ORDER
T.K. Jayaraman, Member (T)
1. This appeal has been filed against the Order-in-Appeal No. 835/2004 dated 23.12.2004, passed by the Commissioner of Customs (Appeals), Chennai.
2. The appellants imported goods described as ‘Accuguard Replenished’ and claimed classification under CTH 281420. The rate of duty was 5% + 16%. The goods were assessed to duty provisionally, pending test report. The supplier of the goods had indicated the composition of the goods as Ammonium – 8.5%; Ammonium Chloride – 26 to 28%; Ammonium Carbonate – 2%; and water – 61%. The goods were tested and based on the report, the Original authority classified the item under CTH 382490 and assessed them to duty at 35% Basic + 16% CVD + 4% SAD. Aggrieved over the order of the Original authority, the appellants approached the Commissioner (Appeals). The Commissioner (Appeals) held that the impugned goods are not clearly ‘Ammonia in Aqueous Solution’ classifiable under CTH 2814.20 but are chemical preparations containing different chemically defined components. Therefore, she held that the impugned items are classifiable under CTH 3824.90. The appellants are highly aggrieved over the impugned order.
3. S/Shri B.N. Gururaj and K. Kumarasen, learned Advocates appeared for the appellants and Shri K. Sambi Reddi, learned JDR appeared for the Revenue.
4. The learned Advocates urged the following points:
(i) There is a gross violation of the Principles of ‘Natural Justice’. The notice of hearing dated 9.12.2004 put the appellants to notice of the personal hearing is for stay petition. However, the appeal itself was taken up in a hasty manner. This is a gross violation of Principles of ‘Natural Justice’.
(ii) Even though the authority violated the Principles of ‘Natural Justice’, show cause notice was issued without disclosing the contents of the test report issued by the Customs Laboratory. In spite of bringing it to the notice of the Respondent by reply dated 13.12.2002, the copy was neither disclosed during the hearing nor provided at subsequent two personal hearings.
(iii) Though the appellants had produced technical data, none were referred to.
(iv) As per Note 1 (d) of Chapter 28, separate chemically defined compounds which are dissolved in water are classifiable under that chapter. There is nothing in the Chapter Note which prohibit dissolution of more than one type of Ammonium salt in water and treat the same as Aqueous Solution of Ammonia. The only prohibition found is that it must not contain alcohol. None of the lower authorities have entered such finding. Under these circumstances, the appellant submits that classification under sub heading No. 2814.20 is most appropriate.
(v) The show cause notice while proposing to reject the appellant’s classification under sub-heading No. 2814.20 did not propose alternate classification. This lacuna was brought to the notice of the adjudicating authority by the appellant’s reply dated 13.12.2002. Instead of taking steps to correct this lacuna, the Original authority has passed the impugned order reclassifying ‘Accuguard under sub heading No. 3824.90 without disclosing the basis and reasons thereof. The appellant had no effective opportunity to object this alternative classification.
(vi) On merits, the appellant submits that from what is disclosed of the chemical analysis report of Customs Laboratory, it is alleged that Accuguard contains organic compounds. It is not clear as to how this militates against the classification under sub-heading No. 2814.20 in the absence of anything in the tariff entry and chapter/section notes or the General Rules of Interpretation.
(vii) Without proposing alternative classification, differential duty could not have been demanded. Sub heading No. 3824.90 is a residuary entry and it has no reference whatsoever to Ammonia or its liquors or etching fluids. Sub heading No. 2814.20 is more specific. Therefore the classification claimed by the Revenue is violative of Rule 3 (a) of the General Rules of Interpretation of Customs Tariff.
(viii) The Provision of Rule 3 (c) for classifying under the last entry in the numerical order could be adopted only when two entries merit equal consideration. In this case, not only the Original authority did not disclose the proposed classification under sub heading No. 3824.90 but also did not rely on any material which would show that classification under sub heading No. 3824.90 was equally merited.
(ix) Reference to the Explanatory Notes of HSN shows that only Ammonia Solutions with Alcohol contents are excluded from the scope of sub heading No. 2814.20. It does not exclude solutions with organic compounds. Therefore without a clear finding that Accuguard contained alcohol, the Respondent was unjustified in rejecting the classification under sub heading No. 2814.20.
(x) The appellants had produced technical extracts from “Printed Circuit Board Technology”. This clearly showed the composition of Ammonia Etchants used in the manufacture of PCBs. But the impugned order fails to take notice of this relevant technical material even for the purpose of rejecting it.
4. The learned JDR reiterated the impugned order.
5. We have gone through the records of the case carefully. We agree with the appellants that Principles of ‘Natural Justice’ have been violated by the Appellate authority and the Original authority. Without disclosing the alternate classification in the show cause notice deciding the issue is bad in law. It is also stated that the test report has also not been given to the appellants. We also did not find the same in the case records. There is no proper discussion of the classification issue. Both the orders (impugned Order-in-Appeal and Order-in-Original) are not speaking orders. The appellants has stated that the impugned product is known as “Accuguard Replenisher”. It has been following composition:
(i) Ammonia – 8.5%;
(ii) Ammonia Chloride – 26 to 28%;
(iii) Ammonium Carbonate – 2%
(iv) Water – 61%
From the Technical Literature submitted by the appellants, it appears that the classification claimed by the appellants would be more appropriate. However we do not have a test report of the Chemical Examiner before us to come to a definite conclusion. Since the impugned order has violated the Principles of ‘Natural Justice’ and is also not a speaking order, we set aside the same and remand the matter to the Original authority to supply the copy of the test report given by the Chemical examiner to the appellants and to re-examine the matter in the light of the submissions of the appellants. All issues are kept open. The appeal is allowed by way of remand.
(Operative portion of the order has been pronounced in the open court on completion of hearing)