PETITIONER:
COLLECTOR OF CUSTOMS, BOMBAY
Vs.
RESPONDENT:
BHOR INDUSTRIES LTD.
DATE OF JUDGMENT20/04/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1988 AIR 1351 1988 SCR (3) 641
1988 SCC Supl. 418 JT 1988 (4) 726
1988 SCALE (1)907
ACT:
Customs Tariff Act, 1975: Chapters 28 & 29 & Headings
39.01/06 and 38.01/19(6)-"Plastz.cizers not otherwise
specified"-Interpretation of-"Sancticizer 429"-Levy of duty
on-Not separately defined chemical compounds.
Statutory Interpretation-Customs and Excise Statutes-
Tariff entries-How goods are known in the trade and trade
literature-Relevancy of.
HEADNOTE:
The respondents who imported 'Sancticizer 429',
contested the levy of duty by the Department and filed a
claim for refund, which was rejected by the Assistant
Collector on the ground, that on ted the product was found
to be organic compound (easter-type) of colourless viscose
liquid and as per 7.0.046 should be considered a polymeric
plasticizer.
On appeal, the Appellate Collector came to the
conclusion that Chapter 38 of the Customs Tariff Act 1975
was residuary in nature and that if the item was not covered
by any other Chapter of the Tariff Act only then it would
fall under the said Chapter. He also found that linear
polysters were covered by CCCN 39.01(E) and that the goods
in question are formed by the condensation of diabasic acid
within dihydric alcohols and were similar to the
polycondensation products of terphthalic acid or adipic acid
with ethanediel covered by the aforesaid CCCN headings,
which corresponds to 39.01/06 of the Customs Tariff Act,
1975. The Appellate Collector upheld the decision of the
Assistant Collector.
The respondent appealed to the Customs Excise and Gold
Control Appellate Tribunal which allowed the appeals taking
the view that plasticizers were not resins, but are added to
resins to impart better flexibility of plastic properties to
the latter, that 'Sancticizer 429' is admittedly a
plasticizer and would therefore not have fallen for
classification under Heading No. 39.01/06 of the Customs
Tariff Schedule as it stood before amendment in 1978 and
that the product was classifiable
642
under heading 38.01/19(6) of the Tariff Act.
Dismissing the Appeals of the Revenue, this Court,
^
HELD: 1. As per various technical authorities,
plasticizers are not resins. These are added to resins to
impart better flexibility or plastic properties to them.
These are not plastic materials by themselves either. [644H]
2. The goods under reference in the instant case, are
not similar to resols or polysiobutylenes. Their
classification under Heading 39.01/06 of the Customs Tariff
Act, 1975, prior to and even after its amendment in 1978,
should not be applicable. Not being separately defined
chemical compounds, these would also not fall within Chapter
28 or 29 of the Act. Since these are not specified elsewhere
their appropriate classification would be under Heading No.
38.01/19(6) as "Plasticizers, not elsewhere specified".
[645C]
3. In these matters how a good is known in the trade
and treated in the trade literature is relevant and
significant and often decisive factor. [645D]
"Encyclopaedia of Chemical Technology" 3rd Edition page
111 referred to.
Bhor Industries Ltd. v. Collector of Customs, Bombay,
[1984] 18 E.L.T. 521 and Collector of Customs, Bombay v.
Bhor Industries Ltd. and another, [1985] 21 E.L.T. 291
approved.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 392-95
of 1988.
Appeal under Section 130E(b) of the Central Excise and
Salt Act, 1944 from the order dated 15.12.1986 of the
Customs Excise and Gold (Control)-Appellate Tribunal, New
Delhi in Appeal Nos. C/2130 to 2132/86-C & 1027/83 and order
No. 757-760/86.
B. Datta, ASG, Mrs. Indira Sawhney and P. Parmeshwaran
for the Petitioners.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These appeals under Section
643
130E(b) of the Customs Act 1962 (hereinafter called the Act)
are against the order dated 15th December, 1986 passed by
the Customs, Excise and Gold (Control, Appellate Tribunal
(hereinafter called CEGAT). These appeals are related to a
dispute regarding the duty of custom imposed on the
respondent. The department had levied duty on the product
known as ‘Sancticizer 429’ imported by the respondent. The
respondent had contested this duty and filed a claim for the
refund. The Assistant Collector of Customs rejected this
claim. The Assistant Collector on test found it to be
organic compound (easter-type) inform of colourless viscose
liquid and as per 7.0.046m should be considered as polymeric
plasticizer. The Appellate Collector found that Chapter 38
of the Customs Tariff Act, 1975 was residuary in nature.
According to him, if the item was not covered by any other
chapter of the Customs Tariff Act, 1975 then it would fall
under Chapter 38. The Appellate Collector further found that
linear polysters were covered by CCCN 39.01(E). The
Appellate Collector held that the impugned goods are formed
by the condensation of diabasic acid within dihydric
alcohols and were similar to the poly condensation product
of terphthalic acid or Adipic acid with ethanediel covered
by above mentioned CCCN headings. The Appellate Collector
held this CCCN headings corresponds to 39.01/06 of the
Customs Tariff Act, 1975. The Appellate Collector upheld the
decision of the Assistant Collector. The respondent
challenged the aforesaid order of the Appellate Collector
before the Tribunal. The Tribunal allowed the appeals
relying on the two decisions of the Tribunal one being Bhor
Industries Ltd. v. Collector of Customs, Bombay, [1984] 18
E.L.T. 521 and the other Collector of Customs, Bombay v.
Bhor Industries Ltd. and another, [1985] 21 E.L.T. 291. The
Tribunal was of the view that the product was classifiable
under the heading 38.01/19(6) of the Customs Tariff Act. The
decision of the Tribunal was later on followed by the
subsequent decision referred to hereinbefore.
In Bhor Industries Ltd. v. Collector of Customs, Bombay
(supra), the Tribunal observed that these are ordinarily
liquids and, in rare instances, solids, as simple high
boiling solvents for the polymers. These are neither resins
nor do they seem to be plastic materials; on the other hand,
these are added to resins to impart better flexibility or
plastic properties to them. It was further observed that
there was no evidence had been produced before the Tribunal
to show that Sancticizer was a resin or plastic material as
defined in Explanatory Notes to C.C.C.N. It was neither
similar to resols or polysiobutylene to attract the mischief
of Note 2(c) to Chapter 39 nor a separately defined Chemical
Compound so as to fall within Chapters 28 or 29 of
644
Customs Tariff Act, 1975. Hence, it was classifiable not
under Heading 39.01/06 as it stood before its amendment in
1978 but under 38.01/19(6) of Customs Tariff Act, 1975 as
“plasticizer, not elsewhere specified”.
The Tribunal in its decision considered the technical
leaflet on the product. Sancticizer 429 was described as a
medium-high molecular polyester plasticizer made from a
glycol reacted with a dibasic acid. Among the properties
claimed for the product are good low temperature
flexibility, excellent electrical properties, outstanding
migration resistance, humidity, stability and resistance to
oil and solvant extraction. It is said to be an excellent
plasticizer for making oil-resistant high temperature PVC
wire and cable compounds. It is also stated to be useful for
plasticizing ethyl cellulose, mitrocellulose, acrylic
caulking compunds, and adhesive systems based upon polyvinyl
accetate, styrene-butadiene, and acrylic latices. Reference
was also made to Kirk-othmer’s “Encyclopaedia of Chemical
Technology” 3rd edition page 111, where it was observed as
follows:
“A plasticizer is incorporated in a material to
increase its workability, flexibility, or
distensibility. Addition of a plasticizer may
lower the melt viscosity, the second-order
transition temperature, or the elastic modulus of
the plastic. For effectiveness with polymeric
materials, a plasticizer needs to be initially
mixed with the polymer either by dissolution of
the resin in the plasticizer or the plasticizer in
the resin, by heat or dissolving both in a common
solvent and subsequent evaporation of the solvent.
In “Plastics materials” (4th edition, page 80),
J.A. Brydson refers to plasticizers-ordinarily
liquids and in rare instances solids-as simply
high boiling solvents for the polymer. The action
is explained by saying that plasticizer molecules
insert themselves between polymer molecules
reducing but not eliminating polymer-polymer
contacts and generating additional free volume;
also as some interaction between polymers and
plasticizers off setting the spacing effect; or
both.”
The Tribunal came to the conclusion that plasticizers
were not resins; these are added to resins to impart better
flexibility or plastic properties to the latter. Nor did
they seem to be plastic materials by themselves. The
Tribunal found that Sancticizer 429 which is admitedly a
plasticizer would, therefore, not have fallen for
classification
645
under Heading No. 39.01/06 of the Customs Tariff Schedule as
it stood prior to its amendment in 1978.
The said reasoning was reiterated by the Tribunal in
the decision of Collector of Customs, Bombay v. Bhor
Industries Ltd. and another. There, the Tribunal observed
that as per various technical authorities, plasticizers are
not resins. Rather, these are added to resins to impart
better flexibility or plastic properties to them. These are
not plastic materials by themselves either. Further, goods
under reference are not similar to resols or
polysiobutylenes. Therefore, their classification under
Heading 30.01/106 of the Customs Tariff Act, 1975, prior to
and even after its amendment in 1978, should not be
applicable. Furthermore, not being separately defined
chemical compounds, these would also not fall within Chapter
28 or 29 of the Act. Since these are not specified
elsewhere, their appropriate classification would be under
Heading No. 39.01/19(6) as “Plasticizers, not elsewhere
specified”.
It is well-settled in these matters how a good is known
in the trade and treated in the trade literature is relevant
and significant and often decisive factor.
In that view of the matter, the Tribunal was right in
the view it took. These appeals fail and are accordingly
dismissed.
N.V.K. Appeals dismissed.
646