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Bombay Paints and Allied Products Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(17)ELT473TriDel
AppellantBombay Paints and Allied Products
RespondentCollector of Customs
Excerpt: warrant for the view of the lower authorities that the said heading is restricted to pure and untreated grade of titanium dioxide or that the pigment grade was a special, coated grade. if it was the latter, shri abrol fairly concluded, he had no quarrel with the finding of the appellate collector. (ii) reference to the explanatory notes under heading no. 28.25 of the cccn (customs co-operation council nomenclature) would show that titanium dioxide when unmixed and not surface treated would fall under the said heading, otherwise under heading no. 32.07. (iii) titanium dioxide is basically a chemical and not a pigment as such. it has multifarious uses. it has to be mixed with barium or calcium sulphate or be surface treated for use as pigment. the appellants were using the product in.....
1. The captioned appeals were initially filed before the Central Government as revision applications and have been transferred to this Tribunal in terms of Section 131-B of the Customs Act, 1962, for disposal as if they were appeals filed before it. The issue involved being the same, all these appeals are disposed off by this common order.

2. The appellants imported three consignments of "Titanium Dioxide (Rutile Grade) RCRa". The Customs authorities assessed the goods to duty under Heading No. 32.04/12(1) of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the Import Tariff) at 97.5% ad valorem, auxiliary duty of customs at 20% ad valorem and to countervailing duty of customs at Rs. 60 per quintal. After clearance of the goods on payment of the duty so assessed, the appellants approached the Assistant Collector for re-assessment of the goods under Heading No. 28.01/58 (12) at 60% ad valorem, and 15% auxiliary duty of customs (no re-assessment of countervailing duty was sought for) and consequential refund of duty. This did not meet with success either at the Assistant Collector's level or the Appellate Collector's level.

Hence these present appeals before us.

3. We have heard Shri M.G. Abrol, Consultant for the appellants and Shri A.S. Sunder Rajan for the Respondent. We have also perused the record.

4. Before we consider the submissions before us, it will be expedient to notice the grounds on which the revision applications were filed.

Briefly put, they were:- (a) Upto 1-8-1976, Titanium Dioxide (Rutile Grade) RCRa was being assessed as a chemical product at 60% ad valorem under Item No. 30 (14) of the Indian Customs Tariff Schedule of 1934 plus auxiliary duty at 15% ad valorem. With effect from 2-8-1976, the Customs Tariff Act, 1975 was brought into force. The goods were classified as a pigment under Heading No. 32.04/12 (1) and assessed to duty at 100% ad valorem plus auxiliary duty at 20% ad valorem. A representation was made by the Indian Paints Association to the Chairman of the Central Board of Excise & Customs and, in due course, the Central Government issued Customs Notification No. 433, dated 5-11-1976 restoring the status quo ante.

(b) Since the said notification had only prospective effect, the appellants took up the matter with the Chairman, Central Board of Excise & Customs for extension of the benefit of the notification to consignments imported between 2-8-1976 and 5-11-1976. The Under Secretary of the Central Board of Excise & Customs had advised the appellants to approach the Collector of Customs, Bombay who, he stated, had been suitably advised in the matter.

(c) The aforesaid exchange of correspondence should be kept in view while disposing of the revision applications.

5. The submissions before us on behalf of the appellants, briefly stated, are:- (i) Heading No. 28.01/58(12) of the Import Tariff Schedule is specific for Titanium Dioxide. There is no warrant for the view of the lower authorities that the said heading is restricted to pure and untreated grade of Titanium Dioxide or that the pigment grade was a special, coated grade. If it was the latter, Shri Abrol fairly concluded, he had no quarrel with the finding of the Appellate Collector.

(ii) Reference to the Explanatory Notes under Heading No. 28.25 of the CCCN (Customs Co-operation Council Nomenclature) would show that Titanium Dioxide when unmixed and not surface treated would fall under the said heading, otherwise under Heading No. 32.07.

(iii) Titanium Dioxide is basically a chemical and not a pigment as such. It has multifarious uses. It has to be mixed with Barium or Calcium Sulphate or be surface treated for use as pigment. The appellants were using the product in paint industry. Reliance was placed by Shri Abrol on the affidavit dated 19-7-1983 sworn by one Dr. Nadkarni and to the book "Titanium Dioxide and Titanium Chloride" by Dr. Robert Powell published by Noyes Development Corporation, USA in support of his contention.

(iv) The onus of showing that the subject goods do not fall in the specific Heading No. 28.01/58 (12) lay heavily on the Deptt. The Appellate Collector has not disclosed any reason for his conclusion that the goods are "coated". Alumina and Silica are present in the composition only for the stabilisation of the crystal structure of Titanium Dioxide. Their presence is occasioned by the process of manufac-ture. It is not as if they are mixed or added after the manufacture of TiO2. The CCCN Notes refer to the presence of Calcium and Barium sulphates in the pigment grade in which case, the goods are called "Titanium White" which are not the goods herein and not to alumina and silica. The purity of the imported goods is 93% of TiOa.

6. The contentions on behalf of the respondent may be summarised thus :- (i) According to the Chapter notes, Chapter 28 covers only separate chemically defined compounds. So, only pure TiOa and not TiOa containing admixture of other substances would fall within the chapter.

(ii) The Indian Paints Association's representation to the Board showed the trade's understanding of the matter. Notification No. 433 which came to be issued on 5-11-1976 as a result of the representation, had no retrospective effect.

(iii) A similar issue has been decided against the importer by the Central Government in revision vide its Order No. 76-78/80, dated 2-4-1980 (a copy of the order was filed by the JDR). Reliance was also placed in this connection on the technical literature on a similar product manufactured by BAYER. (iv) Dr. Nadkarni's affidavit is not of help to the appellants since it refers to the presence of certain additives. It is not surface-treating alone which takes TiOa out of the purview of the specific heading.

7. We have given careful consideration to the rival contentions. The Customs Tariff Schedule of 1975 is based on the CCCN, save for some minor modifications. The explanatory notes to the CCCN are, as the Tribunal has held in Kanwar Sewing Machine Co., New Delhi v. Collector of Customs, Bombay-1983 E.L.T. 804 (CEGAT) of considerable persuasive value, though not of legally binding nature, in understanding the scope of the headings in the Customs Tariff Schedule. The following are extracted from the CCCN notes :- Titanium dioxide is chiefly used as a pigment and is classified here when unmixed and not surface treated. When mixed with barium or calcium sulphate or other substances or surface treated it falls in heading 32,07. The term "titanium white" applies to all these pigments. It has the highest covering power of all white pigments and resists the action of light. It is used as a filler for very opaque paper, as an opacifier in the manufacture of glass, in the ceramic and rubber industries and for delustring rayon.

"32.07-Other Colouring Matter-Inorganic Products of a kind used as luminophores (Page 481, Vol. 1), (5) Titanium white-consisting either of mixtures of titanium dioxide with calcium or barium sulphate or other materials or of surface treated titanium dioxide. The name titanium white sometimes refers to titanium dioxide which is unmixed and has not been surface treated; this product is classified in heading 28.25." 8. There seems to be agreement between both sides that TiO2 when it is unmixed with barium or calcium sulphate or other materials or has not been surface treated, is classifiable in Chapter 28 [28.01/58 (12)]; otherwise as a pigment under Chapter 32 [32.04/12(1)].

9. The goods involved in the present dispute are designated by the code "RCRa grade". The Appellate Collector has said in his order that "as per the manufacturer's literature, same is coated grade and hence assessable under Item 32.04/12". However, from a photo copy of a leaflet : "some properties of TIOXIDE R-CR2", filed by Shri Abrol it is seen that alumina and silica are present as modifiers.

10. It is seen from the Indian Paints Association's representation dated 16-9-1976 to the Chairman, Central Board of Excise and Customs that "the only Titanium dioxide that has ever been imported into this country and continues to be imported is the pigment grade of TiOa. This comes in two forms, viz. (a) Anatase and (b) Rutile grades". Further, it goes on to say :- "With the coming into being of the new Customs Tariff, the Customs Authorities at the Ports have classified Titanium Dioxide to fall under Item No. 32.04/12 (1). This is being done on the technical ground that Titanium is a pigment and is therefore distinct from Titanium Dioxide covered by the Item No. 28.01/58(12). The contention of the Customs Authorities is that Titanium Dioxide appearing under Item 28.01/58(12) refers to an un-mixed and non-surface treated chemical called Titanium Dioxide." "It is true that in terms of the explanatory notes contained in the BTN, the Customs point of view would appear to be technically valid.

The important thing, however, is to recognise that the so-called un-treated and unmixed version of Titanium Dioxide has no commercial significance whatsoever for the Indian importers, whether in the Paint Industry or any other Industry. The Indian users of Titanium Dioxide have always imported Titanium Dioxide as a Pigment which, in the words of the BTN, would constitute a surface treated or mixed grade of Titanium Dioxide and therefore technically classifiable under 28.01/58 (12)." 12. The appellants had enclosed with one of the Revision Applications (appeals before us) a catalogue entitled "TIOXIDE pigments-a guide to selection" published by Tioxide International, UK. On page 2 is a table of "Tio-xide pigment grades for paints etc." It advises : "When exterior durability is required a pigment of the R-CR group should be used;..." Rutile grade- R-CR2 is shown in the list as having outstanding performance in applications such as "airdrying gloss, tint base (white gloss), marine paints, primers, undercoats and fillers, paste paints, Industrial paints (general), motor-car refinishing paints, traffic paints" etc. Of course, the same grade R-CRs is shown as having many other applications as well : pigment grade for printing inks, plastics, rubber etc. R-CR2 is specifically shown as a pigment grade on page 10. The manufacturing process is described on page 12.

R-CRa grade is shown under "Type II Coated and refined", Type I pigments which are "untreated" pigments are dispersed in water, wet-milled, and classified to remove oversize particles.

"Between 1% and 5% of other oxides, usually titania, silica, and alumina, are next precipitated on the pigment surface". This product is then filtered, dried and micronized to obtain the desired particle-size range. On page 15, the recommended uses of Rutile pigment-Tioxide R-CR2 are described thus :- "TIOXIDE R-CR2 is a modification of R-CR produced to give greatly increased speed of wetting and dispersion when used in making paints, plastics, and rubber. Its better dispersion gives it higher opacity than R-CR in many media, and it is particularly recommended for use with modern high output dispersion equipment. R-CR2 is the best grade for printing inks when a compromise of gloss and opacity is required. TIOXIDE R-CR.2 can be employed for practically every application where a rutile titanium dioxide is wanted, and it is a yardstick for durability." It is clear from all this that the imported goods are a pigment grade of TiO2. It is surface coated. In the case of a branded product such as this, it is, as a rule, safer to rely on the technical literature of the manufacturer than on any text book or reference book. We do not see any reason why this catalogue should be discarded in favour of Dr.

Nadkarni's affidavit in which he says that the imported goods are TiOa unmixed with either barium or calcium sulphates or other substances and that they contain only certain additives for stabilisation of the crystal structure and are not surface treated. In the face of what the manufacturers' technical literature has to say (R-CRa is shown as a coated grade in which 5% of other oxides are precipitated on the surface of the pigment), we cannot give any weight to the averments in this affidavit.

13. We do not consider it necessary to discuss the leaflet of BAYER on a similar product when we have the advantage of perusing the manufacturers' own literature.

14. We have perused the extracts from "Titanium Dioxide and Titanium Tetrachloride" (filed by the appellants) by Dr. Robert Powell and do not find any thing therein which necessitates a modification of the view which we have expressed earlier based on the manufacturer's own technical catalogue.

15. We do not consider it necessary to discuss the Central Government's order-in-revision dated 2-4-1980 (copy filed by the JDR) which was on a branded product of another manufacturer.

16. Note I (a) to Chapter 28 of the Customs Tariff Schedule, 1975 provides that "except where the context or these Notes otherwise requires or require, this Chapter is to be taken to apply only to : (a) Separate chemical elements and separate chemically defined compounds, whether or not containing impurities ;" There is no doubt that the subject product which contains added ingredients and is coated or surface treated, (as we have seen) is excluded from Chapter 28. Keeping in view the Explanatory Notes to headings 28.25 and 32.07 of the CCCN, the appropriate classification is, in our view, under heading 32.04/12(1).

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