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TMI Blog1997 (1) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... as countervailing duty on its import of caprolactum monomer. This raw material was used by the company for manufacture of nylon yarn. In the course of processing of caprolactum monomer the company obtained at an intermediate stage a product called `Polymer Chips', also known as Nylon 6 Chips, which were consumed in the manufacture of the finished product, namely, nylon yarn. The question relates to the levy of excise duty on these polymer chips. The only question which now survives for our determination is whether these polymer chips can be classified under Item 15A of Schedule I to the Central Excises and Salt Act, 1944 as it stood during the period 1962-1972, since this period covers all the appeals. 3.The assessee has described the process employed in its factory for polymerisation of caprolactum monomer. Once caprolactum is polymerised, it becomes nylon. In order to change the form of this substance and give it the required properties which enable textile yarn to be produced from it further processing is required in the course of which, at an intermediate stage, polymer chips are produced. The chips are obtained for the purposes of removing the remnant monomer so that the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be a part of the plastics industry ............... Similarly the fibre industry is considered to be independent of the plastics industry and here again the same raw-materials, polyamides (nylon) cellulose and cellulose acetate are used by both industries. Plastics are also divorced from the self-supporting type of film production such as the manufacture of photographic film and celluphone. The term plastic, therefore, is essentially a commercial classification to which no strictly scientific definition can be applied." (underlining ours) 8.The term `plastic', therefore, is a commercial classification which covers various kinds of natural or synthetic materials which can be shaped by heat during their fabrication either by moulding or by extrusion and which will retain that shape during use. It is also made clear that normally, rubber or synthetic material which is used for the manufacture of fibres and yarn, or for the manufacture of photographic film and celluphone, is not commercially considered as plastic. 9.In the book "Polymers and Resins" by Brage Golding, 1959 Edition, "plastic" is defined as under : "A plastic has been defined in a limited sense as any of a large g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts." 12.Our attention is also drawn to the American Society for Testing Material Standard which makes a distinction between "nylon" and "nylon plastics" - including the former under the heading `Definition of Textile Terms' and the latter under the heading `Plastics Nomenclature'. The Indian Standard Institute Glossary also makes a distinction between "nylon" and "nylon plastics" and similarly classifies "nylons" under the glossary of textile terms and "nylon plastics" under the glossary of terms used in plastic industry. 13.It is, however, urged on behalf of the Revenue that the chemical composition of the polymer chips (Nylon 6 Chips) which are produced by the assessee is similar to the chemical composition of material used in plastic industry. And hence, going by the chemical composition of this material, it can be appropriately classified as a plastic. This contention will have to be examined in the light of the wording of Entry 15A. Entry 15A does not use any scientific or technical term. It deals with "plastics, all sorts". As Encyclopaedia Britinnica has described, the term `plastic' is a commercial classification. When this kind of a term in commercial use is used in an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... byasachi Mukharji J. (as he then was) has summed up the rule of interpretation in the following words : "It is well-settled that the commercial meaning has to be given to the expressions in Tariff Items. Where definition of a word has not been given it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject-matter with which the Statute is dealing, would attribute to it......... that in interpreting items in statutes like the Excise Act or Sales Tax Acts, whose primary object was to raise revenue and for which purpose to classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning that is to say, the meaning attached to them by those dealing in them. 18.In the present case, since Entry 15A as it then stood, use a commercial term "plastics" which is well-known in the trade and is used in the trade, we should not go into the technical analysis of the composition and character of a plastic product. We should go by the meaning which is attached to the term `plastics' in the trade parlance. Plastics as understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se acetate butyrate and Cellulose propionate, Cellulose acetate-propionate, Ethyl cellulose, and Benzyl cellulose whether plasticised or not, and plasticised 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 flexbile, including layflat tubings and Polyvinyl chloride sheets. Explanation:- For the purpose of sub-item (2), `plastic' means the various artificial or synthetic resins or plastic material included in sub-tem (1)." 21.The main heading of this item is now changed to read "Artificial or synthetic resins and plastic materials and articles thereof". Clause (1) refers to artificial or synthetic resins and plastic material in any form, "among them the following" which are described in sub-clauses (i), (ii) and (iii). These sub-clauses describe the technical process by which the end product is derived. Thus in sub-clause (i) for example, the processes which are referred to, inter alia, are condensation, poly-condensation and poly-addition and products resulting therefrom. Sub-clause (ii) refers, inter alia, to polyamides. All these are tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a solid or semi-solid, natural or synthetic organic substance of relatively high molecular weight (not necessarily a polymer) which exhibits no sharp melting point, breaks with a conchoidal fracture, and usually (but not always) is predominantly amorphous in structure. A plastic has been defined in a limited sense as any of a large group of organic substances, whether natural or synthetic, which can be molded (plastikos - fit for molding). He goes on to observe : "The term `resin' originally referred to natural products (particularly of vegetable origin) but now includes the man-made substances. As will be seen from the physical descriptions of the polymers given in latter chapters, the above definitions of both resin and plastic include many of these polymers, and the terms are now often used interchangeably." (underlining ours) 25.Webster's Dictionary defines "Resins (synthetic)" as : "any of a large class of synthetic products (as alkyd resins or phenolic resins) usually of high molecular weight that have some of the physical properties of natural resins but typically are very different chemically, that may be thermoplastic or thermosetting, that are made by polymeriza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st three descriptions/definitions of synthetic resins emphasise the plastic quality of synthetic resins, the last description clearly brings out the fact that in the synthetic fibre industry, polyamides which are used as raw material would not be termed as resins. The term `synthetic resins', therefore, appears to be used in connection with plastic materials. The British Plastics Year Book of 1967 quoted earlier also emphasises that the term `synthetic resins' is now generally applied to all polymeric plastic materials with the possible exception of cellulosic and casein materials. Webster's Dictionary (supra) has also described synthetic resins as those which may be thermoplastic or thermosetting — these being typical characteristics of plastic material and has clearly said that synthetic resins are used chiefly as plastics of essential ingredients of plastics as also in varnishes and other coatings and in adhesives and ion exchanges. There is no reference here to their being used in the manufacture of yarn. Webster's Dictionary also states that the terms `resin' and `plastic' are interchangeable and some times the unfabricated material is called resins and the fabricated material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processes which are referred to sub-clauses (i), (ii) and (iii) of Entry 15A for the purpose of producing material or products which are suitable in the manufacture of plastics. The processes which are described in sub-clauses (i), (ii) and (iii) are undoubtedly technical, scientific or chemical processes and the products which are derived as a result of these processes are also described in technical terms in the said sub-clauses. Polyamides, for example, which are relevant in the present case, would cover, by themselves a wide range of products. However, these sub-clauses come under the main heading of artificial or synthetic resins or plastic materials. Polyamides of textile grade are not plastic materials nor are they referred to as synthetic resins in the textile trade. Hence polyamides of textile grade would not fall under either "Artificial or synthetic resins" or under "plastic material". They would be outside the ambit of Entry 15A. The polymer chips which are manufactured by the assessee would not, therefore, come under the category of artificial or synthetic resins also. Polyamides, however, which are capable of producing plastic materials are known in the plastic trade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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