ORDER
K.S. Venkataramani, Member (T)
1. These appeals and stay application have been filed by the Collector of Customs, Bombay against the orders dated 23.4.1990 and 7.5.1990 passed by the Collector of Customs (Appeals), Bombay. The former order is in the case of respondents, M/s. Century Enka Ltd. and the latter order is in the case of respondents, M/s. Haryana Petro Chemicals (Appeal C/No. 2633/90-C). The stay application for staying the operation of the impugned order has become infructuous since the appeals stand posted for hearing on merits and the stay application is, therefore, rejected as such. The common issue involved in these appeals is whether the goods imported by the respondents in all these cases, which is described as ‘Spin Finish Oil’ will be eligible for exemption under Notification 136/86 on being classified under heading 34.03 Customs Tariff Act 1975 as also whether exemption under Notification 51/86 will be available to the product imported. In all these cases, the goods on import were assessed to duty under heading 34.03 which covers lubricating preparations and preparations of a kind used for the oil or grease treatment of textile materials, leather, furskins or other materials, but excluding preparations containing as basic constituents, 70% or more by weight of petroleum oils or of oils obtained from bituminous minerals. The appellants, herein, after paying duty as assessed on clearance of the goods, subsequently, filed claims for refund of duty on the grounds that these are lubricating preparations and, therefore, entitled for concessional assessment under Notification No. 51/86. The claims were rejected by the Assistant Collector (Customs) in the case of respondents, M/s. Century Enka Ltd. on the ground that heading 34.03 consists of two categories of chemicals, namely, lubricating preparations and preparations of a kind used for the oil or grease treatment of textile materials, etc. It was held by the Assistant Collector that the goods imported were not lubricating preparations, but fell in the other category. It was, further, held by the Assistant Collector that classification of the goods under heading 34.03 is not in dispute but that the wordings of the notification would show that it did not cover all lubricants but only those lubricants which are described as lubricating preparations. Notification 51/86 was held to be not applicable. In the case of respondents, M/s. Haryana Petro Chemicals, the Assistant Collector of Customs, in his order, held that notification 51/86 covers only lubricating preparations and the goods imported had (been) classified under heading 34.03 as preparations for treatment of textile materials which is not covered by the notification 51/86. He also held that the two categories are different as the notification applied only to lubricating preparations. Appeals were filed against these orders before the Collector (Appeals) and the Collector (Appeals) considered in detail authoritative technical literature, considered the composition of the spin finish oil and observed that it consisted of lubricants and anti-static agent and emulsifier and the ratio in which these components are used, being a secret, but in the general proportion 40 – 60% (lubricant); 10 – 25% (Antistatic agent); and 15 – 35% (Emulsifier). He also relied upon the opinion given by various experts/bodies like Bombay Textile Research Association; opinion given by Dr. Nand Kishore and Shri D.S. Nadkarni. The Collector concluded that spin finish oil is a lubricating preparation and that it is a blend of lubricants (mineral oil) and surfactants whose ratio keeps on varying from one brand to another. The Collector (Appeals), further, look up the point of the Assistant Collector that lubricating preparation is one category and preparation of a kind used for the oil or grease treatment is another kind. The Collector (Appeals) referred to the HSN Explanatory Note at page 487 for the group of products covered under ‘G’ and concluded that, according to the HSN Explanatory Note, preparations for lubricating textile material will fall under the category of the lubricating preparation and not under the latter category. Therefore, the Collector held that spin finish oils which are used for reducing friction are lubricating preparations and will fall under heading 34.03 CTA and will also be eligible for exemption under the relevant notification. The Collector concluded that the main component is lubricant and which gives them the essential character of a lubricating preparation and they will be classifiable as such by applying Rule 3(b) of the Rules for the Interpretation of the Tariff which lays down that the goods be classified by their material which used the essential character. The Collector followed a similar reasoning in his order in respect of respondents, M/s. Haryana Petro Chemicals and held that the spin finish oil imported by them is also eligible for exemption under Notification 136/86. The Collector of Customs, Bombay is in appeal against these orders of the Collector (Appeals).
2. Shri L.N. Murthy, ld. JDR appearing for the appellant Collector contended that the technical literature on UCON Textile Fibre Lubricants by the respondents would show that the product in the case of respondents, M/s. Century Enka Ltd. called Sinparol En is only a lubricant component for synthetic filament yarn spin finishes. Therefore, it is clear that it is not a lubricating preparation by itself. It was, further, argued by the ld. DR that the Deputy Chief Chemist, by his report dated 1.1.1987, had clearly given the opinion that lubricating preparations and preparations of a kind used for the treatment of textile, etc. are separately mentioned in the description of heading 34.03 and had, further, opined that the exemption available for lubricating preparations cannot be extended to preparations for the treatment of textile even though one of the functions of such preparations may be lubricating of filaments and yarns. The ld. D.R. urged that the notification exempts only lubricating preparations and not preparations of a kind used for treatment of textile material, etc. which occurs in the latter half, of the Tariff description under heading 34.03 CTA. In respect of Collector (Appeals’) order relating to the respondents, M/s. Haryana Petro Chemicals, the ld. D.R. argued that the Collector (Appeals) has allowed the respondents’ appeal only on the basis of textual authorities without considering the nature of the goods actually imported. The respondents had come up in a refund claim and it is well-settled that in such a situation, it is for them to establish their claim for the exemption, for which the ld. D.R. relied upon the Supreme Court decision in the case of Mysore Metal Industries v. Collector of Customs, Bombay and in the case of Navsari Oil Products Ltd. v. Assistant Collector of Central Excise .
3. The ld. Counsel for the respondents, Shri Lakshmikumaran, contended that the department admits classification of the goods under heading 34.03 and it cannot be accepted that the goods would be eligible for classification under heading 34.03 and at the same time, not eligible for the exemption under notification 136/86. It was also urged that the spin finish oil is not a component of lubricating preparations and the ld. Counsel in this regard referred to the Test Report on ‘Spin Finish Oil’ UCON 50 HB-260 dated 17.5.1988 given by the Chemical Examiner wherein the Chemical Examiner has opined that the goods on merits to be considered as synthetic lubricating preparation. The goods have also been tested by the Customs Laboratory, who have said in their Test Report that it is complex organic compound in the form of colourless thick liquid. The ld. Counsel, further, referred to the literature regarding ‘Spin Finish Oil, namely-
i. Fibres by Mr. C. B. Chapman, Senior Research Scientist, ICI Fibres Limited. Chapter 3–Spinning Manmade Fibres–Page No. 38
ii. Manmade Textile Encyclopedia by J.J. Preas. Chapter 11-6–Polyamide Fibres–Page No. 72.
iii. Man-made Textile Encyclopaedia by J.J. Preas. Chapter 11-7–Polyester Fibres–Page No. 74.
iv. Bulletin on Fluids and Lubricants–Page No. 15 Textile Fibre Lubricants.
4. The ld. Counsel urged that the above textual authorities would show that spin finish oil imported by the respondents is only lubricating preparation. The ld. Counsel, further, urged that lubricating preparation can also be used for treatment of textile material and that a plain reading of the tariff heading would show that it consists not only of preparations of a kind for the oil or grease treatment of textile material, but also include lubricating preparations. The goods imported, according to the appellants, is only the lubricating preparation with an incidental anti-static properly. Its primary function is that of a lubricating preparation. The Collector (Appeals) has given a clear finding that this is so. The ld. Counsel, further, cited and relied upon the decision of the Tribunal in the case of JK Synthetics v. Collector of Customs wherein the Tribunal held that staple fibre plant silicone spray Toshiba TGS-6007 imported in that case being on test by the Chemical Examiner found to be mould release preparation would be correctly assessable under heading 34.03 and will also be eligible for notification 136/86. It was, further, argued that heading 34.03 would cover all sorts of lubricating machines irrespective of whether they are used in textile or fur skin, etc. The ld. Counsel referred to the literature produced by the respondents to say that there may be oil preparation for textiles which have no lubricating function, wax emulsions. There is nothing in the notification to restrict the exemption only to lubricating preparations other than those for textile material. The ld. Counsel relied upon the case law in the case of the Western India Plywoods Ltd. v. Collector of Central Excise, Cochin that exemption is to be given to all forms of the material.
5. The submissions made by both the parties have been carefully considered. The question is whether the goods spin finish oil imported in these cases will be eligible for exemption under notifications 136/86 and 51/86 which exempt lubricating preparations on being classified under heading 34.03 CTA. The Collector (Appeals) in his elaborate findings with reference to the textual authorities on the subject and opinions given by experts in the field has clearly held that the goods are lubricating preparations eligible for such exemption. Regarding the point as to what is spin finish? It has been explained in an article published in the Textile Journal July, 1988 edition by W. Postman produced by the respondents as follows:
In the production of synthetic continuous filament yams, it is necessary to apply to the filaments during the spinning operation a lubricating composition to reduce friction developed as the yarns pass over the metal and ceramic machinery surfaces. Since they are applied during the spinning step, they are frequently referred to as spin finishes.” “The primary function of a finish is to provide surface lubricity to the yarn such that smooth high speed transfer over various metallic guides…can take place with a minimum of fibre breakage.
6. Again in the Chapter Spinning Man-made Fibres by C.B. Chapman, Senior Research Scientist, ICI Fibres Ltd., it has been stated that
Before winding up the filaments, spinning finish is applied by contacting them with the surface of a rotating wet roller, or by a capillary feed device…Spinning finish is a complex preparation of oil lubricants emulsified in water; wetting agents, antistatic agents, and adhesives may be added also. Its purpose is to provide yarn lubrication for subsequent processing over guides and rollers, and to disperse static electrical charges during processing which would otherwise cause mutual repulsion and separation of filaments and consequent snagging. The formulation of finishes depends upon the yarns being spun and the subsequent processes to which they will be exposed.
7. From the above it is clear that spin finish oil is a lubrication preparation. In this context, it is, further, noticed that on perusal of the literature regarding one of the brands of the spin finish oil imported in this UCON 50 HB-260, the Chemical Examiner in his opinion dated 17.5.1988, has said as follows:
Seen the literature supplied by the party. UCON 50 HB 260 has been stated to a synthetic mineral oil having a viscosity of 50 say bold universal seconds at 100 F and some additive.
In view of its composition it merits to be considered as a synthetic lubricating preparation.
8. The Collector (Appeals) has also found, on detailed consideration of the textual authorities on the subject, affidavits filed by experts in the field had found that the goods imported are predominantly lubricant with the essential character of lubricating preparations and hence will be classifiable under Heading 34.03 CTA and eligible for notification 136.86. As we have noted, this view of the Collector finds support in the report of the Chemical Examiner dated 175.1988, extracted above. Once it is found that these are lubricating preparations, the question whether they are preparations of a kind used for the oil or grease treatment of textile material, etc. will not arise for consideration. In this view of the matter, we see no reason to interfere with the order passed by the Collector (Appeals) in all these cases. The fact that in the case of respondents, Mis. Haryana Petro Chemicals, their (sic) is no test report, may not make any difference in view of the facts that the goods there also have been accepted and classified sa spin finish oil and the textual authorities cited by the Collector (Appeals) in his order and noted above, clearly show that such oils have a lubricating function. In the result, appeals filed by the Collector are rejected. The Cross Objection also, accordingly, disposed of.