ORDER
G. Sankaran, President
1. The issue arising for determination in the present appeal is the classification, under the First Schedule to the Customs Tariff Act, 1975, of a product called “DOW CORNING ANTIFOAM ‘A’ “COMPOUND” imported by the appellant at Bombay Port. The goods were originally assessed to basic customs duty under Heading No. 38.01/19(1) at 60% ad valorem plus auxiliary duty at 15% ad valorem plus nil additional duty of customs. Later on, the Department issued a notice dated 11-6-1979 alleging a short-levy of Rs. 63,899.85 on the ground that “in the absence of test report, literature etc. the goods appeared to be assessable at 100% + 20% + c.v.d. 40% as against orgl. assessment”. At this stage itself, we are constrained to observe that the notice has been issued in a most casual way. It does not set out how and why the initial assessment was wrong and the proposed re-assessment was more appropriate. It does not set out the heading in the Tariff Schedule under which the goods are held to fall. And, this is not the first time we observe such short-levy notices issued in cyclostyled forms with brief blanks filled in by the customs authorities under Section 28 of the Customs Act. This tendency to issue show cause notices in a very casual way without setting out in an intelligible way the grounds leading to the allegation of short levy which alone would enable the noticee to make his submissions, has to be deprecated. In due course, the Asst. Collector passed an order dated 6-9-1985 confirming the demand. This order, to say the least, is cryptic and contains no discussion leading to the decision except for a bald assertion : “The goods imported were silicone emulsion and therefore assessable to duty under Heading 39 at 100% + 20% + c.v.d. 40%”. Anything but a speaking order! The appeal against this order was dismissed by the impugned order by the Collector (Appeals) who relied inter alia on statutory Chapter Notes 2 and 3 to Chapter 39 of the Customs Tariff Schedule and held that the imported goods being silicone in emulsion fell for classification under Chapter 39.
2. We have heard Shri V. Sridharan, Advocate, for the appellants and Shri S. Chakraborti, JDR, for the respondent-Collector.
3. The Learned Counsel for M/s. IDPL contends that while Chapter 39 of the Schedule covers silicones, it does not cover preparations of silicone and the present product being one such preparation, being a defoamer or anti-foaming agent, fell outside the scope of Chapter 39. In this connection, he refers to the Tribunal’s decision in the case of Precise Impex (P) Ltd. v. Collector of Customs [1989 (40) ELT 440] laying down that preparations containing silicone, as for example, silicone in emulsion for specific uses, are not covered by Chapter 39. The subject product is an emulsion of “dimethyl Polysiloxane Compounds formulated in non-ionic emulsifying agents”, as set out in the purchase order at page 11 of the appellants’ paper book. The invoice at page 16 describes the goods as “Dow Corning (R) Antifoam A Compound” supplied against the above purchase order. The Counsel draws our attention also to the write-up on “Def oamers” on page 430 onwards in Volume 7, “Kirk-Othmer – Encyclopedia of Chemical Technology (Third Edition)”. On page 435, the following passage occurs :-
“The components in most defoamers can be divided into five general functional classifications. Many defoamers contain more than five components and some contain only two or three, so obviously there is some overlapping of the function of each component. Most defoamers contain: a primary antifoam agent, a secondary antifoam agent, a carrier or vehicle, an emulsifier or spreading agent, and a coupler or stabilizing agent.”
and the following passage on page 436 –
“Emulsifiers. Even though a defoamer is insoluble, it must spread or emulsify rapidly into the system. Since application of a chemical defoamer actually pits the rate of foam collapse (owing to the activity of the product) against the rate of foam formation, it is imperative that the defoamer contact as much of the surfaceas possible. Thus, the defoamer must be made to disperse quickly.
Emulsifiers or spreading agents function by introducing the main components (primary antifoam agent, secondary antifoam agent, and carrier) into the system. These products dictate the speed of foam decay by spreading the product quickly throughout the foaming media. Spreading effectiveness is one of the most important measurable characteristics of a defoamer no matter what the application. Examples of emulsifying or spreading agents are esters, ethoxylated products, sorbitan esters, silicones, and alcohol sulfates.”
In Volume 20 of the same hook, under the head “Silicon Compounds (Silicones) ¦ Derived Products”, the following passage occurs :-
“Emulsions of silicone fluids in water are made for convenience in applying small amounts of silicone to textiles, paper, or other surfaces. Concentrations are usually 20-60 wt.% silicone, except for foam-control agents, which may contain as little as 10 wt% silicone. Various emulsifiers are used. The emulsified silicone fluids may be of any type but are usually dimethyl or methylalkyl silicones. Emulsified fluids are also convenient as antifoams. They disperse rapidly in aqueous systems, but for nonaqueous systems, e.g., crude oil or vegetable oils, 100% silicone or a solvent solution of the silicone is used.”
Shri Sridharan, relying on these passages, submits that the subject product is not a silicone simpliciter but a preparation thereof for its use as an anti-foaming or defoam-ing agent. It is not silicone in emulsion. It is a compounded product, formulated in an emulsifier. The manufacturers’ literature on the product states it to be a compounded silicone fluid with 100% active defoamer. The Counsel submits that the appropriate classification is under Chapter 38 and the onus to prove its classification under Chapter 39, especially in the present case which arose out of re-assessment proceedings, is on the Department.
4. The Learned D.R., in his reply, submits that there is no dispute that compounded products are out of the purview of Chapter 39. But, he points out, there is no material on record showing the actual composition of the subject product. What the available material shows is that the product is nothing but an emulsion of dimethyl polysiloxane, a silicone, in a non-ionic emulsifier. Regarding the Tribunal’s decision in the Precise Impex case (supra), he submitts that the exact nature of the product is not known. Chapter 38 is not specific for anti-foaming agents unlike Chapter 34 which is specific for surface-active agents. Moreover, he says, Chapter 38 is in the nature of a residuary chapter for classifying miscellaneous chemical products. The active ingredient is said to be 100%. Chapter 39 is specific for silicone in emulsion and should be preferred to Chapter 38.
5. We have carefully considered the rival submissions and perused the record. It is seen from the manufacturers’ literature that the subject product is a compounded silicone fluid. It is a defoamer or foam suppressor. It is said to contain 100% active ingredients. It is also seen from the invoice, read with the purchase order, that the product is an emulsion of dimethyl polysiloxane (a silicone) compounds formulated in non-ionic emulsifying agents. There is little doubt, therefore, that it is a silicone in emulsion. Page 435 of Volume 7 (Third Edition) of Kirk-Othmer’s “Encyclopedia of Chemical Technology” shows that many defoamers contain more than five components; some contain only two or three. Most contain a primary antifoam agent, a secondary antifoam agent, a carrier or vehicle, an emulsifier or spreading agent, and a coupler or stabilizing agent.
6. The question is whether the present product, a silicone in emulsion in an emulsifying agent falls within the mischief of the term “silicones” figuring in Heading 39.01/06 of the Tariff Schedule. Statutory Note 3(a) to Chapter 39 reads :-
“3. Heading No. 39.01/06 is to be taken to apply to materials in the following forms only:
(a) liquid or pasty (including emulsions, dispersions and solutions);”
7. The goods in the Precise Impex case (supra) were a foam stabilizer, a water soluble polymeric complex organic compound based on silicones possessing surface active property. The Tribunal referred to its decisions in Collr. of C. Ex., Bombay, v. Auxichem [1988 (34) ELT 637] and Ceat Tyres of India Ltd. Bombay v. Collector of Cus., Bombay [1988 (35) ELT 635] and held that the correct classification was under Heading No. 34.01/07(3) of the Customs Tariff Schedule and not under Heading No. 38.01/06.
8. In Auxichem case (supra), decided by a 5-Member Bench of this Tribunal, the assessee was importing silicone oil which was being subsequently mixed with some other matter like water and emulsifiers to produce textile processing softeners. Paras 15 and 16 are of relevance and are reproduced below:-
“15. The heading in the Harmonized Code which defines silicones is 39.10 and is reproduced below in full:
The silicones of this heading are non-chemically defined products containing in the molecule more than one siliconoxygen – silicon linkage, and containing organic groups connected to the silicone atoms by direct silicone-carbon bonds.
They have a high stability and may be either liquid, semi-liquid or solid. The products include silicone oils, greases, resins and elastomers.
(1) Silicone oils and greases are used as lubricants remaining stable at high or low temperatures, as water-repellent impregnating products, as dielectric products, as foam inhibiters, as mould release agents, etc. Lubricating preparations consisting of mixtures containing silicone greases or oils fall in Heading 27.10 or 34.03 as the case may be (See corresponding Explanatory Notes.) (2) Silicone resins are used mainly in the manufacture of varnishes, insulating or waterproof coatings, etc., where stability at high temperature is required. They are also used in the preparation of laminates with glass fibre, asbestos or mica as the reinforcing material, as flexible moulds and for electrical encapsulation. (3) Silicone elastomers, although not covered by the definition of synthetic rubber in Chapter 40, have some extensibility which is not changed by high or low temperatures. This property renders them suitable for manufacture into washers or other packings for appliances submitted to high or low temperatures. An application in the medical field is the manufacture of automatic brain valves used in cases of hydrocephalus."
16. It is easy to see that this expert and authoritative work classes under the head Silicones only such liquids, solids etc. as are silicones in primary form. It specifically excludes mixtures and preparations containing silicone fluids, oils, greases. This is because the mixtures and preparations are not silicone liquids in primary forms. Silicones are not understood to include even compounds, blends, combinations which contain silicones with other materials and ingredients for specialised application. The CCCN also makes this explicit exclusion in Chapter 39 in the heading on silicones. Furthermore, both Harmonized System and the CCCN specify lubricating preparations and mould release preparations containing silicones under heads outside the main SILICONES head.”
9. In Ceat Tyres of India Ltd., Bombay v. Collector of Customs, Bombay [1988 (35) ELT 635], the Tribunal observed :
“A lubricating preparation containing silicone though a liquid will not be a silicone in primary form, because it is a silicone that has been compounded and mixed, blended etc.”
10. Silicones figure in Heading No. 39.01/06 as a specified example of “condensation, polycondensation and polyaddition products”. The above expression in question has been defined in Chapter Note 2 to Chapter 39 thus :
“2. In Heading No. 39.01/06 “condensation, polycondensation, polyaddition, polymerisation and copolymerisation products” are to be taken to apply only to goods of a kind produced by chemical synthesis answering to one of the following descriptions :
(a) artificial plastics including artificial resins; (b) silicones; (c) resols, liquid polyisobutylene, and similar artificial polycondensation or polymerisation products."
It is clear, therefore, that only products of the aforesaid processes, produced by chemical synthesis, and answering to one of the specified descriptions will be covered by the said expression, for the purpose of Heading No. 39.01/06. Silicones is one of the specified descriptions. Now, silicones are polymerisation products. According to the Condensed Chemical Dictionary (10th Edition, revised by Gessner G. Hawley – page 921), silicone (organosiloxane) is defined as –
“Any of a large group of siloxane polymers based on a structure consisting of alternate silicon and oxygen atoms with various organic radicals attached to the silicon”.
The same book describes the various forms of silicone as –
“Fluids, powders, emulsions, solutions, resins, paste, elastomers”.
One of the uses of the liquid form is stated to be “antifoaming agent for liquids.” According to Chapter Note 3 (extracted earlier), silicones could (and should only) be in the form of liquid or paste (including emulsion, dispersion or solution) to fall under Heading 39.01/06. This means that if a silicone emulsion is to fall under the said heading it has to be just an emulsion of silicone and nothing more. It should not be a preparation or compounded or formulated product. In this context, reference may be usefully made to paras 9 and 10 of the Tribunal’s order in the Auxichem case (supra).
“9. The only silicones that are assessable under Item 15A are the synthetic polymers, the first stage when the silicone product, or if I may call it the undiluted, unmixed silicone polymer, is produced by synthesis. Generally speaking, the states in which silicone appears are fluids, resins and elastomers. From these three so-called primary silicones, a number of derived products like sealants, rings washers, adhesives, surface active preparations, encapsulation cement etc. are obtained. Many of these preparations are in emulsions. All these preparations have other materials, additives, emulsifiers etc. added to aid and help in the use of the preparations in the desired industry application.”
“10. I am not able to see the logic of assessing everything and anything containing silicone under 15A. The Department itself is mistaken to say that silicone oil is listed in 15A, and that these preparations containing silicones are listed and they may be in pasty form, emulsion form, solution form; or they may be powder, blocks or lumps. However, great care must be taken here. It would not be correct to understand this to mean that any emulsion must be assessed under 15A. Only an emulsion of a silicone as such silicone in its primary state or one of its primary states, will be covered. A preparation containing silicone in emulsion for specific uses as in wetting, mould release, lubrication, will not be that emulsion; it is only an emulsion preparation used as wetting, mould release or lubricating preparation; otherwise all goods containing polymers or synthetic resins will have to be assessed under 15A. Thus paints, lubricants, adhesives, to name only a few, all contain varying amounts of synthetic polymers in mixtures or emulsions. Silicones find uses even in medicines as antiflatulents. In all these preparations, mixtures, compounds, it is the synthetic polymers that give the products their active, distinctive qualities and properties. For example, in a coating (paint) compound, it is the polymer that coats, protects and binds. The adhesion caused by the synthetic glue is also due to the polymer. It would be a fantastic operation to assess medicines as a silicone, under 15A simply because they contain silicone, even though silicone is the ingredient that gives the medicine its active character. Silicones find wide use as adhesives. They also find use in the preparation of varnishing compounds. To argue as the Department does, all such products must come under 15A. And to travel further, many fibres and synthetic polymers in origin, nylon and polyester being the most well-known. We will then have to assess nylon and polyester fibres under 15A because they contain synthetic polymers, and because, according to the Department, their specification under other heads would not prevent their assessment under the head specifying the material, synthetic polymer, of which they are made.”
11. The question then boils down to whether the subject product is a silicone polymer in the form of emulsion or is a preparation or formulation with other added substances. The manufacturers’ test report and leaflet do not throw any light on this. Unlike surface active preparations containing silicone for which Chapter 34 has been held to be more specific, no heading more specific than 39.01/06 to cover silicone emulsions used as anti-foam substances or preparations has been pointed out to us. Chapter 38 is a residuary Chapter and Heading 38.01/19(1) is a residuary heading within that chapter. Therefore, unless one can rule out Chapter 39, it will not be correct to place the subject product in Chapter 38. As far as the material on record goes, all it shows is that the product is an emulsion of silicone in a non-ionic emulsifying agent. Much cannot be read into the words “compounds” and “formulated” appearing in these documents unless what silicone is compounded with or formulated with is made known. As it is, silicone in emulsion form seems more specific to cover the product. The state of the evidence on record does not persuade us to change the classification to the residuary Heading 38.01/19(1).
12. In this view of the matter, we dismiss the appeal.