9911796707
TMI Blog1990 (5) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... stries. The respondents had been manufacturing Prescol Glue since 1964-65 and were paying duty on this product under Tariff Item 15-A(1). 3. On 7-8-1978, the respondents, by a letter, contended that their product was not chargeable to duty under the said tariff entry and they challenged the classification. On 10-8-1978, the respondents submitted a classification list in Form-I wherein they described Prescol Glue Grades G , L , PW amd W , as the other goods with remarks that they did not attract duty. Another classification list Form-I dated 21-8-1978 was also submitted by the assessee with the same contents, but with addition of Grade TUL to the grades of Prescol Glue mentioned in the earlier classification list. While these were under consideration, the respondents started clearing the goods without payment of duty. Thereafter, some correspondence took place between the department and the respondents and a show cause notice was issued by the jurisdictional Assistant Collector asking the respondents to show cause why their classification lists dated 10-8-1978 and 21-8-1978 should not be rejected. Thereafter, litigation followed and ultimately, the jurisdictional Assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lasticised Cellulose nitrate. (2) Articles made of plastics, all sorts, including tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible, including layflat tubings and polyvinyl chloride sheets, not otherwise specified. (3) Polyurethane foam. (4) Articles made of polyurethane foam. EXPLANATION :- For the purpose of sub-item (2) plastics means the various artificial or synthetic resins or plastic materials or cellulose esters and ethers included in sub-item (1)". Item 15A was further amended as under with effect from 1-3-1982 :- 15A. ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIAL AND OTHER MATERIALS AND ARTICLES SPECIFIED BELOW :- (1) Condensation, Polycondensation and polyaddition products, whether or not modified or polymerised, and whether or not linear (for example phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, silicones); polymerisation and co-polymerisation products (for example, polyethylene, polytetrahaloethylene, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl acetate, polyvinyl chloroacetate and other polyvinyl derivatives, pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spray dried to powder form to further slow down the condensation and increase shelf life. 8. In the order-in-appeal, it is also stated that when mixture of Urea and Formaldehyde alongwith other chemicals reaches hydrophilic stage, further condensation is stopped and the resultant product, namely, Prescol Glue has very low molecular weight and is water soluble. It is claimed by the respondents that this hydrophilic stage in the case of this product is irreversible and that the resultant mixture cannot be reprocessed to attain hydrophobic stage or be put to any other use. In order-in-appeal, it is stated that the respondents had contended before the Assistant Collector that their product in question, was neither artificial resin nor synthetic resin as being of low molecular weight and water soluble and in support thereof, they referred to definitions of Resin Synthetic from Hawley s Condensed Chemical Dictionary and also from Wettington s Dictionary of Plastics wherein it has been defined to be solid or pseudo-solid material often of high molecular weight. It is also stated in the order that the respondents referred to the definition of resin synthetic in Hawley s Condensed C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1985 (20) E.L.T. 124 (Tribunal) are . not applicable to the present case. 11. We have considered the records of the case and the arguments of the learned advocate and the learned DR. Our findings and the conclusion on the various points raised are given in the following paragraphs. 12. The trade name of the respondents product is Prescol Glue . The period for which the classification of the product is in dispute relates to 1978 to 27-2-1986. With effect from 28-2-1986, the new Central Excise Tariff under the Central Excise Tariff Act, 1985 was introduced. The question to be decided is whether the product was correctly classifiable under Item No. 15A(1) of the Central Excise Tariff as it then existed during the relevant period or it fell under the residual Item 68 of the Tariff. The Assistant Collector held that the product was assessable under Tariff Item 15A(1), but the Collector (Appeals) has found the goods classifiable under Item 68. Tariff Item 68 will come into picture if the products do not fall within the purview of Tariff Item 15A(1). The specific entry prevails over the residuary entry as held by the Hon ble Supreme Court in 1983 (13) E.L.T. 1566 (S.C.) - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper-book. The Assistant Collector s conclusion is not linked with reasons. (iv) The test report of the Department should not be followed in this case as the molecular weight was not determined in the test. (v) Under the new Central Excise Tariff, effective from 28-2-1986, the product is classified as glue under Heading 3506.00. 14. Tariff Item 15A, as it stood during the period from 18-6-1977 to 28-2-1982, read as Artificial or synthetic resins and plastic materials, and cellulose esters and ethers, and articles thereof . Entry (i) below sub-item (1) of Item 15A specifically mentioned condensation products, whether or not modified or polymerised, and whether or not linear, such as Phenoplast, Aminoplast, esters and ethers" etc. Entry (ii) mentioned polymerisation and co-polymerisation products. Entry (iii) specified various cellulose products including plasticised cellulose nitrate, as mentioned therein. Entry (i) of the Tariff Item 15A(1) did not stipulate that the condensation products must be of any specified molecular weight or that the condensation process must attain the final stage. Therefore, the fact that the condensation stopped at hydrophilic stage, wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, the Assistant Collector has stated that the assessees in their submission, made under reference No. NPL-201 dated 9-7-1985, briefing manufacturing process, submitted that the goods in question were and are manufactured by condensation process and in support thereof they quoted relevant lines from page 71 of Thorpes Dictionary of Applied Chemistry to further reveal that the process of condensation was interrupted at an early stage . Again at the bottom of the said page, the Assistant Collector has observed that the assessees, in their submission dated 9-9-1985, inter alia, mentioned, Note - It may kindly be noted that our products are a thermosetting resins . At page 27 of the copy of order-in-orig inal, the Assistant Collector has stated as follows :- On going through the balance sheet of the assessee I find that upto the period 1977-78 the goods in question had been described therein to be U.F./M.F. synthetic resins and after that year they come to be described by their trade name Prescol". In the assessee s literature on the subject called Technical Bulletins E-21 and G-01, the goods have been described as Prescol U.F. Synthetic resin and Prescol PW. Cationic pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts that include plasticizers, extenders, stabilizers, curing agents, hardeners, etc. The product in question belongs to the second category. Another question arises, i.e. whether the said synthetic resin is a polymer and the product is the result of polycondensation (condensation polymerisation). Again most amino resins used commercially for finishing textile fabrics are methylolated derivatives of urea or melamine. Although these products are usually monomeric, they may contain some polymer by-product. Prescol glue is also used for finishing textile fabrics and thus contains monomeric and not polymeric urea - formaldehyde resin. 19. The foregoing extracts from the report of Dr. Mukherjee show that he has described the respondents products as synthetic resin in so many places. Of course, he has stated that it is a monomeric urea - formaldehyde resin and not polymeric urea - formaldehyde resin. The Tariff Entry does not restrict its scope to polymeric resin only. In the first paragraph at page 3 of his report, Dr. Mukherjee has clearly stated that the product derived from urea and formaldehyde can only fall in the group of synthetic resin. He has also clearly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ics) have been defined as Resin s products produced by the interaction of an aldehyde (i.e. formaldehyde) with an amino compound such as auilino . At page 35 of his order, the Assistant Collector has given extracts of definition of aminoplast resin from Hawley s Condensed Chemical Dictionary, 10th Edition, as under :- Aminoplast resin (amino resin) A class of thermosetting resin made by reaction of an amino with an aldehyde. The only aldehyde in commercial use is formaldehyde and the most important aminos are urea and melamine. At page 37 of the order, the Assistant Collector has also quoted from the Brussel s Tariff Nomenclature, Chapter 39.01, which is in the following terms :- (B) Aminoplasts : These are formed by the condensation of amines or amides with aldehydes (formaldehyde, furfuraldehyde, etc.). The most important are urea formaldehyde and thionrea formaldehyde (Urea resins), melamine formaldehyde, (melamine resins), auiline formaldehyde, (aminoplasts) . It is also stated therein that this material is used as glues and textile dressings etc. The Assistant Collector has observed that the respondents product is based on urea and formaldehyde and it falls with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehensive one. Following the aforesaid judgment of Bombay High Court, this Tribunal held in the case of Collector of Central Excise and Customs, Pune v. General Pharmaceutical Pvt. Ltd., Pune 1986 (26) E.L.T. 1050 (Tribunal) that Tariff Item 15A(1) is highly technical and scientific in character and hence it should be construed likewise. In the present case, the goods are condensation products and are aminoplast. Aminoplast, without any qualification, is specifically mentioned in the Tariff Entry 15A(1). The Tariff is also specific for condensation products. The products are covered by the description of the Tariff. Their classification should, therefore, be governed by the technical and scientific meaning. In this view of the matter, the affidavits from the various parties regarding use of the final products filed by the respondents cannot be a determining factor for classification of the respondents products. 22. The claim of the respondents is that their products are used as glue and it should appropriately be classified under Item 68 of the erstwhile Central Excise Tariff. The Assistant Collector has observed that at the time of clearance of the products from the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) was already paid. The adhesive in that case was not the result of condensation process or chemical synthesis, but it was the result of mechanical mixing of two resins on which duty was already paid as resin. In the present case, the respondents resin is the result of condensation process and no duty was paid thereon earlier under Tariff Item 15A(1). The facts of the earlier case being completely different, the said decision is not applicable to the present case. 24. The main contention of the respondents is that their products were not classifiable under Tariff Item 15A(1) as these were of low molecular weight and water soluble. In support of this contention, they have relied on dictionary meaning, according to which synthetic resins are often of high molecular weight and are not water soluble. In this regard, they relied on the definition of resin/synthetic resin given in A.S.T.M., and Hawley s Condensed Chemical Dictionary. According to A.S.T.M., resin is a solid or pseudosolid organic material often of high molecular weight, which exhibits a tendency to flow when subjected to stress, usually has a softening or melting range, and usually fractures conchordally . In Hawley ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eets, tubes, etc., that are used where oil and solvent resistance is required. It may also be used in photosensitive coatings, steel quenching, protective coatings, cementitious products, production of emulsions, materials stabilization, cosmetics, oil-well drilling, and many other miscellaneous applications. Worldwide demand for polyvinyl alcohol exceeded 295 metric tons (650 million pounds) in 1978. The United States market is comprised chiefly of textile, adhesive, and paper applications. Polyvinyl alcohols are water-soluble synthetic polymers with excellent film-forming, adhesives, and emulsifying properties and outstanding resistance to oil, grease, and solvents. (Emphasis supplied by us) The first polyvinyl alcohol produced in the United States was by the Du Font Co. in 1939. Du Font and other producers have developed products of excellent quality and uniformity to meet industrial needs." It cannot, therefore, be said that synthetic resins can never be water-soluble. Solubility in water should not disqualify the respondents products from being categorised as synthetic resin. 25. Indian Standard Glossary of Terms Used in the Plastics Industry, i.e., IS:2828-1964, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disputed products were for retail sale packed in packages not exceeding 1 Kg. Further, in the case of Atul Glass Industries Ltd. and Others v. Collector of Central Excise and others (supra), the Hon ble Supreme Court held that the classification of goods under Central Excise Tariff Act was not dependent on classification under BTN. In paragraph-10 of the judgment, Supreme Court observed as follows :- Our attention has been drawn on behalf of the Revenue to the circumstances that glass mirrors have been classified as Glass and Glassware in Chapter 70 of the Brussels Tariff Nomenclature. It seems to us that this can hardly advance the case of the Revenue, because the First Schedule to the Central Excises and Salt Act does not appear to have been modelled on the Brussels Tariff Nomenclature. There is nothing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature. It was when the Customs Tariff Act, 1975 was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature, evidently because the progress made in industrial growth and economic development, and the substantial changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f producing by further polymerisation. 28. For the purpose of classification under Tariff Item 15A(1), it is sufficient if a resin has reached A -Stage resin. From page 11 of the copy of the Assistant Collector s order, it is observed that he had enquired from the respondents whether their products had reached A -Stage resin. In reply, the respondents stated A stage resin is a very scientific and technical term and applies to Phenol Formaldehyde resin only. On page 11 of the order-in-appeal, the Collector (Appeals) has observed that I also considered whether the appellants product can claim classification under Tariff Item 15A(1) on the basis that the product is one that can be considered as having initial polymers of molecular weight but which are intended to be converted into high molecular weight at the stage of application. It may be so, but the same would not make any difference as far as classification of the appellants product is concerned. It is the form in which the goods are cleared that is relevant for classification and not what it becomes or how it reacts at the time of application . The reply given by the respondents to the query of the Assistant Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
