2024 (5) TMI 631 - AT - Customs

Classification of PVC resin Impact Modifier Kane ACE B 22 - change of classification from 3902 to 3906 - Interpretation of sub-heading note - exemption from basic custom duty under notification 46/2011-Cus - HELD THAT - From the record, it is apparent that for choosing the heading within the chapter, the chapter note 4 is relevant and for choosing sub-heading within heading, has to be done in terms of sub-heading notes. From the composition of material mentioned in para 2 above, it is seen that the Butadiene content is almost 50% whereas Methyl Methylacrylate content is 15-20% only. Thus in terms of Chapter note 4, the goods will fall under the heading relevant to Butadiene which is heading 3902. Once the classification is decided under 3902, the sub heading notes becomes relevant for classification within the heading 3902. In these circumstances, question of change of classification from 3902 to 3906 on the strength of sub-heading note does not arise. Thus, we do not find any merit in the impugned order, the same is set aside and appeals are allowed.

Summary

Issues involved: Appeal against change of classification of imported product and demand of duty.

Classification dispute: The appellant, M/s Uniworth Enterprise LLP, contested the classification of the imported product 'PVC resin Impact Modifier Kane ACE B 22' under Chapter Tariff Heading 3902 9090 as claimed by them or custom heading 3906 9000 as claimed by the Revenue. The eligibility for full exemption from basic custom duty under notification 46/2011-Cus dated 01.06.2011 depended on this classification.

Legal arguments: The appellant's counsel argued that the product should be classified under the Custom Tariff Heading under which Butadiene Polymer is covered, as Butadiene is the main content by weight in the imported product. They relied on Chapter notes and sub notes, emphasizing the exclusion method of application and the relevance of Chapter note 4 to Chapter 39 of the Customs Tariff Act.

Interpretation of Chapter notes: The Chapter note 4 defines the classification of copolymers based on the weight contribution of monomer units. It states that copolymers are to be classified in the heading covering polymers of the comonomer unit which predominates by weight. In this case, as Butadiene predominates in the composition of the imported product, it should be classified under heading 3902.

Judgment: The Appellate Tribunal found merit in the appellant's arguments and set aside the impugned order, allowing the appeals. The classification under heading 3902 was upheld based on the weight composition of the product, specifically the predominance of Butadiene. The sub-heading notes were deemed relevant for classification within heading 3902, and the question of changing the classification to 3906 was dismissed.

Conclusion: The appeal was successful, and the classification of the imported product under heading 3902 was upheld, leading to the setting aside of the impugned order and allowing of the appeals.