Central Excise - Classification of Rubber Solution - Regarding - Central Excise - 99/24/87-CX.3

Central Excise - Classification of Rubber Solution - Regarding F. No. 99/24/87-CX.3 Dated 8-2-1988 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Classification of Rubber Solution - Regarding. A doubt has been raised about the proper classification of rubber solution manufactured by dissolving duty-paid natural rubber in solid form in an organic solvent like toluene. 2. The issue was discussed in the North Zone Tariff-cum-General Conference held at Delhi on 26th and 27th November, 1987. 3. The Collector of Central Excise, Meerut who sponsored the point stated that a manufacturer of compressed asbestos fibre jointing sheets falling under Chapter 68 is also manufacturing rubber solution for captive consumption. For the manufacture of such rubber solution, duty-paid natural rubber in solid form is dissolved in duty-paid toluene by the process of dipping and occasional stirring for about 24 hours. Consequently, the rubber gets dissolved in toluene and the result is a rubber solution. 4. During the discussion, it was observed that HSN Explanatory Notes below HSN Heading No. 40.05 (p. 588) speak of two types of compounded rubber. One is rubber compounded with carbon black or silica. Another is compounded rubber not containing carbon black or silica, which contains substances such as organic solvents, vulcanising agents, accelerators, plasticisers extenders, thickeners and fillers (other than carbon black or silica). These two categories include also dispersions and solutions of un-vulcanised rubber in organic solvents used for the manufacture of dipped articles or for coating finished goods. Prima facie it would fall under sub-heading 4005.00 of the Schedule to the Central Excise Tariff Act, 1985. It was also reported at the Conference that as per computer following classifications were possible under 3506, 3801.90 and 4001 and in Delhi Collectorate 3801.90 has been adopted. 5. In view of the above facts, the Conference felt that the matter needed to be examined in greater detail by the Board for its proper classification. 6. Accordingly the matter has further been examined in the Board's office. Natural rubber finds a special mention under Heading No. 40.01. As per the note 5(b) of Chapter 40, the presence of the substances as mentioned in note 5b(i), (ii) and (iii) in rubber or mixture of rubber shall not affect the classification in heading No. 40.01 or 40.02, provided that such rubber or mixture of rubber retains its essential character as raw material. However, organic solvents are not mentioned in the note 5b(i), (ii) and (iii). It, therefore, means that the presence of organic solvents would affect the classification of rubber or mixture of rubber in Heading No. 40.01 or 40.02. Thus natural rubber no longer remains natural rubber once it is mixed with organic solvents. Moreover, as per note 3 of Chapter 40, though solutions are treated as primary forms yet it applies to the solutions of Heading Nos. 40.03 and 40.05 only and not to Heading No. 40.01. So, the solution of natural rubber in an organic solvent can not be treated as a primary form of natural rubber. 7. However, if such goods have to be classified under Heading No. 40.05 as a primary form of compounded rubber, a question would arise whether the rubber solution i.e. rubber dissolved in an organic solvent like toluene could be treated as a form of compounded rubber. Since rubber gets dissolved in toluene and a solution is formed, so it can be taken as a homogeneous entity and the solution can be treated as compounded rubber. 8. In view of the position explained, in the foregoing paragraphs, the Board is of the view that rubber solution manufactured by dissolving duty-paid natural rubber in an organic solvent like toluene is properly classifiable under sub-heading 4005.00 of the Schedule to the Central Excise Tariff Act, 1985. 9. Trade interests may be informed accordingly. All pending cases in this regard may be decided on the above guidelines.