In re VVF (India) Limited (CAAR Mumbai)
CAAR held that the goods ‘Fatty Alcohol Ethoxylate (1-mole, 2-moles, 7-mole)’ are non-ionic organic surface-active agents and merit classification under subheading 34021300 of Customs Tariff Act, 1975, subject to prescribed conditions under note 3 to Chapter 34.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
M/s VVF (India) Limited vide their application dated 17.02.2017 sought an advance ruling on the classification of Fatty Alcohol Ethoxylate (1-mole, 2-mole, 7-mole). The application was admitted on 03.11.2017, though no ruling was passed. Thereafter, on the appointment of the Customs Authority for Advance Rulings, Mumbai under the provisions of section 28EA of the Customs Act, 1962; the secretariat of the erstwhile AAR transferred the said application to the CAAR, Mumbai.
2. On scrutiny by the Secretary to the Customs Authority for Advance Rulings, Mumbai, it appeared that the application has lapsed since no ruling was given within 3 months as mandated under sub-section 6 of section 28-1 of the Act. However, on a constructive interpretation of the law and purely as a trade facilitation measure, the applicant was given an opportunity to re-submit the application if they continued to be desirous of obtaining an advance ruling as sought originally. Accordingly, the application has been submitted on 03.08.2021.
3. The applicant is a registered resident public limited company. They are engaged in the manufacturing and export of oleochemicals. They also export fatty alcohol ethoxylate (I -mole, 2-mole, 7-mole) (hereinafter referred to as FAE) as a merchant exporter, which is procured from M/s. Esteems Industries Private Limited. As per sample shipping bills appended with CAAR-1, the applicant has classified FAE under subheading 34021300 of the Customs Tariff Act, 1975 for export purposes. The applicant intends to import FAE. In their original application, the applicant indicated that they wish to import Fatty Alcohol Ethoxylate (1-mole, 2-moles, 7-mole) under the jurisdiction of the Principal Commissioner/ Commissioner of Customs, Mumbai Zone-I, Mumbai Zone-II and Mumbai Zone-Ill. In their fresh application dated 03.08.2021 also, the applicant has expressed the same intention.
4. As per the applicant, the generic name of FAE is “Lauryl alcohol with ethylene oxide derived with 1, 2, and 7-mole ethoxylation”. These are surfactants, which are commonly used as components of cleaning detergents and formulation in the industrial, commercial, and domestic markets. FAEs find large-scale applications in detergents (wetting agents, emulsifiers), personal hygiene products (shampoos, foam boosters), leather (degreasing, wetting), textile paints and agriculture (emulsifiers, dispersion) processes. As per safety data sheets issued as of 01.01.2015 by Esteem Industries Pvt. Ltd. for FAE, the product is recommended to be used as a surfactant in the chemical industry. Therefore, FAE is a surfactant, also known as a ‘surface active agent’, used in various applications as mentioned above. As per the applicant, the product FAE is classifiable under subheading 34021300, which is a specific Tariff Heading for classifying organic non-ionic surface-active agents.
5. In respect of the application for advance ruling filed originally, Commissioner of Customs, NS-V, JNCH, Nhava Sheva was of the view that the said product merits classification under CTH 3402 and that the CTH 3824 may not be considered.
6. In their new CAAR-1 application, the applicant has declared that they would import under the jurisdiction of Principal Commissioner/ Commissioner, Mumbai (Zone I, Zone II and Zone III). Accordingly, their application was forwarded to the jurisdictional customs authorities for comments. The jurisdictional commissionerate of Mumbai Customs, Zone II is of the view that as per information provided by the applicant, the goods to be imported are FAE. The surface-active agents are specifically classified under heading 3402 of the Customs Tariff Act, 1975. Therefore, heading 3824, which is a residual heading does not merit consideration. No comments have been received from Mumbai Customs, Zone I and III.
7. The applicant was heard in virtual mode on 21.09.2021. Shri Karthik Dedhia, advocate represented the applicant. No one appeared on behalf of Principal Commissioner/ Commissioner, Mumbai (Zone I, Zone II and Zone III). The applicant explained the product specifications in detail and drew my attention specifically to Chapter Note 3 of Chapter 34. They shared a test report of the products dated 06.03.2017 issued by Jamnagar based Intertek laboratory and a safety data sheet dated 01.01.2015 issued by M/s. Esteem Industries Pvt. Ltd. in respect of the goods under consideration. The test report of the FAE is reproduced below:
