2023 (7) TMI 1068 - AT - Customs

Exemption from Customs Duty - high density polyethylene granules which is chemically modified - applicability of exemption N/N. 12/2012-Cus dated 17.03.2012 (Serial No. 237) - HELD THAT - From the notification, it can be seen that as per the Serial No. 237, the polymers of ethylene mentioned at serial (iii), it is clear that exemption is granted to High Density Polyethylene (HDPE). Now it is to be examined that the appellant s goods falls under the description of High Density Polyethylene or otherwise - It is found that Customs department drawn sample and got it tested from Customs House laboratory, Kandla which has reported that goods are chemically modified polymers. The samples were re-tested to ascertain the goods imported are chemically modified or otherwise. From the composition, it can be seen that the product is high density polyethylene and it consists of 98% ethylene by weight. Therefore, even though some additives in very miniscule percentage exists in the composition but chemical character of the product i.e. high density polyethylene does not get altered and the same cannot be classified in any other entry other than high density polyethylene. Thus, even though miniscule percentage of different chemicals including additive mixed with HDPE, the goods remain as high density polyethylene and therefore clearly covered under the exempted entry in Notification No. 12/2012-Cus dated 17.03.2012 - the appellant is entitled for exemption under Notification No. 12/2012-Cus in respect of their imported goods i.e. High density polyethylene. Appeal allowed.

Summary

Issues Involved:
The issue involved in the present case is whether high density polyethylene granules, which are chemically modified, are liable for exemption under Notification No. 12/2012-Cus dated 17.03.2012 (Serial No. 237) or not.

Comprehensive Details:

Issue 1 - Eligibility for Exemption:
The appellant imported high density polyethylene (HDPE) granules which were chemically modified. The department argued that since the granules were modified, they no longer qualified as HDPE and thus were not eligible for the exemption under Notification No. 12/2012-Cus. The appellant's counsel contended that even though the granules were modified, the character of HDPE was maintained, as confirmed by the Customs House laboratory report. The counsel cited various decisions in support of their argument.

Issue 2 - Interpretation of Notification:
The key dispute revolved around the interpretation of the exemption Notification No. 12/2012-Cus and its applicability to HDPE. The relevant entry (Serial No. 237) specifically mentioned polymers of ethylene, including HDPE, as eligible for a 5% duty rate exemption. The Customs House laboratory report confirmed that the imported goods were predominantly HDPE, despite being chemically modified. The composition analysis revealed that the product consisted of 98% ethylene by weight, indicating that the chemical character of HDPE was not altered significantly.

Decision and Ruling:
After considering the arguments and evidence presented by both sides, the Tribunal concluded that the appellant's imported goods, despite containing some additives, remained classified as high density polyethylene. Therefore, the goods were deemed to fall under the exempted entry in Notification No. 12/2012-Cus. Citing the supporting judgments, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The decision was pronounced in open court on 24.07.2023.