Central Excise - Classification of binding agents used in the textile industry - Clarification regarding - Central Excise - 53/89

Central Excise - Classification of binding agents used in the textile industry - Clarification regarding Circular No. 53/89 Dated 20-9-1989 [From F. No. 92(4)-CX.3] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Central Excise - Classification of binding agents used in the textile industry - Clarification regarding. A doubt had been raised about the correct classification of binding agents used in the textile industry. 2. The matter also came up for discussion at the South Zone Tariff Conference held at Madras on 29th 30th May, 1989. The Collector of Central Excise, Madurai, the sponsoring Collector, explained that the binding agents consist of acrylic binder, silicon antifoam, wetting agent, ammonium hydroxide and ammonium chloride and water. These ingredients are taken in a tank in the proportion of 50, 05, 1.0, 1.0, 2.0 and 145.5 and mixed well to get a batch of 200 litres. The binding agent so obtained is used for binding non-woven webs during the course of manufacture of non-woven fabrics. The main purpose of the binding agent is to act as a binding agent. 3. The manufacturers had sought classification of this product under heading No. 38.09 as a 'finished agent' used in the textile industry. The sponsoring Collector was of the view that the product was rightly classifiable under heading No. 35.06 as an 'adhesive' as the main use of the chemical is as a binding agent in the manufacture of non-woven webs and also the product is not used after the fabric is obtained. It is not used in the finishing process of the textiles, even though it is used in the textile industry. Therefore, it will not be eligible for exemption under Notification No. 172/87 as 'finishing agent', used in the textile industry, the Collector explained. 4. The Conference took note of the fact that the binding agent is used only in the initial stage of formation of the non-woven fabric and it is not used in any of the finished processes of the fabrics. It is rather used for binding purpose as explained by the Collector while bringing into existence and non-woven fabrics. The samples of the 'binding agent', were also shown at the time of the Conference. According to the HSN Explanatory Notes (page 775) under heading No. 56.03 relating to Non-woven, it is stated that non-wovens can be produced in various ways and production can be conveniently divided into the following three stages :- (i) web formation, (ii) binding and (iii) finishing. After web formation, it is subjected to bonding and bonding itself can be carried out by any one of the three methods namely chemical bonding, in which the fabrics are assembled by means of a bonding substance which is an adhesive binder like rubber gum or plastics in solution or emulsion. The bonding can be also done by means of thermal bonding or mechanical bonding. The various types of bonding may also frequently be combined. Under the heading 'finishing' with reference to non-wovens, the different finishing processes mentioned in the H.S.N. Explanatory Notes (p-775) are dyeing, printing , impregnating, coating, covering, laminating etc. 5. In view of the reasons discussed above, the Conference came to the conclusion that the binding agents are nothing but 'adhesives' covered under heading No. 35.06 of the Central Excise Tariff. 6. The matter has also been got further examined in the Board's office in consultation with the Dy. Chief Chemist. CRCL, New Delhi who is also of the view that the binding agents used in the textile industry would be appropriately classifiable under Heading No. 35.06 of the CET. A copy of his opinion is enclosed. 7. The Board agrees with the above views of the Conference and the Dy. Chief Chemist. 8. The above guidelines may be brought to the notice of the lower field formations and the trade interest may also be suitably advised. COPY OF DY. CHIEF CHEMIST'S OPINION The point at issue in the file is whether "Binding Agent" is to be classified as "Prepared glues and other prepared adhesives not elsewhere specified or included" under heading 3506.00 or as 'Finishing agent, dye carriers to accelerate the dyeing or fixing of dye-stuffs and other products and preparations of a kind used in the textiles, paper, leather or like industries" under heading 3809.00 of C.E.T. As seen from the file, the product under reference described as "Binding Agents" consists of acrylic binder silicone antifoam, wetting agent, ammonium hydroxide, ammonium chloride and water. It is stated to be used for binding non-woven webs during the course of manufacture of non-woven fabrics. It has been argued in the file at page 2/n. that the binding agents would merit classification under heading 38.09 on the ground that Explanatory notes under HSN heading 38.09 covers wide range of products generally used during processing or finishing of yarns, fabrics, paper, leather or similar material. It has been further stated that Binders for leather, paper and like industries are covered by heading 38.09 under Note (B) hence binders used in textile industry are also covered under heading 38.09. It may be seen that note (B) under heading 38.09 of HSN is specific, which includes products and preparations used in the textile or like industries. Note (A) clearly lists a number of items from (1) to (13) which are covered under heading 38.09. Binding Agents of the type for which textiles have not been mentioned from (1) to (13) in Note (A). The product under reference would also not be covered under note (b) or (C) to heading 38.09, which are either meant for paper, paper board or like industries or products and preparations used in the leather or like industries. The product under reference is stated to find use in binding webs of non-woven fabrics. Binding "webs" during the course of manufacture of non-woven fabrics is, therefore, part of manufacture of non-woven fabrics. It cannot be considered as a "process' or "finishes". "Process" and "Finishes" are those described under Note 'A' to heading 38.09, from (1) to (13). Secondly, it has been argued that unless a product is suitable for use as glue or adhesives, put up for retail sale as glue or adhesives, not exceeding a net weight of 1 Kg. cannot be classified under heading 35.06. However, heading 35.06 of C.E.T. refers to only "Prepared glues and other prepared adhesives, not elsewhere specified". The word "suitability for use as glues and adhesives and being put in a unit container of weight not exceeding 1 Kg" are not mentioned in the Central Excise Tariff. However, it has to be seen whether the product is prepared glues or prepared adhesives or not. An adhesive is any substance inorganic or organic, natural or synthetic that is capable of binding other substances together by surface attachment, prepared glues and prepared adhesives are formulated products, composition of such products is also given under note (B) of heading 35.06 of HSN. In the instant case product is used as an adhesive for binder textile fibres. In view of the foregoing the product, in my opinion, would more appropriately by covered under heading 35.06 of C. Ex. Tariff Act, 1985. 28th August, 1989 Sd/- (DR. BADRI PRASAD) Deputy Chief Chemist