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TMI Blog1975 (10) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Indian Tariff Act, 1934 (hereinafter referred to as I.C.T.). 2. The appellants are manufacturers of automotive tyres. V.P. Latex is required in the process of manufacturing of tyres. V.P. Latex is required in the process of manufacturing of tyres. V.P. Latex is not manufactured in India and has to be imported from outside the country. The tyre industry uses V.P. Latex as one of the essential ingredients in the course of manufacture of automotive tyres. 3. The appellant in Civil Appeal No. 1446 of 1972 imported sometime in April 1969, 3 consignments of V.P. Latex. In appeal from the proceedings before the Assistant Collector of Customs for appraisement of the said consignments for the purpose of imposition of customs duty and/or countervailing duty, the Appellate collector of Customs, Calcutta upheld the appellant s contention and classified V.P. Latex under Item 39 of the I.C.T. as raw rubber. The classification made by the Appellate Collector was revised by the Central Government in a proceeding initiated, suo motu, under Section 131(2) of the Customs Act, 1962. The Central Government held by the impugned order, that the said V.P. Latex was an aqueous dispersion of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powders, the following, namely......" 9. An additional item being Item No. 16AA was introduced in the C.E.T. for the first time by the Finance Act, 1970, which reads as follows :- Item No. 16AA. - Synthetic rubber, including butadiene acrylonitrile rubber, styrene butadiene rubber and butyl rubber, synthetic rubber latex, including prevulcanised synthetic rubber latex. The quantity of V.P. Latex consumed by the tyre industry in India as a whole is said to be about 1000 tonnes per year and the value thereof is Rs. 40,33,000/- approximately. The appellant, Dunlop India Limited, consumes about 300 tonnes per year. The controversy between the parties centres round the real meaning of V.P. Latex, while the appellants submit that V.P. Latex is synthetic rubber in the latex form, according to the respondents it is not so, but on the other hand, it is what may be described as `resin . 10. In order that the Court is able to appreciate the rival contentions, both sides addressed us referring to several standard authorities and treatises. 11. Before we proceed further it may be appropriate to see how rubber is described in the Encyclopaedia Britannica, Volume 19, 1965 Edition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one minute to less than 1.5 times its original length after being stretched at normal room temperature to twice its length and held for one minute before release. 13. It also defines raw rubber as `vulcanised rubber . According to H.J. Stern in his book Rubber Natural and Synthetic , V.P. Latex is composed of butadiene styrene and vinvyl pyridine in the ratio of 70 : 15 : 15 respectively. A synthetic latex is produced as the first stage in the manufacture of most synthetic rubbers. V.P. Latex is one such synthetic rubber latex. An affidavit sworn by Mr. Mayer, Manager, Technical Services, Chemical Division, Goodyear International Corporation, states that V.P. Latex is a terpolymer rubber as defined in A.S.T.M. Specification DI-566-60T and that there is no measurable resin content in this product. It is claimed by the appellants that pyratex which is the commercial name for V.P. Latex, imported by them, is exactly similar to the V.P. Latex referred to in Mr. Mayer s affidavit, since it also contains butadiene styrene and vinyl pyridine in the same proportion of 70 : 15 : 15 with no measurable resin content. It is claimed that V.P. Latex is an emulsion of synthetic rubber and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubber, natural. 15. In the same Dictionary, rubber synthetic is described as follows :- Any of a group of man made elastomers which approximate one or more of the properties of natural rubber. Some of these are : sodium polysulfide (`Thiokol ); polychloroprene (neoprene); butadiene-styrene copolymers (SBR); acrylonitrile-butadiene copolymers (nitrile rubber); ethylene-propylene-diene (EPDM) rubbers; synthetic polyisoprene (`Coral , `Natsyn ); butyl rubber (copolymer of isobutylene and isoprene); polyacryloni-trile (`Hycar ); silicone (polysiloxane); epichlorohydrin; polyurethane (`Vulkollan ). Styrene-butadiene rubber (SBR, s. type elastomer) is the most common type of synthetic rubber. Manufacture involves copolymerization of about 3 parts butadiene with 1 part styrene. Its uses are for tires, footwear, mechanical goods coatings; adhesives; etc. 16. The appellants have also produced the Import Trade Control Policy, Volume I, for the year 1975-76 described during the arguments as the `Red Book of the Commerce Ministry of the Government of India. It may be useful to quote the entire entry 150 at page 58 : Section II : Policy for individual items and the detailed policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Again the Condensed Chemical Dictionary at page 741 describes Pyratex the trade name under which V.P. Latex has been imported as follows :- Pyratex, 248 Trademark for a vinylpyridine Latex. Properties : Total solids 40-42% PH 10, 5-11, 5 : sp. gr. 0.96. Uses : To promote adhesion between rayon or nilon fibres and rubber, as in tire cord, belting, hose, etc." 18. The British Standard specification is as follows :- The British Standards Institution gives the specification of PSBR 41 latax as (Vinyl) pyridine-styrene-butadiene rubber latex with a nominal total solids content with the range 40.0% to 49.9% and a nominal bound styrene content of less than 20.0% of the total polymer . In the Elastomers Manual, under Table XI, the International Institute of Synthetic Rubber Producers, Inc. enumerates GENTAC and PYRATEX as Emulsion Styrene-Butadiene and Butadiene Rubber Latices of S 41 P Class. The classification S 41 P properly decoded means as belonging to the Chemical Family of Styrene-Butadiene Rubber (SBR) having total solid contents of 40 to 49% and Styrene Co-monomer content of less than 20% wherein Vinyl Pyridine is present in the Polymer. 19. Although the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perties. (7) The question of classifying a substance rests primarily on its chemical properties as borne out by technical tests. In the case of V.P. Latex, when coagulated, the coagulum answers fully the A.S.T.M. standards and tests prescribed for rubber. Its use in liquid state is commercially more expedient than its use in dry state but this should not be factor in classifying a product according to its technical and chemical composition. (8) V.P. Latex has been designed as a special synthetic rubber latex to be suitable for its use at the fabric cross-linking stage with rubber compound. In its application it is in no way different from any other natural rubber or synthetic rubber latices. V.P. Latex should, therefore, properly be regarded as a synthetic rubber latex. (9) It is not correct to say that all rubber latices when coagulated should have an absolute commercial dry rubber usage in order to be classified under raw rubber. Quoting from G.S. Whitby the addition of vinyl pyridine in such terpolymers of butadiene, styrene and vinyl pyridine has been found to improve the characteristics and properties with the increase of vinyl pyridine content and it is known to reach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority observed as follows :- These definitions imply that latex is a material from which rubber is obtained and not rubber itself. Latex, according to the authority, is milk juice of the rubber tree which is source of rubber and is in common parlance referred to as rubber. The authority then refers to Chapter 40 of the Brussels Tariff Nomenclature (B.T.N. dealing with natural rubber latex (40.01) and synthetic rubber latex (40.02). 40.01. : Natural rubber latex, whether or not with added synthetic rubber latex; pre-vulcanised natural rubber latex; natural rubber; balata, gutta-percha and similar natural gums. 40.02. Synthetic rubber latex; pre-vulcanised synthetic rubber latex; synthetic rubber; factice drived from oils. The authority then observed as follows :- Chapter 40 of the B.T.N. covers raw rubber, Heading No. 40.01 refers to `natural Rubber Latex whether or not with added synthetic rubber latex, pre-vulcanised natural rubber latex, natural rubber..... but natural rubber latex has been defined under 40.01 as containing in suspension 30% to 40% of rubber. Rubber Latex therefore appears to fall under 40.01 by specific inclusion only. So also synthetic ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no accepted definition of the term `resin in trade usage or technical literature and resins are identified by their use as resins and in this view V.P. Latex may well be considered as a resin latex. 27. Mr. Sanghi for the respondents has made a strenuous plea that V.P. Latex is not rubber raw and is synthetic resin. If it is correct that V.P. Latex is synthetic resin, it would come under Item 87 I.C.T. the residuary entry covering all other articles not otherwise specified . 28. To revert to the order of the authority, it is clear that the authority would to have found no difficulty in coming to the conclusion that V.P. Latex in view of chemical composition and physical properties is rubber raw, if the same were commercially used as rubber. The authority, therefore, was principally influenced to come to its decision on the sole basis of the ultimate use of the imported article in the trade. 29. Section 12 of the Customs Act, 1962, is the charging section. That section reads - (1) Except as otherwise provided in this Act or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haiprasad v. Assistant Sales Tax Officer, (1962) 1 SCR 279. In Ramavatar s case, this Court was concerned with the meaning of the word `vegetable occurring in C.P. and Berar Sales Tax Act, 1947. This Court held as follows :- But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning `that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it . It is to be construed as understood in common language. 34. Again in the Commissioner of Sales Tax, Madhya Pradesh, Indore v. M/s. Jaswant Singh Charan Singh, AIR 1967 SC 1454, this Court had to deal with the word `charcoal used in Madhya Pradesh General Sales Tax Act. It was contended in that case that `charcoal would be covered under Entry I of Part III of Schedule II to that Act. This Court while holding that charcoal would be included in coal, observed as follows :- Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inyl pyridine is one component of terpolymer of butadiene, styrene and vinyl pyridine used in latex form to promote good adhesion between rubber and textiles, particularly rayon and nylon . We find the same description reiterated in a book Latex Natural and Synthetic by Cook (a Reinhold Pilot Book) where at page 145 it is stated that `there is one type of speciality rubber latex that deserves special notice. This is terpolymer of butadiene, styrene, and 2-vinyl pyridine. Under the trade names of Gentac and Pyratex it is extensively used in nylon tire cord saturation because it gives better adhesion between the cord and the rubber in which the cord is imbedded than do other latices . Mr. Sanghi, however, emphasises that V.P. Latex is merely an adhesive and so is akin to resin and not to rubber. 36. We are, however, unable to accept the submission. It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co., Private Ltd., gave the I.C.T. Item No. 87 with regard to the imported V.P. Laitex. This, according to Mr. Sanghi, clearly shows how the appellants themselves have understood the matter. There is, however, no estoppel in law against a party in a taxation matter. In order to clear the goods for the Customs, the appellant Agents may have given the classification in accordance with the wishes of the authorities or they may even be under some misapprehension. But when law allows them the right to ask for refund on a proper appraisement and which they actually applied for, we do not attach any significance to this aspect of the matter pointed out by counsel. The question is of general importance and must be decided on its merits. 41. Mr. Sanghi drew our attention to two decisions of this Court in V.V. Iyer of Bombay v. Jasjit Singh, Collector of Customs, (1973) 1 SCC 148 and the Collector of Customs, Madras v. K. Ganga Setty, (1963) 2 SCR 277 and submitted that this Court should not interfere with the decision of the authority under Article 136 of the Constitution. These decisions are clearly distinguishable, as, in the view we have taken, the order is ex facie based on an irr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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