on the classification of the imported
product under Chapter 27, the CESTAT erred in placing
reliance on HSN Notes and the Explanation appended. As
per Chapter note 1(b) to Chapter 29 of HSN Explanatory
Notes, a mixture of acrylic hydrocarbon isomer, whether
saturated or not, are excluded from Chapter 29 and are
classifiable under Chapter 27.
25. It was lastly submitted that the once the SGS Test Report has
specifically stated that the imported product has a
Distillation Range (boiling point) between 63 to 70 °C and
flash point of below 25°C, the same shall be an admixture of
hydrocarbons and not a pure commercial compound and
ought to be classified under Chapter 27 of the Customs
Tariff Act and not under Chapter 29.
Civil Appeal No.569 of 2012 Page 13 of 49
VI. SUBMISSIONS CANVASSED BY THE RESPONDENT
- ASSESSEE
26. Per contra, Mr. Shyam Divan, the Learned Senior Counsel
appearing on behalf of the Respondent - Assessee submitted as
follows:
27. It was vehemently argued that n-Hexane is an Acyclic Straight
Chain Hydrocarbon containing six carbon and hydrogen bond
represented as C6H14 and are components of Petroleum oils.
While Petroleum oils and oils are covered from bituminous
minerals, other than crude oil, Acyclic Hydrocarbons which are
a component of Petroleum oil are specifically placed under
Chapter 29.
28. Reliance was placed on decisions of this Court in CCE v.
Madhan Agro Industries (India) P. Ltd
3
; CCE v. Wood Craft
Products Ltd (supra) ; CCE v. Bakelite Hylam Ltd
4
; CC v.
Business Forms Ltd
5
and CC v. Phil Corporation Ltd
6
to
contend that the Courts can safely refer the internationally
accepted HSN Notes for resolution of any dispute with respect
to classification. It is then submitted that since Hexane is
3
2024 SCC Online SC 3775
4
(1997)10 SCC 350
5
(2005) 7 SCC 143
6
(2008) 17 SCC 569
Civil Appeal No.569 of 2012 Page 14 of 49
covered under Chapter 29 Heading 29.01 of the HSN
Explanatory Notes, the same is to be rightly placed thereunder
and not under Chapter 27.
29. Normal Hexane or n-Hexane is a “Separately Chemically
defined compound” which means that it is a single chemical
compound which does not contain any other substance
deliberately added during or after its manufacture. Any added
substance changes the chemical composition to make the
substance a mixture and it ceases to be a pure compound.
However, mere presence of impurities will not make it a
mixture as according to the HSN Explanatory Notes, the term
impurities are only meant for those impurities that are only
borne out of the manufacturing process. Thus, it is argued that
it is not apparent from the Show Cause Notice that any impurity
has been deliberately added during the manufacturing process
or deliberately left behind or in any other manner making it a
mixture.
30. In addition, the Learned Senior Counsel also submitted that the
imported Hexane in the commercially pure form has 63.93%
of n-Hexane and the remaining are other components correctly
classified under unconverted starting materials which are not
deliberately added to the imported product. Thus, the thrust of
Civil Appeal No.569 of 2012 Page 15 of 49
the argument of Learned Senior Counsel was the presence of
impurities did not change the composition of the imported
product as the major component of the compound, i.e., n-
Hexane remained at 63.93%.
31. With regard to the HSN Explanatory Note, the Learned Senior
Counsel submitted that the classification of Hexane under CTH
2901.10 and CETH 2901.90 is also supported by Policy
Circular No.40 (RE-2003)/2002-2007 dated 14.7.2004 issued
by the DGFT wherein it is clearly mentioned that the import of
Hexane will fall under Chapter 29.
32. It was contended and submitted that for a compound to fall
under Chapter 27, more particularly CTH 2710.00 and CETH
2710.12, it must be a Motor Spirit and must satisfy two
conditions, i.e., the flash point has to be below 25°C and that it
must be used as a fuel spark in ignition engines. Merely
because of the boiling point range of the imported good fell in
the range of 63-70°C and that the flash point was less than
25°C, the same cannot be classified under Chapter 27. The
Show Cause Notice has failed to prove that n-Hexane is used
as a fuel in spark ignition engines and is bereft of any details to
the same. It was specifically submitted that the imported
product obtained from the process of fractional distillation
Civil Appeal No.569 of 2012 Page 16 of 49
from petroleum is used as a solvent for vegetable oil, low
temperature thermometer, calibrations, polymerization
reaction medium, paint diluents etc.
33. It was finally submitted that the Commissioner of Appeals as
well as the CESTAT have correctly held that the classification
of n-Hexane was under Chapter 29 and not under Chapter 27.
VII. ISSUES FOR CONSIDERATION BEFORE THIS
COURT
34. Having heard the Learned ASG appearing on behalf of the
Appellant – Revenue and the Learned Senior Counsel
appearing for the Respondent – Assessee and after the perusal
of the entire material on record, we are of the considered view
that the following point arises for our consideration.
“Whether the imported product, “n-Hexane” or
“Exxsol Hexane” is to merit classification under
Chapter 27, i.e., CTH 2710.00 and CETH 2710.12 as
a Petroleum Oil, more particularly Motor Spirit or
under Chapter 29, i.e., CTH 2901.10 and CETH
2901.90 as a Pure Hydrocarbon existing as a
Separate Chemical Compound.”
35. In order to ascertain the true classification of n-Hexane, we
have further formulated various headings which will aid us in
correct classification n-Hexane.
Civil Appeal No.569 of 2012 Page 17 of 49
VIII. ANALYSIS/CONSIDERATIONS BY THIS COURT
IN RE: BASIC CHEMICAL COMPOSITION AND
PROPERTIES OF n-HEXANE
36. Before we venture into the main issue on classification of n-
Hexane, we deem it necessary to set the foundation of the basic
physical and chemical composition and properties of n-
Hexane.
37. A hydrocarbon is a compound consisting of carbon and
hydrogen atoms only. The atoms of the said elements bond
over strong covalent bond by sharing of one or more pairs of
valence electrons to form a suitable stable structure. A
saturated hydrocarbon a compound comprising of only carbon
and hydrogen atoms bonding over single covalent bonds.
Hexane is one such generic term for a hydrocarbon that
consists of six Carbon atoms and fourteen Hydrogen atoms. n-
Hexane, covered under the umbrella of Hexane, is one such
saturated hydrocarbon bearing Chemical Formula C6H14,
most commonly existing in a straight chain structure,
represented by a definitive structural diagram as indicated
below. n-Hexane is a compound that exists in pure form. The
Civil Appeal No.569 of 2012 Page 18 of 49
following is the 3-Dimension structural representation of n-
Hexane
7
.
38. As seen from the pictorial representation, the compound is
linear, acyclic, has 6 carbon atoms (represented by grey balls)
balanced by Hydrogen bonds (white sticks attached the grey
ball). Moving on to the concept of n-Hexane being an isomer,
according to International Union of Pure and Applied
Chemistry (IUPAC), an isomer is “One of several species (or
molecular entities) that have the same atomic composition
(molecular formula) but different line formulae or different
stereochemical formulae and hence different physical and/or
chemical properties”. This means that the number of the
carbon and hydrogen atoms remains the same but the
arrangement of the same differs, giving each separate
7
Hexane | C6H14 | CID 8058 - PubChem - NIH
Civil Appeal No.569 of 2012 Page 19 of 49
compound different physical and/or chemical properties.
While the straight form is n-Hexane or just Hexane, the
branched form of the same makes isomers of n-Hexane.
39. The CESTAT has relied upon the Kirk-Othmer Encyclopedia
to study the physical and chemical properties of n-Hexane.
This Court also deems it appropriate to reproduce and
understand certain concepts of n-Hexane for better
understanding vis-a-vis classification and tariff determination.
The imported product in question as contended by the
Respondent-Assessee is pure commercial hexane and the same
is manufactured through fractional distillation process
petroleum or natural gas. As noted by the encyclopedia and
reiterated by the CESTAT, the impurities cannot be reduced to
nil but hydrogenation can significantly reduce impurities to
make it commercially more viable. Thus, according to Table
10 Hexane A (closest member to n-hexane) has Distillation
initial boiling point of Hexane in degree centigrade is 68.2. The
table also indicates that the impurities such as benzene and
sulfur are less in case of Hexane in the table.
40. Apropos, the detailed discussion on n-Hexane, we note that n-
Hexane is a Saturated Acyclic Hydrocarbon with chemical
formula C6H14, having a Distillation Range (boiling point)
Civil Appeal No.569 of 2012 Page 20 of 49
between 63 to 70°C with flash point at below 25°C as
identically recorded by the SGS Test Report.
IN RE: BURDEN OF PROOF IS GRACED OVER THE
SHOULDERS OF THE REVENUE
41. As rightly declared by the Courts in a catena of judgments, it
is trite law that in matters of classification of goods, the burden
of proof rests on the shoulders of the Revenue. This Court in
Union of India and Ors. v. Garware Nylons Limited
8
observed:
“....The burden of proof is on the taxing authorities
to show that the particular case or item in question is
taxable in the manner claimed by them. Mere
assertion in that regard is of no avail. It has been held
by this Court that there should be material to enter
appropriate finding in that regard and the material
may be either oral or documentary. It is for the taxing
authority to lay evidence in that behalf even before
the first adjudicating authority…”.
Further quoting para 35 of the judgment rendered by this Court in
Dunlop India Ltd. v. Union of India
9
:
“...When an article has, by all standards, a
reasonable claim to be classified under an
enumerated item in the Tariff Schedule, it will be
8
(1996) 10 SCC 413
9
(1976) 2 SCC 241
Civil Appeal No.569 of 2012 Page 21 of 49
against the very principle of classification to deny it
the parentage and consign it to an orphanage of the
residuary clause.”
42. Most recently, this court in Gastrade International v.
Commissioner of Customs
10
at para 45 observes:
“There cannot be any dispute to the proposition of
law as noted by the High Court that the burden of
proof as regards the classification of any goods of
importation is upon the Revenue/Customs authority
and the standard of proof in proceedings under the
Tariff Act is not “beyond reasonable doubt”.
However, whether “preponderance of probability”
can be the appropriate test for classification under
the Customs Act would be required to be examined in
the light of the “General Rules for the interpretation
of this Schedule” as provided in the First Schedule –
Import Tariff in Part 2 of the Tariff Act (hereinafter
referred to as the “Rules”)”
43. Once we have established that the burden of proof is to be
discharged by the Appellant - Revenue and that the test is of
preponderance of probability, we now advert to the next limb
of arguments raised by the parties, i.e., on the application and
interpretation of HSN Explanatory Notes.
10
(2025) 8 SCC 342
Civil Appeal No.569 of 2012 Page 22 of 49
IN RE: ON HSN EXPLANATORY NOTE AND GENERAL
RULES OF INTERPRETATION
44. The introduction of Harmonized System of Nomenclature
(HSN) Notes marks a significant advancement in the uniform
classification of goods for taxation and trade purposes.
Developed under the framework of the World Customs
Organization, HSN provides a standardized system that
ensures consistency and clarity in the identification of goods
across jurisdictions. The explanatory notes accompanying the
HSN serve as an essential interpretative guide, aiding
authorities, courts, and taxpayers in understanding the scope
and ambit of tariff entries. Their importance lies in minimizing
ambiguity and reducing disputes arising from divergent
interpretations of product classifications. By offering detailed
descriptions and illustrative guidance, HSN Notes facilitate a
more predictable and transparent tax regime. They also
promote international harmonization, thereby easing cross-
border trade and compliance. In the context of adjudication,
reliance on HSN Notes has been recognized as a valuable tool
in resolving classification issues. Consequently, their adoption
strengthens legal certainty and enhances the efficiency of tax
administration.
Civil Appeal No.569 of 2012 Page 23 of 49
45. The World Customs Organization aimed at enhancing the
effectiveness and efficiently of the Customs Administrations
has provided 6 General Rules for the Interpretation of the
Harmonized System and more particularly, Rule 3(a) speaks
“When by application of Rule 2 (b) or for any other
reason, goods are, prima facie, classifiable under two
or more headings, classification shall be effected as
follows :
a) The heading which provides the most specific
description shall be preferred to headings providing
a more general description. However, when two or
more headings each refer to part only of the materials
or substances contained in mixed or composite goods
or to part only of the items in a set put up for retail
sale, those headings are to be regarded as equally
specific in relation to those goods, even if one of them
gives a more complete or precise description of the
goods.”
(emphasis supplied)
46. The principle enunciated from the above extraction is that a
specific heading is preferred over a general heading. The same
has been dealt with this Court wherein the rule of specific over
general has gained judicial stamp.
47. Primarily, the controversy involved in the present matter is
whether n-Hexane is to be classified under Chapter 27 or under
Chapter 29 which attracted the contours of Rule 3(a) of the
Civil Appeal No.569 of 2012 Page 24 of 49
General Rules of Interpretation which specifically states that
the heading which provides for the most specific description
shall be preferred to headings providing a more general
description. The Rule makes it clear that if any good is
classifiable under two headings, the one that is most specific
shall be preferred over the one which is general. For applying
the said Rule, we deem it appropriate to critically examine
Chapter 27 as well as Chapter 29 of the HSN Explanatory
Notes in comparison to that of the Customs Tariff and Central
Excise Tariff Headings.
48. The contention of the Appellant-Revenue that since the boiling
point of the imported good is between 63 - 70°C and since the
flash point is below 25°C, it must be classified as a Petroleum
oil to be used in spark ignition engine under Chapter 27 is
vehemently rebutted by the Respondent-Assessee by
categorically referring to the point that Hexane is a separate
chemically defined compound existing in pure commercial
form as defined under Chapter 29. Thus, under such
circumstances, it is necessary to investigate the rival
contentions by seeking aid from the HSN Notes to ascertain the
Chapter under which the n-Hexane has to be classified.
Civil Appeal No.569 of 2012 Page 25 of 49
49. As it was specifically contended by the Appellant-Revenue that
HSN Explanatory Notes are to be resorted only when there is
ambiguity, this Court considers it appropriate to examine the
same in the light of the interpretation and guiding value of the
Notes.
50. This Court has already dealt with the scope of HSN
Explanatory notes and has observed that any dispute related to
tariff classification can be resolved with the aid of HSN
Explanatory Notes which also forms the basis for Central
Excise Tariff Act, 1985 and Customs Tariff Act, 1962. Once
the expression used in the Notes is in the same context as that
of the Tariff Acts, it is safe to import the meaning directly from
the HSN Notes and the explanation thereto.
51. The same has already been discussed in the case of Collector
of Customs, Bombay v. Business Forms Ltd (supra) which
relied upon CCE v. Wood Craft Products
11
at Para 18 wherein
it came to be held:
“...any dispute relating to tariff classification, a safe
guide is the internationally accepted nomenclature
emerging from the HSN. This being the expressly
acknowledged basis of the structure of central excise
tariff in the Act and the tariff classification made
therein, in case of any doubt the HSN is a safe guide
11
(1995) 3 SCC 454
Civil Appeal No.569 of 2012 Page 26 of 49
for ascertaining the true meaning of any expression
used in the Act.”
52. As it is clearly stated that HSN Notes are used to shed light on
the issue of the Classification, we now deem it appropriate to
peruse Chapters 27 and 29 under the HSN Explanatory Notes
to that of Customs Tariff Act and Central Excise Tariff Act for
better understanding and for the sake of convenience, the HSN
notes of both heading in comparison with both Acts are
enumerated herein below:
HSN EXPLANATORY
NOTES
CHAPTER 27
CUSTOMS TARIFF
ACT
CHAPTER 27
CENTRAL EXCISE
TARIFF ACT
CHAPTER 27
Mineral fuels, mineral oils
and products of their
distillation; bituminous
substances; mineral waxes
Chapter Notes.
1. This Chapter does not
cover:
(a) Separate chemically
defined organic
compounds, other than
pure methane and propane
which are to be classified in
heading No. 27.11;
Mineral Fuels, mineral oils
and products of their
distillation; bituminous
substances; mineral waxes.
Notes:
1. This Chapter does not
cover:
(a) Separately chemically
defined organic
compounds, other than
pure methane and propane
which are to be classified in
heading No. 21.11
(b) Medicaments of heading
No. 30.03 or 30.04; or
Mineral Fuels, mineral oils
and products of their
distillation; bituminous
substances; mineral waxes.
Notes:
3. This Chapter does not cover:
(d) Separately chemically
defined organic compounds,
other than pure methane and
propane which are to be
classified in heading No.
21.11
(e) Medicaments of Chapter 30
(f) Mixed Unsaturated
Hydrocarbons of Chapter 33
to 38
Civil Appeal No.569 of 2012 Page 27 of 49
(b) Medicaments of
heading No. 30.03 or
30.04; or
(c) Mixed unsaturated
hydrocarbons of heading
No. 33.01, 33.02 or 38.05.
2. References in heading No.
27.10 to "petroleum oils
and oils obtained from
bituminous minerals
include not only petroleum
oils and oils obtained from
bituminous minerals but
also similar oils, as well as
those consisting mainly of
mixed unsaturated
hydrocarbons, obtained by
any process, provided that
the weight of the non-
aromatic constituents
exceeds that of the
aromatic constituents.
:
:
:
GENERAL
The Chapter covers,
covers, in general, coal and
other natural mineral fuels,
petroleum oils and oils
obtained from bituminous
minerals, their distillation
products, and products of a
similar kind obtained by
any other process. It also
(c) Mixed Unsaturated
Hydrocarbons of heading
No. 33.01, 33.02 or 38.05.
2. References in heading No.
27.10 to ‘Petroleum oils
and oils obtained from
bituminous minerals’
include not only petroleum
oils and oils obtained from
bituminous minerals but
also similar oils, as well as
those consisting mainly of
unsaturated hydrocarbons,
obtained by any process,
provided that the weight of
the non -aromatic
constituents exceeds that of
the aromatic constituents.
27.10
2710.00 Petroleum oils and
oils obtained from
bituminous minerals, other
than crude; Preparations
not else-where specified or
included, containing by
weight 70% or more of
petroleum oils or of oils
obtained from bituminous
minerals, these oils being
the basic constituents of the
preparations
4. References in heading No,.
27.10 to ‘Petroleum oils and
oils obtained from
bituminous minerals’
include not only petroleum
oils and oils obtained from
bituminous minerals but also
similar oils, as well as those
consisting mainly of
unsaturated hydrocarbons,
obtained by any process,
provided that the weight of
the non -aromatic
constituents exceeds that of
the aromatic constituents.
:
:
4.’Flash Point’ shall be
determined in accordance
with the tests prescribed in
the rules made in the
Petroleum Act, 1934.
27.10 Petroleum oils and
oils obtained from
bituminous minerals, other
than crude; Preparations not
else-where specified or
included, containing by
weight 70% or more of
petroleum oils or of oils
obtained from bituminous
minerals, these oils being the
basic constituents of the
preparations
- Motor spirit, that is to say,
any hydrocarbon oil
Civil Appeal No.569 of 2012 Page 28 of 49
covers mineral waxes and
natural bituminous
substances. Goods of this
Chapter may be crude or
refined; however, with the
exception of methane and
propane, when they are
separate chemically
defined organic
compounds in the pure or
commercially pure state,
they are to be classified in
Chapter 29. 29. For certain
of these compounds (e.g.,
ethane, benzene, phenol,
pyridine) there are specific
purity criteria indicated in
Explanatory Notes 29.01.
29.07 and 29.33. Methane
and propane are classified
in heading 27.11, even
when pure.
:
:
27.10- Petroleum oils and
oils obtained from
bituminous minerals, other
than crude; preparations
not elsewhere specified or
included, containing by
weight 70% or more of
petroleum oils or of oils
obtained from bituminous
minerals, these oils being
the basic constituents of the
preparations.
(excluding crude mineral oil)
which has its flash point
below 25 °C and which
either by itself or in an
admixture with any other
substance, is suitable for use
as spark ignition engines:
2710.11 – Special Boiling
point spirits (other than
Benzene -toluol) with
nominal boiling range 55-
115°C
2710.12 - Special Boiling
point spirits (other than
Benzene, Benzol, Toluene
and Toluol) with nominal
boiling range 63-70°C
2710.13 – other special
boiling spirits (other than
Benzene, Benzol, Toluene
and Toluol)
2710.14 – Naphtha
2710.15 – Natural Gasoline
Liquid
2710.19 – other
2710.90 – other
Civil Appeal No.569 of 2012 Page 29 of 49
The products covered by
this heading are those
which have undergone any
process other than those
specified in the
Explanatory Note to
heading 27.09.
The heading includes:
(A) "Topped crudes" (where
certain lighter fractions
have been removed by
distillation), as well as
light, medium and heavy
oils obtained in more or
less broad fractions by the
distillation or refining of
crude petroleum oils or of
crude oils obtained from
bituminous minerals.
These oils, which are more
or less liquid or semi-solid,
consist predominantly of
non-aromatic
hydrocarbons such as
paraffinic, cyclanic
(naphthenic).
They include:
(1) Petroleum spirit.
(2) White spirit.
(3) Kerosene.
(4) Gas-oils.
(5) Fuel oils.
(6) Spindle-oils and
lubricating oils.
(7) White oils.
Civil Appeal No.569 of 2012 Page 30 of 49
The heading covers
fractions as described
above, even if they have
been further treated to
eliminate impurities (e.g.,
treatment with acids or
alkalis, with selective
solvents, with zinc
chloride, with absorbent
earths, etc., or by re-
distillation), provided this
treatment does not produce
separate chemically
defined compounds in a
pure or commercially pure
state (Chapter 29).
HSN EXPLANATORY
NOTES
CHAPTER 29
CUSTOMS TARIFF ACT
CHAPTER 29
CENTRAL EXCISE
TARIFF ACT
CHAPTER 29
ORGANIC CHEMICALS
Chapter Notes.
1.- Except where the
context otherwise requires,
the headings of this
Chapter apply only to:
(a) Separate chemically
defined organic
compounds, whether or
Organic Chemicals
Notes:
1. Except where the
context otherwise
requires, the headings
of this Chapter apply
only to:
(a) Separate chemically
defined organic
compound, whether
or not containing
impurities;
(b) Mixtures of two or
more isomers of the
same organic
Organic Chemicals
Notes:
1. Except where the
context otherwise
requires, the headings
of this Chapter apply
only to:
(a) Separate chemically
defined organic
compound, whether
or not containing
impurities;
(b) Mixtures of two or
more isomers of the
Civil Appeal No.569 of 2012 Page 31 of 49
not containing
impurities;
(b) Mixtures of two or
more isomers of the same
organic compound
(whether or not containing
impurities), except
mixtures of acyclic
hydrocarbon isomers
(other than stereoisomers),
whether or not saturated
(Chapter 27);
:
:
GENERAL
As a general rule, this
Chapter is restricted to
separate chemically
defined compounds,
subject to the provisions of
Note I to the Chapter.
(A) Chemically defined
compounds
(Chapter Note 1)
A separate chemically
defined compound is a
compound (whether
or not containing
impurities), except
mixtures of acyclic
hydrocarbon isomers,
(other than stereo
isomers), whether or
not saturated
(Chapter 27)
:
:
:
I. Hydrocarbons and
their Halogenated,
Sulphonated,
Nitrated or
Nitrosated
Derivatives.
29.01 Acyclic
Hydrocarbons
2901.10 – Saturated
– Unsaturated
2901.21 – Ethylene
2901.22 – Propene
(propylene)
2901.23 – Butene (butylene)
and isomers thereof
2901.24 – Buta-1,3-diene and
isomers thereof
2901.29 – Other
same organic
compound (whether or
not containing
impurities), except
mixtures of acyclic
hydrocarbon isomers,
(other than stereo
isomers), whether or
not saturated (Chapter
27)
I. Hydrocarbons and
their Halogenated,
Sulphonated, Nitrated
or Nitrosated
Derivatives.
29.01 Acyclic Hydrocarbons
2901.10 – Acetylene (whether
in dissolved condition or not)
– Unsaturated
2901. 90 – other
Civil Appeal No.569 of 2012 Page 32 of 49
single chemical compound
of known structure, which
does not contain other
substances deliberately
added during or after its
manufacture (including
purification). Accordingly,
a product consisting of
saccharin mixed with
lactose, for example, to
render the product suitable
for use as a sweetening
agent is excluded from this
Chapter (see Explanatory
Note to heading 29.25).
A separate chemical
defined compounds of this
Chapter may contain
impurities
(Note 1 (a)). An exception
to this rule is created by the
wording of heading 29.40
which, with The separate
chemically defined
compounds of this Chapter
may contain impurities
regard to sugars, restricts
the scope of the heading to
chemically pure sugars.
Civil Appeal No.569 of 2012 Page 33 of 49
The term " impurities"
applies exclusively to
substances whose presence
in the single chemical
compound results solely
and and directly from the
manufacturing process
(including purification).
These substances may
result from any of the
factors involved in the
process and are principally
the following:
(a) Unconverted starting
materials.
(b) Impurities present in the
starting materials.
(c) Reagents used in the
manufacturing process
(including purification).
(d) By-products.
It should be noted,
however, that such
substances are not in all
cases regarded as"
impurities" permitted
under Note 1 (a). When
such substances are
Civil Appeal No.569 of 2012 Page 34 of 49
deliberately left in the
product with a view to
rendering it particularly
suitable for specific use
rather than for general use,
they are not regarded as
permissible impurities. For
example, a product
consisting of methyl
acetate with methanol
deliberately left in with a
view to improving its
suitability as a solvent is
excluded (heading 38.14).
For certain compounds
(e.g.. ethane, benzene,
phenol, pyridine), there are
specific purity criteria,
indicated in Explanatory
Notes to headings 29.01.
29.02, 29.07 and 29.33.
This Chapter further
includes, whether or not
they contain impurities,
mixtures of isomers of the
same organic compound.
This provision applies only
to mixtures of compounds
having the same chemical
function (or functions) and
which either coexist in their
natural form or are
Civil Appeal No.569 of 2012 Page 35 of 49
obtained simultaneously in
the course of the same
synthesis. Mixtures of
acyclic hydrocarbon
isomers (other than
stereoisomers), whether or
not saturated, are, however,
excluded (Chapter 27).
53. Sub Chapter 29.01 of Chapter 29 of the HSN Explanatory
Notes clearly identifying Hexane under Chapter 29 is
reproduced below:
I - 29.01,
SUB-CHAPTER I
HYDROCARBONS AND THEIR HALOGENATED,
SULPHONATED, NITRATED OR NITROSATED
DERIVATIVES
29.01 - ACYCLIC HYDROCARBONS.
2901.10 – Saturated
- Unsaturated :
2901.21 -- Ethylene
2901.22 -- Propene (propylene)
2901.23 -- Butene (butylene) and isomers thereof
2901.24 -- Buta-1,3-diene and isoprene
2901.29 -- Other
Civil Appeal No.569 of 2012 Page 36 of 49
Acyclic hydrocarbons are compounds containing only
carbon and hydrogen which have no rings in their structure.
They can be classified in two categories :
(A) Saturated acyclic hydrocarbons.
(B) Unsaturated acyclic hydrocarbons.
(A) SATURATED ACYCLIC HYDROCARBONS
These form a homologous series which may be
represented by the general formula (CₙH₂ₙ₊₂). They occur
abundantly in nature and are the main components of
petroleum oils.
The basic hydrocarbon is methane(CH₄), with one atom
of carbon. Methane and also propane (C₃H₈) with three atoms
of carbon are, however, classified in heading 27.11 even if
they are pure.
The saturated acyclic hydrocarbons of this heading include:
(1) Ethane (C₂H₆) with two atoms of carbon.
To be classified in this heading, ethane must have a purity
of 95 % or more by volume. Ethane of lower purity is
excluded (heading 27.11).
(2) Butanes (C₄H₁₀), with four atoms of carbon.
(3) Pentanes, with five atoms of carbon.
(4) Hexanes, with six atoms of carbon.
(5) Heptanes, with seven atoms of carbon.
(6) Octanes, with eight atoms of carbon.
(7) Nonanes, with nine atoms of carbon.
(8) Decanes, with ten atoms of carbon.
(9) Pentadecanes, with fifteen atoms of carbon.
(10) Triacontanes, with thirty atoms of carbon.
(11) Hexacontanes, with sixty atoms of carbon.
These saturated hydrocarbons are all insoluble in water. At
normal temperature and pressure, such hydrocarbons
containing up to four atoms of carbon are gaseous; those
Civil Appeal No.569 of 2012 Page 37 of 49
containing five to fifteen atoms of carbon are liquid;
hydrocarbons with a greater number of carbon atoms are
generally solid.”
54. Notably, Chapter 27 and 29 of HSN Explanatory Notes and
Chapter 27 and 29 of the Customs Tariff Act and Central
Excise Tariff Act are respectively pari materia leaving little or
no room for doubt. Chapter 29 of the HSN Notes at Sub-
Heading 2901.10 contains 2 broad classifications of Acyclic
Hydrocarbons - Saturated and Unsaturated. On reading further,
it is categorically mentioned that Hexane is a Saturated
Hydrocarbon which is acyclic (linear) in structure containing 6
atoms of Carbon with hydrogen bond. Similarly, Chapter 29 of
the Customs Tariff Act mentions Acyclic Saturated
Hydrocarbons as classified under Sub Heading 2901.10.
55. On plain reading, it is clear that the tenor of Chapter 27 of the
HSN Explanatory Note is confined to petroleum oils and oils
obtained from bituminous minerals other than crude oil. As per
Kirk-Othmer Encyclopedia for Chemical Technology, Hexane
or n-Hexane is obtained through fractional distillation of
petroleum. The CESTAT vide the impugned order relied on
Table 10 found in the Encyclopedia (supra) and observed that
the Distillation was 68.3°C and the flash point of was below
Civil Appeal No.569 of 2012 Page 38 of 49
25°C. Further, it is also mentioned that n-Hexane is used as a
solvent in industries. The Chemical report submitted by SGS
Analytical Report records Distillation Range of n-Hexane is at
67.2°C. Going by the chemical characteristic and mannerisms
of n-Hexane and its physical and chemical properties, one will
be compelled to accept and admit that the classification ought
to be done under Chapter 27 but we are inclined to critically
examine Chapter 29.
56. For a product to fall under Chapter 27, more particularly under
the CETH 2710.12 as a Motor Spirit, the Supplementary notes
to Chapter 27 provide that a Motor Spirit is “any hydrocarbon
oil (excluding crude mineral oil) which has its flashpoint below
25°C and which either by itself or in admixture with any other
substance, is suitable for use as fuel in spark ignition engines”.
Hence, for a product to be classified as a Motor Spirit, it ought
to fulfil 3 conditions, viz, it should be a hydrocarbon oil, have
a flash point of below 25°C and it ought to be shown that the
product is used as a fuel in spark ignition engines either by
itself or in admixture with any other substance.
Civil Appeal No.569 of 2012 Page 39 of 49
57. This Court in CCE v. GAIL (India)
12
held as under at Para 11
and Para 12 -
“It is evident from the rival contentions, that the
competing entries are “other” “motor spirits”- urged
by the Revenue (TI 2710.11.19) whereas the other
entry is “2710 19 90 --- Other”. Now, since both
tariff entries fall within Chapter 2710, the chapter
notes are an internal guide to their interpretation.
Supplementary note (a), therefore holds the key to
interpretation; it states that “motor spirit” means
any hydrocarbon oil (excluding crude mineral oil)
which has its flash point below 25°C and which either
by itself or in admixture with any other substance, is
suitable for use as fuel in spark ignition
engines.” Therefore, any product, to qualify under
the broad rubric of “motor spirit” should be
(a) a hydrocarbon oil excluding crude mineral oil;
(b) which has a flash point below 25°C and
(c) which by itself, or in admixture with any other
substance, is suitable for use as a fuel in spark
ignition engines.
12. A plain reading of the note would reveal that all
the ingredients have to be satisfied. It is not sufficient
if the product is a hydrocarbon oil or that it has a
flash point below 25°C; it should qualify both
conditions, and also fulfil the last condition that by
itself, or in admixture with any other
substance should be suitable for use as fuel in spark
ignition engines. It is crucial that the admixture
should be with any other substance. The use of the
term “other” is significant because it is meant to
exclude the reference to a class of oils, i.e.,
hydrocarbon oil.”
12
2022 SCC OnLine SC 2130
Civil Appeal No.569 of 2012 Page 40 of 49
58. On examining the conditions, we find that the Appellant-
Revenue has failed to discharge its duty to prove that the
imported product is a Motor Spirit. Apart from contending that
the flash point of n-hexane is below 25°C, nothing has been
placed on record to conclusively arrive at a finding that n-
hexane imported by Respondent-Assessee was used as Motor
Spirit which is suitable for use as fuel in spark ignition engines.
The SGS Chemical Test report only records that the flash point
of n-Hexane is below 25°C but as already discussed supra, it
was the bounden duty of the Appellant-Revenue to provide
cogent evidence to indicate the use of the imported product as
a Motor Spirit. Per contra, it is the contention of the
Respondent – Assessee that n-hexane is used as a solvent for
extraction of vegetable oils, manufacture of HDPE etc. We find
merit in the contentions of the Respondent – Assessee that
mere emphasis on the flash point being below 25°C will not
render the imported product to be placed under Chapter 27,
especially in the teeth of the judgment of this Court mandating
sufficient satisfaction of all the 3 conditions. Thus, the
contention the Appellant –Revenue is sans cogent evidence to
show that the imported substance is a Motor Spirit.
Civil Appeal No.569 of 2012 Page 41 of 49
59. Chapter Note 1 to Chapter 29 under HSN Explanatory Notes
defines a “Separate Chemically Defined Compound” as “a
substance consisting of one molecule species whose
composition is defined by a constant ratio of elements and can
be represented by a definitive structural diagram.” The trigger
for a compound for it to be a Separate Chemical Compound
arises only when the said two criteria are satisfied, i.e., its
composition must be defined by a constant ratio of elements
and that it can be represented by a definitive structural diagram.
As already depicted above, although the chemical formula of
n-Hexane is C6H14 and so do the isomers of n-Hexane have
the same chemical composition, the structural diagram of n-
Hexane makes it fully differentiable from that of its isomers.
The words included under Chapter 29 specifically state
‘definitive structural diagram’ meaning thereby that it is the
structural formation of bonds of carbon and hydrogen that give
it a unique structure making it a separate chemical compound.
Civil Appeal No.569 of 2012 Page 42 of 49
60. The above picture is a structural representation of the 5 isomers
of Hexane. Pertinently, all the isomers of Hexane have C6H14
as molecular composition but differ in the arrangement of the
carbon and hydrogen atoms. This phenomenon is called
isomerism. In simple words, isomers are compounds that have
the same number of building blocks but by assembling them in
different ways, many distinct compounds exhibiting distinct
physical and chemical properties would emerge. As seen from
the diagram reproduced above, except n-Hexane, the other
isomers of hexane are branched. In the instant case, the
imported product is n-Hexane which has a linear definitive
structure unlike the other four isomers of Hexane thereby
displaying notably different physical and chemical properties.
Civil Appeal No.569 of 2012 Page 43 of 49
61. Now that we have observed that n-Hexane has constant ratio of
elements, i.e., C6H14 and that it is also has a definitive
structural diagram, it satisfies the conditions to be classified
under Chapter 29 as a separately defined chemical compound.
62. However, a single chemical compound may also have several
impurities. As contended by the Learned ASG for the
Appellant-Revenue, the presence of impurities makes n-
Hexane a mixture of isomer which is specifically excluded
from Chapter 29 and is to be placed under Chapter 27. The term
impurities under Chapter Note 1 of Chapter 29 are acquired by
the compound from 4 factors during or after manufacturing
process, namely, (1) unconverted starting materials, (2)
impurities present in the starting materials (3) reagents used in
the manufacturing process and (4) by products.
63. The imported product is obtained by way of fractional
distillation of petroleum and no other substance is deliberately
left behind or added to the single compound to make it suitable
for specific use. As such from Table 10 of the Kirk Othmer
Encyclopedia, the impurities in n-Hexane are other isomers of
Hexane along with sulfur, chlorine etc. which are of negligent
percentage and thus do not suppress the characteristic of n-
Hexane and its presence. Thus, while it is contended by the
Civil Appeal No.569 of 2012 Page 44 of 49
Appellant-Revenue that the imported product suffers from
impurities and is not a pure compound, the extent of other
compounds, i.e., 2,3 Dimethylbutane (0.05%), 2-Methyl
Pentane (3.48%), 3-Methyl Pentane (9.38%), Methyl
cyclopentane (19.3%), Cyclohexane (0.78%), Benzene
(2.81%) and Dimethyl pentane (0.16%) are the unconverted
starting materials, which are not deliberately added during
manufacturing process nor deliberately left to render the
product suitable for specific use. As per the SGS Chemical
Analysis Report, the percentage of n-Hexane is 63.93% with
other impurities standing at a lesser rate than n-Hexane. As
rightly observed by CESTAT, the percentage of n-Hexane in
the SGS Test Report is congruent to the recordings under Table
10 of the Kirk-Othmer Encyclopedia and the same remains
undisputed.
IN RE: CLASSIFICATION OF HEXANE UNDER CHAPTER
29 AS CLARIFIED BY THE DGFT IN THE POLICY
CIRCULAR
64. On perusal of the Policy Circular No. 40(RE-2003)/2002-2007
dated 14.07.2004, it is seen that clarifications were sought as
to the import of Hexane covered under Chapter 29 of ITC (HS)
Civil Appeal No.569 of 2012 Page 45 of 49
Classification wherein the DGFT clarified that import of
Hexane is covered under Chapter 29 of the ITC (HS)
Classifications of Export and Import Items, 2002-07.
65. This Court in Atul Commodities Private Limited v.
Commissioner of Customs
13
had held that according to Para
2.3 of the Foreign Trade Policy regarding classification of
items in the ITC (HS) (2002) had observed that any doubt with
respect to the classification of any item under the ITC (HS)
shall be referred to the DGFT whose decision shall be final and
binding. In view of the same, the binding decision of the DGFT
has clearly enunciated that the import of Hexane shall fall
within the contours of Chapter 29.
66. Thus, the merits of classification of Hexane under Chapter 29
of the Customs Tariff Act was already clarified by the DGFT
and the same bound the authorities. The instant appeals sought
by the Appellant-Revenue ought to be dismissed by placing
reliance on this Policy Circular dated 14.07.2004 alone.
13
(2009) 5 SCC 46
Civil Appeal No.569 of 2012 Page 46 of 49
IN RE: REVENUE INVOLVED IN CLASSIFICATION OF
GOODS
67. The Indian Trade Classification (Harmonized System) (‘ITC
(HS)’) provides identity to various products imported into the
country. This country has adopted the Indian trade
Classification which is also based upon and is an extended
version of the internationally recognised Harmonized System
Notes or the HSN Notes.
68. Much stress has been supplied on the correct classification of
goods by the Customs authority. A wrong classification attracts
enhanced or reduced percentage of duty; payment of hefty
penalties or even wrong applications of the Circulars issued
from time to time. When things stand thus, it is for the
Appellant-Revenue to pay close attention to the duty imposed
along with directions/circulars issued in respect of the same.
69. The percentage of duty payable under Chapter 27 of the
Customs Tariff Act is higher than what is prescribed under
Chapter 29. The stark difference in the duty payable under the
two chapters evidently spills the reasons for such a
classification. The products under Chapter 27 are minerals and
in the instant matter as argued by the Appellant- Revenue, are
Civil Appeal No.569 of 2012 Page 47 of 49
derivatives of petroleum products. However, a derivative
taking the shape of an organic compound is placed under
Chapter 29 and is severed from Chapter 27 on the specific
reason that certain products exist separately after garnering
unique structural representation. Thus, n-Hexane is rightly
classifiable under Chapter 29, more particularly under CTH
2901.10 and CETH 2901.90.
70. While various factors are considered for classification a
misclassification may cost heavy burden on the Revenue as
well as the Assessee. No person or authority may be afflicted
with a burden that will defeat the contours and objective of the
provisions.
IX. CONCLUSION
71. Hence, after thorough examination of the issue involved, we
conclude with the findings as mentioned under -
a) Initial burden of proof is not discharged by the Appellant-
Revenue – The only contention raised by the Appellant-
Revenue was that the Distillation range (boiling point)
was between 63°C to 70°C and flash point was below
25°C. No oral or documentary evidence was led to
Civil Appeal No.569 of 2012 Page 48 of 49
support the submission that the imported good is a Motor
Spirit as under the essentials laid down under Chapter 27.
b) The application of Rule 3(a) of the General Rules of
Interpretation of the HSN Notes, clearly applies to the
present matter – HSN Notes guides Customs Tariff and
tariff determination. In light of the same, the specific
mention of Hexane under Chapter 29 of the HSN Notes
clearly defines and places Hexane under Chapter 29 as it
exists as a separate chemically defined compound
exhibiting distinct chemical and physical properties.
c) Since the burden has not been discharged by the Revenue,
on examination of Chapter 29 of the Customs Tariff,
significantly, n-Hexane is a saturated acyclic hydrocarbon
existing as a separate chemical compound in pure
commercial form. Further, no other substance is
deliberately added during or after the manufacturing
process or deliberately left behind to classify it as a
mixture with impurities.
d) Emphasis is supplied on Policy Circular dated 14.07.2004
issued by the DGFT wherein it is categorically clarified
that the import of Hexane falls under Chapter 29 of the
Customs Tariff Act.
Civil Appeal No.569 of 2012 Page 49 of 49
e) The Appellant-Revenue cannot be unjustly enriched due
to wrong classification of products which is prima facie
also against the classification of the same product under
HSN Notes. The Revenue implications in matters such as
these are far and wide having significant impact on the
Exim status of the nation.
72. Since the primary contentions and issues raised in this matter
is one pertaining to the classification of n-Hexane, the issues
are dealt accordingly and the appeal of the Appellant-Revenue
stands dismissed in view of the above reasoning and the order
of CESTAT dated 15.07.2011 stands affirmed.
73. Pending applications, if any, stands disposed of.
...................................................J.
[ARAVIND KUMAR ]
.....................................................J.
[PRASANNA B. VARALE]
NEW DELHI;
MAY 25
th
, 2026.
Legal Notes
Add a Note....