1995 (8) TMI 184 - AT - Central Excise

Summary

Issues:
Classification of 'polystyrene co-polymer Beads' under sub-heading 3903.10 vs. 3903.90 based on Chapter note 4 of Chapter 39.

Detailed Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the classification of 'polystyrene co-polymer Beads' manufactured by the respondent under sub-heading 3903.10 or 3903.90. The Revenue contended that the goods should be classified under the residuary sub-heading 3903.90, while the manufacturer claimed classification under sub-heading 3903.10 with exemption Notification No. 133/86-C.E. The dispute arose from a show cause notice demanding duty for the period September 1987 to November 1987, which was initially confirmed by the Assistant Collector but overturned by the Collector (Appeals) in favor of the respondent.

The main argument presented by the Revenue was that Chapter note 4 of Chapter 39 should be used to determine the correct heading based on predominance, not the sub-heading within the heading. The Revenue emphasized that sub-heading 3903.10 specifically covers polystyrene, while sub-headings 3903.20 and 3903.30 cover copolymers and terpolymers. The Revenue asserted that polystyrene polymer is distinct from copolymers with a predominance of styrene monomers, thus urging for the impugned order to be set aside.

Upon careful consideration, the Appellate Tribunal analyzed Chapter note 4, which states that copolymers should be classified under the heading of the comonomer that predominates by weight. The Collector (Appeals) reasoned that since styrene monomer predominates in the product over other comonomers, it should be classified under sub-heading 3903.10 as polystyrene. It was noted that sub-heading 3903.90 is a residuary heading to be used only when the product does not fit under preceding sub-headings. The Tribunal found no technical data provided by the Revenue to dispute the factual predominance of styrene in the product, leading to the conclusion that the 'polystyrene copolymer beads' should indeed be classified as polystyrene under sub-heading 3903.10.

In conclusion, the Appellate Tribunal upheld the Collector (Appeals) decision, rejecting the Revenue's appeal and affirming the classification of the 'polystyrene co-polymer Beads' under sub-heading 3903.10 based on the predominance of styrene monomer and the application of Chapter note 4 of Chapter 39.