2022 (6) TMI 433 - AT - Customs

Classification of imported goods - PVC Kane Ace B-564 - classifiable under CTH 39029000 or under CTH 39069090 - availability of benefit of exemption entry no. 457 (I) of Notification No.46/2011- CUS - non-consideration of statutory provision of central excise tariff act and chemical characteristics of the product - classification decided only on the basis of nomenclature that too picking up words from the full nomenclature of the name of the product - violation of principles of natural justice - HELD THAT - In the present case it is the admitted fact that co-polymer does not have any single monomer unit which contributes 95% or more by weight. As per the above note co-polymers are to be classified under the heading covering polymer of co-monomers unit which pre-dominates by weight over every single co-monomer unit. In the present case undisputedly the butadiene is pre dominantly constituent. The butadiene is nothing but the olefin - the products i.e. polymer of other olefin in primary form is classified under 390290000 and other. In the present case as given above the product imported by the appellant consisted of pre-dominantly of Butadiene which is an olefin therefore in terms of Chapter note 4 to chapter 39 the product is correctly classifiable under CTH 390290000. The Adjudicating Authority and the Commissioner (Appeals) have not considered this statutory provision of central excise tariff act they have also not considered the chemical characteristics of the product therefore the classification decided only on the basis of nomenclature that too picking up words from the full nomenclature of the name of the product is absolutely baseless and cannot be sustained. The appellant has correctly classified the imported goods under CTH 390290000 - Appeal allowed.

Summary

Issues:
Classification of imported goods under CTH 39069090 vs. CTH 39029000 for exemption claimed under Notification No.46/2011-Cus.

Analysis:
The case involved the classification of an imported modifier for PVC, "Kane Ace B-564," by the appellant. The appellant initially classified the product under CTH 39029000 and claimed exemption under Notification No.46/2011-Cus. However, the department contended that the product should be classified under CTH 39069090 as an Acrylic Polymer. The adjudicating authority re-classified the goods under CTH 39069090, denying the exemption but extending the benefit of a concessional duty rate. The Commissioner (Appeals) upheld this classification, leading to the appellant's appeals before the Tribunal.

The appellant argued that the product was not an acrylic-based polymer but primarily a MBS-based polymer containing butadiene as a major component. They provided technical data sheets and chemical analysis certificates to support their claim. The appellant maintained that historical classification under CTH 39029000 was correct, citing Chapter Note 4 to Chapter 39 of Customs for classification based on the predominant constituent of co-polymers.

The Tribunal noted that both lower authorities classified the product under CTH 39069090 based on the nomenclature "Acrylic Polymer," without conducting a chemical test to determine the composition. The product's composition predominantly consisted of butadiene, an olefin. Referring to Chapter Note 4, the Tribunal emphasized that co-polymers without a single monomer unit contributing over 95% by weight should be classified based on the predominant constituent. As butadiene predominated in the product, it was correctly classifiable under CTH 39029000, not CTH 39069090 as contended by the department.

The Tribunal found the classification based solely on nomenclature to be baseless and unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellant, granting consequential relief. The Tribunal's decision highlighted the importance of considering statutory provisions and chemical characteristics for accurate classification, emphasizing substance over mere nomenclature.

In conclusion, the Tribunal's detailed analysis and application of legal provisions led to the correct classification of the imported goods under CTH 39029000, overturning the lower authorities' classification under CTH 39069090. The judgment underscored the significance of thorough examination of product composition and statutory provisions for accurate classification in customs matters.