1998 (5) TMI 286 - AT - Central Excise

Summary

Issues: Classification of Rubber Latex Solution under Heading 40.05 with Notification 250/86 vs. Heading 4001.00; Applicability of test reports for classification; Challenge on grounds of vulcanization and compounded rubber; Classification under Heading 4005; Benefit of notification under Heading 4001.

Classification under Heading 40.05 with Notification 250/86 vs. Heading 4001.00:
The assessee initially classified the Rubber latex solution under Heading 40.05 with the benefit of Notification 250/86. However, a test report described the product as a white liquid, aqueous dispersion of natural rubber and organic chemicals, leading to a notice challenging the classification under Heading 4001. The Assistant Collector confirmed the classification under Heading 4001.

Applicability of test reports for classification:
The Collector (Appeals) noted that a subsequent test report classified the product as natural rubber latex, unvulcanized, and uncompounded under Heading 4005. The Collector ordered the earlier period's classification under Heading 4005 with the benefit of the notification, setting aside the duty demanded. The issue arose whether a later test report could be applied retroactively to goods already classified based on an earlier test report.

Challenge on grounds of vulcanization and compounded rubber:
The respondent challenged the Department's classification under Heading 4001 by arguing that the product was vulcanized latex falling under Heading 4005, not Heading 4001 for vulcanized forms. Technical evidence was presented, asserting that vulcanized latex can remain in liquid form even after vulcanization. The Department relied on definitions of vulcanization, thermoplastic, and elasticity to support its classification under Heading 4001.

Classification under Heading 4005 and benefit of notification under Heading 4001:
The Tribunal analyzed the characteristics of vulcanized rubber, emphasizing its conversion from a thermoplastic to a thermoset with elasticity, indicating it must be solid. As the product in question was in liquid form, it was concluded that it was not vulcanized. The respondent failed to prove that the product was not compounded rubber retaining its raw material characteristics, leading to the affirmation of classification under Heading 4005, rendering the benefit of the notification under Heading 4001 inapplicable.

Judgment:
The Department's appeals were allowed, overturning the Collector (Appeals) decision on classification and duty, reinstating the Assistant Collector's orders. The Tribunal upheld the classification of the Rubber latex solution under Heading 4005, denying the benefit of the notification applicable to goods under Heading 4001.