ORDER
Jyoti Balasundaram, Member (J)
1. The respondents herein are engaged inter alia in the manufacture of Sorbitol (Diglucital), Commercial and I.P. Grade. They hold a drug licence for the manufacture of Sorbitol IP Grade. They cleared Sorbitol manufactured by them on payment of duty at the rate of 10% Ad valorem in terms of Notification No. 6/94 dated 1.3.94 (upto 15.3.95) and thereafter under Notification No. 8/95 dated 16.3.95.
2. The Department was of the view that Sarbitol in liquid form manufactured by the respondents fell for classification under CET sub-heading 3823.00 attracting duty at the rate of 20% Ad valorem and not under CET sub-heading 2905.90 attracting concessional rate of 10% ad valorem was availed. Hence a show cause notice proposing classification under CET sub-heading 3823.90 and raising a duty demand of Rs. 16,02,765 was issued on 26.7.95.
3. The Adjudicating Authority accepted the assessees claim for classification under CET sub-heading 2905.90 read with Notification No. 6/94 and No. 8/95 and dropped the demand. The order of the Assistant Commissioner was upheld by the Commissioner (Appeals). Hence this appeal.
4. We have heard Shri H.K. Jain, learned DR for the appellants and Shri A.C. Jain, learned Advocate for the respondents.
5. We find that the product was chemically examined and the report showed that (a) the product is a Sorbitol solution with a definite chemical formula i.e. C6H14O6 or C6H8(OH)6; (b) total alcohol is 70.6% in the product and 100% on dry basis; (c) crystallisability of the product is positive.
6. Note 1(a) of Chapter 38 states that separate chemically defined elements/ compounds are not covered under this Chapter. According to Note 1(a) of Chapter 29, separate chemically defined organic compounds are classifiable under Chapter 29. The test report establishes that the product in dispute is a definite chemical formula and hence it is excluded from Chapter 38. The respondents contention that Sorbitol manufactured by them is obtained by hydrogenation of dextrose solution/ syrup having nil or negligible Di-Sacharide and Poly-sacharide contents is a hexa-hydric alcohol, has not been rebutted by the Revenue. The sorbitol covered by Chapter heading 3823 has high Di-sacharide and Poly-sacharide contents. Further contention of the respondents that Sorbitol manufactured by them is fully crystallisable, has also not been rebutted by the Revenue.
7. According to HSN Explanatory Notes to Chapter heading 38.23 Sorbitol of Chapter 38 is difficult to crystallise. The stand of the Department that only powder/crystal form of sorbitol falls for classification under Chapter 29 and Sorbitol in liquid form (which is the product in dispute) does not fall under Chapter 29, is not tenable in view of the fact that Note 1(d) to Chapter 29 shows that Sorbitol dissolved in water is classifiable under Chapter 29.
8. In view of the fact that product in dispute is a separate chemically defined compound having a definite chemical formula and that is easily crystalliable and contains nil or negligible Di-Sacharide and Poly-sacharide contents, we agree with the lower authorities that the correct classification of the product is under CET sub-heading 2905.90, uphold the impugned order and reject the appeal.