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TMI Blog1994 (5) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986. However, when the importers filed their Bill of Entry No. 7480 dated 24-10-1988 for clearance it was noticed after the careful scrutiny of the Invoice that the price of Polypropylene Dyed Chips is about three times of the normal price of polypropylene and it varies according to the colour, showing that the price is dependent on the colourant rather than the base material that is to say Polypropylene. Consequently, the importers were asked to submit the manufacture s literature to verify whether it is colour master batch. But they did not produce the same. However, manufacture s literature of M/s. Hoechst, Italy regarding the remafin range of products was obtained from the indentors M/s. Hoechst India Ltd. which described that Remafin AP products are pigment preparations of organic and inorganic pigments in a polypropylene carrier. The specifications indicate the content of colourant to vary from 30% + 70%. Since the importers had also imported similar goods from M/s. Sandoz, Switzerland the literature of the manufacturer M/s. Sandoz was also obtained. Since the earlier test reports with respect to the goods imported earlier were given in the absence of technical literature fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the importers and if the entire differential duty has not been secured by Bank Guarantees, the importers should be asked to deposit the balance differential duty forthwith. In the operative portion Collector has also ordered that the duty short levied as indicated in Annexure-I and which comes to Rs. 38,45,396/- be paid by the importers. Hence the present Appeal No. C/493/91-C by the importer. 3. Since the Collector of Customs vide his impugned order has not imposed any penalty under Section 112 of the Customs Act on the importer and their employees, the Revenue has filed the captioned Appeal No. C/243/92-C. It is worthwhile to mention that though in the prayer the Revenue has requested for the imposition of suitable penalty on the importers and their employees yet they have not made the employees of the importers as respondents in the present appeal. In other words, the appeal has been filed against the importers M/s. Rajasthan Petro Synthetics Limited only. 4. At the outset it may be stated that the Ld. Consultant Shri K. Srinivasan appeared on behalf of the importers M/s. Rajasthan Petro Synthetics Limited submitted that the appellants are not challenging the classi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irregular shape, lumps, powders (including molten powders), granules, flakes and similar bulk forms. Polypropylene chips are bulk forms of Polymer and hence classifiable under Heading 39.02. Polypropylene Yarn, according to him, could not be dyed at the yarn stage. In this respect, it is different from either Synthetic Yarn like Polyester Yarn which can be either dope dyed or dyed at the yarn or fabric stage. PP Yarn has to be dyed at the Polymer stage before the spinning of the yarn. The PP Chips in white or non-dyed yarn are imported as PP grey chips. Where it is required to obtain coloured yarn, PP Chips are made with the colourant or the pigment dispersed in the PP Polymer. To spin the yarn, the chips are fed into the hoppers, melted to obtain polymer melt and extruded through spinerettes. Where coloured yarn is required, the grey melt from one hopper and the coloured melt from another are mixed in the right proportion and extruded in the spinerettes to obtain coloured or dyed yarn. It was emphasised that earlier the subject goods were assessed under Heading 39.02 and at no time the Customs Authorities raised any objection that the goods were Master Batches and it is only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Act or in the Imports and Exports (Control) Act or in the Imports (Control) Order, 1955 or in the Import Policy. Even the HSN did not refer to any goods or description or expression as Master Batch . However, the appellants had used this expression Master Batch in some of the documents in a generic sense of representing basic colours. It was from a basic colour that a shade of the yarn or fabric is derived. To conclude, he submitted that this expression did not determine the classification as Chapter 32 does not bring any such Master Batch within its mischief. To support his contention, he cited the case of National Organic Chemical Industries v. Collector of Central Excise, Bombay, 1987 (30) E.L.T. 463 (Tri.) = 1987 (12) ECC T-76, which was followed in Kirti Packaging Industries Ltd. v. Collector of Central Excise, Baroda, 1988 (35) E.L.T. 414 (Tri.) = 1988 (17) ECC T-50 and also the Final Order No. 460/87-C dated 26-6-1987 passed by this Tribunal in the case of Collector of Central Excise, Calcutta v. M/s. P.V.C. Wires Cables, wherein the case was remanded for de novo decision in the light of the ratio of the said cases. Apparently, the said Final Order dated 26-6-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms in written reply to the Show Cause Notice as well as at the time of personal hearing that the Collector of Customs has no jurisdiction to set aside the Order under Section 47 of the Customs Act in his original jurisdiction by issuing a notice under Section 124 of the Customs Act, since he has no jurisdiction to reopen he passed assessment already finalised. In other words, his submission was that the assessment which had been finalised in the past could only be reviewed under Section 129D(2) of the Customs Act, 1962 and not by way of fresh adjudication proceedings, but curiously enough the Collector has not dealt with this preliminary objection though he has stated this contention of the appellants in paragraph 11 of his Order. In reply, Shri Sidharth Kak, learned JCDR, took us through the impugned Order and submitted that for the reasons recorded by the Collector of Customs, the subject goods were rightly classified under Heading 32. As regards the plea of the appellants that the demand was time-barred, he cited the case of Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise, 1989 (40) E.L.T. 214 (SC), wherein in paragraph 10 it was held that from the conduct of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn produced out of the disputed polypropylene chips being classifiable under Chapter 54 was excluded from the expression Plastics wherever used in Chapter 39 by virtue of exclusion clause (e) of Chapter Note 2 and Explanatory Notes appearing at page 552 of the Harmonized System Nomenclature under Chapter 39. In this regard it has been submitted Polypropylene Chips being bulk form of polymer are classifiable under Heading 39.02 since in terms of Chapter Note 6 Primary Forms as applied to Headings 39.01 to 39.14 include blocks of irregular shape, lumps, powders (including molten powders) granules, flakes and similar bulk forms. According to the appellants coloured polypropylene yarn which unlike other synthetic yarns cannot be obtained at yarn or fabric stage by the process of dyeing, is produced by mixing polypropylene chip having dispersed colour or pigment with grey non-coloured chips and the melted mixture is extruded through spinnerettes. It has been claimed that earlier the goods were assessed under Heading 39.02 and it was only in October, 1988 that Delhi Customs House commenced certain enquiries on the suspicion that the goods were Master Batches assessable under Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their product varies from 25% to 50%. The relevant literature from the two suppliers also showed colour Index No. in order to facilitate verification whether a particular product was organic or inorganic pigment. In the absence of proper facilities for carrying out tests of complex materials, in certain test reports given by the Deputy Chief Chemist, Customs House Laboratory, prior to the availability of the manufacturers literature, the goods were described as pigmented polypropylene in cylindrical cuttings and in some cases it was also mentioned that it is not a master batch . However, in cases where tests were carried out after the manufacturers literature was available, on account of the details regarding composition of the product given by the manufacturers, the Customs House Laboratory was able to verify the contents of samples drawn from the imported goods and the Deputy Chief Chemist confirmed that the goods declared by the importer as polypropylene dyed chips were actually pigmented preparation/master batches which merited classification under Heading 3204.17 in the case of organic pigment preparation and under Heading 3206.49 in the case of inorganic pigment prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or adhesives, not exceeding a net weight of 1 kg. (Heading 35.06). (c) Plastics and articles thereof (other than the goods of Heading 39.18 or 39.19), printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods (Chapter 49)." 10. In our view the findings of the Collector that disputed goods being pigment preparations of organic and inorganic pigments in polypropylene carrier were correctly classifiable under Chapter 32 and their sub-classification was determinable on whether the pigments were organic or inorganic are sustainable in view of the following extracts from the General Notes of sub-Heading 32.04 and 32.06 of the HSN. CHAPTER 32 Chapter Note 3. Heading Nos. 32.03, 32.04, 32.05 and 32.06 apply also to preparations based on colouring matters (including, in the case of Heading No. 32.06, colouring pigments of Heading No. 25.30 or Chapter 28, metal flakes and metal powders), of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations. The headings do not apply, however, to pigments dispersed in non-aqueous media, in liquid or paste form of a kind used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s. P.V.C. Wires Cables, cited by the ld. Consultant on behalf of the appellants, it was held that Master Batch is a specialized product used in P.V.C. industry and it is intended for proper dispersal of colour in P.V.C. compound. It was, therefore, held that master batches were not classifiable under Item 15A(1)(ii) of the First Schedule to the Central Excises and Salt Act, 1944. These decisions are not relevant since they relate to the classification of goods under the erstwhile Central Excise Tariff and also for the reason that it was held that Master Batch is a specialized product used in the P.V.C. Industry for proper dispersal of colour in P.V.C. compound and was not classifiable under 15A(1)(ii) which corresponds to certain products falling under Chapter 39 of the Central Excise Tariff. 12. Ld. Consultant on behalf of the appellants has contended that the disputed goods cannot be deemed as Master Batch or colour concentrate. In this regard he has referred to the Explanatory Notes appearing at page 552 of the HSN under Chapter 39 and the Heading Plastic and also to letter No. 93/122/86/CX-3 dated 17-12-1986 of Central Board of Excise Customs issued on the basis of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act. In support of his submissions he has cited various judgments of the High Court and this Tribunal. In this regard it is seen that in the case of Micro Electronics v. Collector of Customs reported in 1989 (41) E.L.T. 464, the Tribunal relying upon the judgment of the Delhi High Court in the case of Jain Shudh Vanaspati Ltd. v. Union of India reported in 1982 (10) E.L.T. 43 have held that the order passed under Section 47 attains finality and once the goods are cleared by Customs Authorities under Section 47 issuing of show cause notice for confiscation or imposing the penalty amounts to reviewing the order under Section 47 but there is an exception to the said proposition that such finality can be disturbed where the Department can successfully show that there was a fraud or deliberate suppression. In the appellants case, as observed by the Collector in the impugned order, as a result of the search of the appellants premises several incriminating documents were recovered which established that the appellants were aware that the disputed goods were not internationally traded as polypropylene chips covered by Chapter 39 of the Customs Tariff but were being described by manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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