1988 (3) TMI 210 - AT - Central Excise

Issues Involved:
1. Re-assessment of imported goods under the correct tariff heading.
2. Classification of the product "Desmophen 7186B" (Polyether polyol) under the appropriate Customs Tariff Act (CTA) and Central Excise Tariff (CET).
3. Determination of whether the imported goods are similar to resols and polyisobutylene.

Issue-wise Detailed Analysis:

1. Re-assessment of Imported Goods under the Correct Tariff Heading:
The appellants sought re-assessment of the imported goods, Desmophen 7186B, under heading 38.01/19(1) CTA read with Item 68 CET, instead of the lower authority's assessment under 39.01/06 CTA read with 15A CET. The lower authority, including the Collector (Appeals), rejected the appellants' claim for reassessment without providing further findings.

2. Classification of the Product "Desmophen 7186B" (Polyether Polyol) under the Appropriate Customs Tariff Act (CTA) and Central Excise Tariff (CET):
The appellants argued that the imported goods, being polyether polyol, should not be classified under 39.01/06 CTA and 15A CET as they are neither resins nor plastics but a polymerized product. They contended that the goods should fall under 38.01/19(1) CTA and 68 CET. The Assistant Collector, whose reasoning was adopted by the Collector (Appeals), classified the goods under 39.01/06 CTA based on the CCCN Explanatory Notes, which group polyethers under "Certain other polycondensation and polyaddition products."

The appellants' consultant argued that the goods should be classified based on their chemical nature and usage, emphasizing that the product is a trifunctional polyether used for making polyurethane foam, and not similar to resols or polyisobutylene. The Department's representative countered that the goods, being products of chemical synthesis and similar in nature to resols and polyisobutylene, fall under 39.01/06 CTA and 15A CET.

3. Determination of Whether the Imported Goods are Similar to Resols and Polyisobutylene:
The tribunal examined whether the imported goods are similar to resols or polyisobutylene. It was noted that the degree of polymerization of the goods was conceded to be similar to that of resols and polyisobutylene. The tribunal referred to technical literature and definitions to understand the characteristics of resols and polyisobutylene, which are both capable of further polymerization and belong to the family of resins and thermoplastics.

The tribunal observed that the imported product, Desmophen 7186B, is a trifunctional polyether based on propylene oxide, intended for the manufacture of polyurethane foam. The product undergoes further polymerization by reacting with isocyanate, stabilizers, and catalysts, forming a thermoplastic polymer. The tribunal considered whether the difference in the process of further polymerization (chemical condensation reaction versus application of heat and pressure) affects the classification under the tariff.

The tribunal concluded that for a product to fall under item 39.01/06 or 15A(1) CET, it must have characteristics similar to resols and polyisobutylene, which include being resinuous in character and capable of further polymerization. The tribunal found that while the imported goods satisfied the criteria of being polycondensation, polyaddition, or polymerized products, there was no material on record to determine if they were resinuous in character.

Conclusion:
The tribunal set aside the order of the lower authority and remanded the matter for re-examination to determine if the imported goods are resinuous in character. The appeal was allowed by remand for a de novo decision in light of the tribunal's findings.

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