Case Law Details

Case Name : In Re Spraytec India Ltd (CAAR Delhi)
Appeal Number : Ruling No. CAAR/Del/Spraytec/20/2021
Date of Judgement/Order : 05/10/2021
Related Assessment Year :

In Re Spraytec India Ltd (CAAR Delhi)

Product in question is a component of spray mechanism, capable of spraying fluid (aerosol) from a bottle/container. Therefore, I am of the considered opinion that goods in question can also be mounted on bottle/can of Scent spray for delivery of Scent/perfume which can be containerized under pressure. Thus, when the goods in question are used as mounts and heads for dispersing or spraying of Scent, then in the light of Rule I and 6 of the General Rules for the Interpretation of Import Tariff, these would be classifiable under heading 9616. Having referred to the said possibility, I note that the applicant has mentioned that “these are general spray purpose valves and applied at many such places and not linked to specific product.” I also find that the concerned Commissioner of Customs has concurred with the said contention, noting that the product in question has “vast uses like in insecticides, pesticides, fungicides, pharmaceuticals, car paints, silicon spray, mould spray etc.” Therefore, in the instant case, the impugned goods with general purpose use do not merit classification under heading 96.16, which has very precise scope.

The third heading 8424 covers, inter-alia, mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders, The features of the goods in question are consistent with the scope of the said heading 8424, inasmuch as these are components of hand operated mechanical appliances meant for spraying liquids (aerosols). Therefore, impugned goods merit classification under heading 8424 in the light of Rule 1 and 6 of the General Rules for the Interpretation of Import Tariff; and specifically under sub-heading 8424 89 90.

FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI

Ruling

M/s Spraytec India Limited, New Delhi a company having IEC No. 0593046668 and PAN AAECS1856R, (M/s Spraytec, in short) have filed an application dated 16.03.2020 seeking advance ruling under section 28-H of the Customs Act, 1962 before the Authority for Advance Rulings (Customs), New Delhi (AAR, in short). The application was received in the Secretariat of AAR, New Delhi on 19.03.2020.

2. The said application was being processed in terms of section 28-1 ibid by the 0/o AAR. Consequent upon the appointment of Customs Authority for Advance Rulings (CAAR, in short) at New Delhi and Mumbai with effect from 04.01.2021, the said application was transferred to CAAR, New Delhi in terms of section 28-F (3) ibid and regulation 31 of CAAR Regulations, 2021.

3. On perusal thereof, and in view of the time limit of three months for pronouncing its advance rulings from the date of receipt of this application prescribed under section 28-1 (6) ibid, it was held that the aforesaid application received in the o/o AAR, New Delhi on 19.03.2020 had become time barred for this Authority.

4. However, on constructive interpretation of the powers vested with this Authority, vide letter dated 28.06.2021, the applicant was advised to intimate whether they continued to be interested in obtaining ruling of this Authority, and if so either resubmit their application in the Form CAAR-I appended to CAAR Regulations, 2021, or simply affirm that the declarations made in the earlier application remain valid and unchanged, at the earliest to this Authority. It was also informed that the date of receipt of such resubmitted application or affirmation, as the case may be, shall be taken as the date of receipt of their application under regulation 8(4); and no separate payment of the prescribed fee under regulation 6 (6) of CAAR Regulations, 2021 is required to be made.

5. The applicant vide letter dated 09.07.2021 affirmed that the declarations made by them in their earlier application stand valid and unchanged, and informed that they are interested in obtaining ruling by this Authority.

6. The concerned Commissioner of Customs (Preventive), Jodhpur vide letter dated 10.11.2020 has furnished comments in the matter stating, inter-alia, that the applicant had filed three Bills of Entry in the month of September, 2018 and October, 2018 for clearance of components of Aerosol valve under CTH 84248990; investigation and studies of the subject product viz. aerosol valves/actuators reveal that the article in question are valves which is fixed/incorporated onto containers (normally of tin/aluminium) and have a dip tube to dispense the solution contained in the said containers; the solution is aerosol (mixture of gas and liquid), filled in the container under high pressure; the valve fixed on top opening of the container releases the aerosol solution as and when the valve is pressed; the aerosol solution would be continuously dispensed in the atmosphere as long as the valve is kept pressed due to the fact that the solution has been filled under pressure; further and more importantly it was found that these valves find their uses in many products and not in perfumes/scents/cosmetics; heading 9616 is specifically meant for mounts and heads for scent sprays; hence the mounts and heads used in the perfumes/scents would fall under 9616; aerosol valve has vast uses like in insecticides, pesticides, fungicides, pharmaceuticals, car paints, silicon spray, mould spray etc.; normally it is not used as scent/perfumes in glass bottles in which aerosol solutions are not filled due to less strength of the glass bottles; hence in scents/perfumes, normally pumps are used commonly known as perfumery/crimp pumps; the working of aerosol valves and the pumps is entirely different; where on one hand the aerosol solution is continuously dispensed as long as the valve is kept pressed, on the other hand pump would release only a measured quantity of the solution (scent/perfume); scents/perfumes are not containerized under pressure whereas valves are used to dispense solutions contained under pressure; the use of aerosol valve does not find its place in scents/perfumes, hence it should not fall under sub-heading 96161020 as mounts and heads for scent; it should also be appreciated that CTH 8424 and 8481 provide for mechanical appliances for projecting, dispersing or spraying liquids/pressure reducing valves and the subject aerosol valve, as the name suggests, is used for these very purposes (of reducing the pressure of aerosol solution inside the container); subject valves and actuators would thus fall under the chapter heading 84; only perfumery pumps are being used in scent/perfume sprays and would thus appear to be classifiable under 9616; the issue of these pumps was taken up by DRI, Jaipur and DRI has intimated that these would merit classification under 9616; detailed opinion of the chartered engineer was also sought, in which, it has been opined that the goods in question viz. aerosol valves/actuators would merit classification under heading 8481; hence working of the aerosol valves is closest to the description mentioned under chapter heading 8481 and would merit classification under 8481.

7. In accordance with the procedure prescribed under the CAAR Regulations, 2021, personal hearing was scheduled on 02.08.2021. However, the applicant sought an adjournment and accordingly, re-scheduled personal hearing in virtual mode was held on 11.08.2021, wherein Shri Priyadarshi Manish, Advocate represented the applicant. He explained the circumstances in which the applicant has moved for advance ruling in respect of on-going activity of import of components of aerosol valves. It was, however, submitted that the question of classification raised in the application is not pending in the applicant’s case before any officer of Customs, the Appellate Tribunal or any Court. Shri Manish explained the details of the product in question and the provisions of the law guiding classification under the Customs Tariff Act. Based thereon, he contended that the components of aerosol valves merit classification under the same heading as aerosol valves. He submitted that the contending classifications are heading 84.24 and 84.81, arguing that heading 96.16, as insisted by certain departmental formations is not correct. He referred three case laws, viz. Avinka Leathers, Cipla Ltd. and Kumar Aerosols, contending that these orders have put aerosol valves in the category of 84.81 or 84.24, but categorically rejected the same falling under 96.16. Upon conclusion of submissions by Shri Manish, the Authority referred to the proviso (b) to section 28-I (2) of the Customs Act and asked Shri Manish as to why the application in this case should not be disallowed since the same classification matter had been already decided by the Tribunals. In this regard, the Authority also referred to CESTAT decision in the case of Commissioner of Customs, Mumbai vs Speciality Valves, wherein parts of M08 spray pumps were held to be classifiable under heading 96.16. Shri Manish submitted that the case laws referred to by him, as also the Speciality Valves order do not cover the specific goods (components of aerosol valves or aerosol valve) being imported by them, and therefore, the aforesaid proviso is not attracted in the instant case. He was advised to make specific written submission in this regard, Since in para 26 of Annexure —II of the application, the applicant has stated that “there are certain judicial decisions which put the aerosol valve in the category of 8481 or 8424 but they categorically rejected the same falling under 9616 ..”. In addition, he was requested to submit a sample of the good in question for proper appreciation of the product by the Authority. The Authority also noted that the applicant had not expressly submitted his view regarding the appropriate heading for classification of his goods, i.e. whether in his opinion the goods are classifiable under heading 84.24 or 84.81, and advised that the same is required to be submitted. Shri Manish requested for some time to make additional submissions, which was allowed by the Authority.

8. The applicant has accordingly made additional submissions dated 30.08.2021 along with physical sample of the good in question regarding the following points.

(i) How the authority, shall allow the application where the question raised in the application is same as in a matter decided already by the Appellate Tribunal or any Court?

(ii) The Applicant should clarify about the classification of goods i.e. ‘aerosol valve’ is falling under CTH 8424 or CTH 8481.

8.1 As regards the applicability of proviso to section 28-I (2), which prescribes that the authority shall not allow the application where question arises in the application, is either (a) already pending in applicant’s case before any officer of Customs, the Appellate Tribunal or any Court, (b) same as in a matter decided already by Appellate Tribunal or any Court, it has been submitted that in the present case no such question is either pending or decided in the case of applicant, therefore, the present application is maintainable in the case of the applicant. It has also been submitted that the applicant relied on certain judicial precedence, which create the impression that the issue has already been decided by the Tribunal in the case of some other importers. However, the impugned goods are different from the goods which are the subject matter of the present application. In the case of Commissioner of Customs, Bombay Vs. Cipla, the goods involved are metered valves; in the matter of Commissioner of Customs, Mumbai Vs. Avinka Leather, the goods involved are solenoid valves; and in Kumar Aerosol Pvt. Ltd., the goods are nozzles., In the present case the product is ‘aerosol valve’ which has not been discussed by any of the judgment; Therefore, the said issue is being raised for the first time by the applicant and the same is neither pending nor decided by any authority. Therefore, the application of the applicant is maintainable.

8.2 As regards the opinion of the applicant about the most appropriate classification for their product, the applicant has compared three CTH, viz. 8424, 8481 and 9616; stated that 9616 had been suggested by the department on various occasion, although later on, they have accepted the applicant’s CTH i.e. 8424. He avers that between the remaining two, the applicant put their thrust on CTH 8424 and as an alternative argument they mentioned if, the classification of the goods which is the subject matter of the present application would be decided under CTH 8481 it will not affect them as the rate of duty against both of them are similar.

8.3 He has reiterated that the classification of the impugned goods would be under CTH 8424 due to following reasons:

(a) Chapter Note 2 of the Chapter 84 states that a machine or appliance which answer to a description in one or more of the headings 8401 to 8424 or heading 8486 and at the same time to a description in one or other of the heading 8425 to 8480 is to be classified under the appropriate heading of the headings 8401 to 8424 or under the heading 8486 as the case may be, and not under the heading 8425 to 8480.

However, the second CTH is 8481 which is not falling under heading 8425 to 8480 but the Chapter Note 2 gives preferential effect of Chapter Heading 8424 as the said classification is general based on reference to their function.

(b) The general content of the chapter 84 mentioned in Section XVI of HSN clarify that the heading 8401 to 8424 cover machinery and apparatus (described generally by reference to their function), which can be used in various branches of industry. So, the classification is based on the function.

(c) The function of the impugned product is dispersing, spraying and projecting, which categorically puts the goods in CTH 8424.

(d) Similarly, the sub-heading Notes 3 of Chapter 84 clarify that for the purpose of sub-heading 8481.20, the expression “valves for oleohydraulic or pneumatic transmission” means valves which are used specifically in the transmission of “fluid power” in a hydraulic or pneumatic system, where the energy source is supplied in the form of pressurized fluids (liquid or gas). However, in the present case, the applicant’s product is not dealing with transmission of fluid power in a hydraulic or pneumatic system; and therefore, would not be falling under 8481.

(e) In reference to the aforesaid, the goods of the applicant would fall under CTH 8424.

9. Having completed the process of seeking comments of the concerned Commissioner of Customs, sharing the same with the applicant, receiving clarification from DRI, Jaipur reiterating the submission of the applicant that no show cause notice has been issued to Mis Spraytec India Ltd., completing the personal hearing and obtaining additional submissions, clarifying inter alia the queries raised during the personal hearing, I now proceed to examine the application in two stages; namely admissibility of the application and thereafter, the question of classification posed for ruling.

10. It is observed that the instant application relates to on-going activity of import of aerosol valves, which is included in the portfolio of activities being carried out by the applicant for last several years. In view of lack of clarity regarding the appropriate classification of the goods being imported by them, the question posed for ruling is regarding the correct classification of the “aerosol valves”, with the applicant contending that the most appropriate classification is sub-heading 8424 8990, with possibility of it being classified under heading 8481, but definitely not under 9616, as has sometimes been contended by the department but not pressed.

10.1 I find that in the instant case of on-going activity, a ruling by this Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to section 28-I (2) of the Customs Act.

10.2 I find that proviso one is not applicable in the instant case on the ground that it has been so claimed by the applicant and confirmed by the concerned Commissioner of Customs and DRI, Regional Unit, Jaipur.

10.3 The second proviso prescribes that this Authority shall not allow an application, where the question raised in the application is “same as in a matter decided already by the Appellate Tribunal or any court”. As mentioned above, in the application, the applicant had, cited reference to three CESTAT cases, claiming that certain judicial decisions put the aerosol valve in category of 8481 or 8424. However, in their additional submission, they have clarified that the impugned goods are different from those which were subject matter of the said three Tribunal decisions.

10.4 In this regard, I find that the goods covered in the Commissioner of Customs, vs Cipla Ltd. [1998(102) E.L.T. 739 (Tribunal)] were “metered valves which ensures a single dose to be delivered on pressure being applied irrespective of the duration of the application pressure”, which were held to be classifiable under heading 84.81. In the Commissioner of Customs, Mumbai vs. Avinka Leathers [2004 (168) E.L.T. 52 (Tri.-Mumbai)] the goods were “solenoid valve fitted with aerosol valve and spray nozzle and a populated PCB connected to along with electric switch and battery lead” and held to be classifiable under heading 84.24. In the case of M/s Kumar Aerosols Pvt. Ltd. vs Collector of Customs, New Delhi [1997 (93) E.L.T. 201 (Tribunal)], it was held that “component parts of aerosol valves (nozzles)” classifiable under heading 84.81 are excluded from the purview of heading 98,06. In the case Commissioner of Customs, Mumbai vs Speciality Valves cited by the department, the goods covered were “parts of M08 spray pumps” where held classifiable under heading 96.16. Therefore, I hold that the classification of impugned goods described in the application as “aerosol valve”, variously described as aerosol valve with actuator/ components of aerosol valves, etc.. in the bills of entry enclosed with the application and as discussed in subsequent para, has not been decided already by the Appellate Tribunal or any court.

10.5 In view of the above, 1 allow the application and proceed to discuss the question posed for ruling.

11 As regards the product description, the applicant has also stated that:

(a) in the product literature, Chinese supplier has clarified that these valves are non-return valve placed on aerosol container depending on inside contents of container. These are general spray purpose valves and applied at many such places and not linked to specific product.

(b) The applicant described the parts and operation of Aerosol Valve, as follows:

Aerosol Valve

(c) The applicant has further explained that the product is a mechanical appliance totally hand operated, which causes to provide the space through which pressurized gas comes out from the can and after coming out due to low pressure turns into the liquid and spraying of liquid takes place; the product in question is being manufactured without knowing end use of the said product; the aerosol valves are pressure reducing valve, which are mounted on top of the container manufactured for glass or metal and are used for spraying liquid pack under pressure; the Chapter Heading 9616 cover scent, brilliantine and similar toiletry spray, the mount for toiletry spray and the head piece for toilet spray; the explanatory note 96.16 of Harmonized Commodity Description and Coding Systems defines a mount as head (with its spray) forming mechanism and a pneumatic pressure valve (sometime in textile knit) or a piston device, which disperse liquid in spray form; the definition prescribed in the Explanatory Note is considered as a pump which is totally different from a valve; the impugned product is not falling under category of CTH 9616; apart from the same, it covers the product which has been specially prescribed for scent and toiletry spray, but it could not cover the generic goods and due to the same it should not fall under CTH 9616.

(d) The applicant has described the operation of the aerosol spray as below:

Aerosol spray

  • Pressure on the actuator moves the stem down.
  • This breaks the seal between the gasket and the stem.
  • The stem is exposed to the product/ propellant in the container. (i.e. the valve is open)
  • Pressure inside the container pushes the product through the valve to the outside of the container.
  • By releasing the actuator, the spring returns the stem orifice to the sealed position (i.e. the valve is closed)

11.1 During the Personal hearing, the applicant’s representative was requested to submit a sample of the good in question for proper appreciation of the product by the Authority. Accordingly, representative samples were forwarded by the applicant’s representative, the image of such sample (supplied by the applicant’s representative) is as below:

Personal hearing

11.2 As stated in para 11 (b), above, the applicant has described various components of the goods in question as, valve, actuator, valve cup, stem, stem gasket, spring, housing and dip tube. Moreover, applicant has furnished copies of few bills of entry filed by them wherein items under import had been declared as aerosol valve, components of aerosol valve (actuator. diptube) etc. In view of the forgoing, it is observed that the goods (sample of which has been supplied by the authorized representative of the applicant), in respect of which ruling on classification has been sought, is not a simple or mere valve. Accordingly, for the impugned product, classification under tariff heading 8481 does not appear appropriate.

11.3 As regards heading 9616, it refers inter-alia to, “Scent sprays and similar toilet sprays, and mounts and heads therefore”. I find that Collins dictionary defines scent spray as a perfume that comes in aerosol bottle (https://www.collinsdictionary.com/dictionary/english/ scent- spray).  Having gone through the product description given by the applicant and viewed the sample provided to this office, I find that the product in question is a component of spray mechanism, capable of spraying fluid (aerosol) from a bottle/container. Therefore, I am of the considered opinion that goods in question can also be mounted on bottle/can of Scent spray for delivery of Scent/perfume which can be containerized under pressure. Thus, when the goods in question are used as mounts and heads for dispersing or spraying of Scent, then in the light of Rule I and 6 of the General Rules for the Interpretation of Import Tariff, these would be classifiable under heading 9616. Having referred to the said possibility, I note that the applicant has mentioned that “these are general spray purpose valves and applied at many such places and not linked to specific product.” I also find that the concerned Commissioner of Customs has concurred with the said contention, noting that the product in question has “vast uses like in insecticides, pesticides, fungicides, pharmaceuticals, car paints, silicon spray, mould spray etc.” Therefore, in the instant case, the impugned goods with general purpose use do not merit classification under heading 96.16, which has very precise scope.

11.4 The third heading 8424 covers, inter-alia, mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders, The features of the goods in question are consistent with the scope of the said heading 8424, inasmuch as these are components of hand operated mechanical appliances meant for spraying liquids (aerosols). Therefore, impugned goods merit classification under heading 8424 in the light of Rule 1 and 6 of the General Rules for the Interpretation of Import Tariff; and specifically under sub-heading 8424 89 90.

11.5 I rule accordingly. Date: 05.10.2021

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