2013 (11) TMI 389 - AT - Customs

Benefit of Notification 21/2002 - Whether co-polymers of vinyl chloride/vinyl acetate would fall under the broad category of polymers of vinyl chloride under heading 3904 and eligible for benefit of Notification No. 21/2002 in Sr. No. 480 - Held that - Heading 3904 covers, not only PVC not mixed with any other substance but also PVC mixed with other substances. It also contains compounds of PVC and copolymers of PVC such as, vinyl chloride-acetate copolymers, vinylidene chloride polymers, fluro polymers. Thus, all forms of PVC merit classification under Heading 3904. It is also provided in Sub-heading note 1(b) that chemically modified polymers should be classified under sub-heading appropriate to the unmodified polymers. As per Note 6, primary forms has been defined to include liquids and pastes, including dispersions and solutions and blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms. As per HSN Explanatory note, primary forms may contain other materials such as plasticizers, stabilizers, fillers and colouring matter, chiefly intended to give the finished products special physical properties or other desirable characteristics. From the Encyclopedia of Chemical Technology, copy of which has been submitted by the appellant, it is seen that PVC is chlorinated so that it can be used in high temperature applications such as hot-water piping. Therefore, chlorinated PVC remains under Heading 3904 as primary forms of PVC. Even if it is assumed that by chlorination, PVC has been chemically modified, as per sub-heading Note1b(2), they remain classified under the same heading as appropriate to the unmodified polymers - No reason to classify the products chlorinated PVC in any other heading other than heading 3904. Vide Notification No. 21/2002 in Sr. No.480, the concessional rate of duty of 5% has been prescribed for PVC falling under heading 3904. The said entry covers all forms of PVC. Sr. No. 559 provides the concessional rate of duty of 7.5% on all goods falling under 3901 to 3915 except 3908. When two rates are specified in a notification for a product, the assessee is entitled to the benefit of that exemption, which gives him greater relief regardless to the fact that the notification as general in terms or other notifications is more specific to the goods. Chlorinated PVC merits classification under CTH 3904 and is eligible for the concessional rate of duty of 5% BCD in Sr. No. 480 of Notification NO. 21/2002 - Decided in favour of assessee.

Summary

Issues: Classification of Chlorinated Poly Vinyl Chloride under Customs Tariff Heading 3904 and eligibility for concessional duty under Notification No. 21/2002.

Classification under Heading 3904:
The case involved the classification of Chlorinated Poly Vinyl Chloride under Customs Tariff Heading 3904. The appellant argued that the product falls under this heading as it includes polymers of vinyl chloride or other halogenated olefins in primary forms. They relied on Chapter Note 5 of Chapter 39, which states that chemically modified polymers should be classified under the heading appropriate to the unmodified polymer. The appellant contended that the chlorination of PVC improves its properties for specific applications, such as hot-water piping, as supported by chemical technology references. The Tribunal analyzed the tariff description under Heading 3904 and concluded that it covers not only PVC but also PVC mixed with other substances, compounds of PVC, and copolymers of PVC. The Tribunal also noted that primary forms include various physical forms of PVC, and the chemically modified PVC remains classified under the same heading as appropriate to unmodified polymers. Therefore, the Tribunal held that Chlorinated PVC falls under Heading 3904.

Eligibility for Concessional Duty under Notification No. 21/2002:
The appellant claimed the benefit of Notification No. 21/2002, which provides a concessional rate of duty for polymers of vinyl chloride falling under Heading 3904. The appellant chose the entry with a more beneficial duty rate, which was applicable to goods under Heading 3901 to 3915. The Tribunal emphasized that when two rates are specified in a notification for a product, the assessee is entitled to the benefit of the exemption that provides greater relief. Citing precedents, including the decision in the case of Henkel Teroson India Ltd., the Tribunal affirmed that the expression "polymers of vinyl chloride" in the notification covers all forms/types of PVC. Therefore, the Tribunal held that Chlorinated PVC is eligible for the concessional rate of duty of 5% under Sr. No. 480 of Notification No. 21/2002. Consequently, the appeal was allowed with any consequential relief.

Conclusion:
The Tribunal's detailed analysis concluded that Chlorinated PVC should be classified under CTH 3904 and is eligible for the concessional duty rate specified in Notification No. 21/2002. The decision was based on the interpretation of the tariff description, relevant notes, and precedents supporting the broader classification of PVC under Heading 3904. The appellant's contentions regarding the chemical modification of PVC and its specific applications were considered in determining the classification and duty eligibility, resulting in a favorable outcome for the appellant.