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Indian Petrochemicals Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC43Tri(Delhi)
AppellantIndian Petrochemicals
RespondentCollector of Central Excise
1. this is an appeal by m/s. indian petrochemicals corpn. ltd., against ordcr-in-appeal no. a.-2276/bd/839/82 dated 31-1-1983 passed by the appellate collector, bombay, the appeal by i.c.p.l. is dated 4-3-1983.the dispute arose when the asstt. collector of central excise, div. iv, baroda passed his order f. no. v. 15a(3) 154/mp/82, dt. 30-9-1982- order-in-original 31/1982, in which he ordered that the poly-acrylonitrile powder produced by i.p.c.l. factory was assessable to duty as 'other high polymers' under item 15a(1), cet.2. m/s. indian petrochemicals corpn. ltd., manufacture acrylic fibre from acrylonitrile by a process of co-polymerisation wtth methyl aery late and dye-acceptor monomers. the asstt. collector held that the poly-acrylonitrile powder was not commercially known as.....
1. This is an appeal by M/s. Indian Petrochemicals Corpn. Ltd., against Ordcr-in-Appeal No. A.-2276/BD/839/82 dated 31-1-1983 passed by the Appellate Collector, Bombay, The appeal by I.C.P.L. is dated 4-3-1983.

The dispute arose when the Asstt. Collector of Central Excise, Div. IV, Baroda passed his order F. No. V. 15A(3) 154/MP/82, dt. 30-9-1982- Order-in-Original 31/1982, in which he ordered that the poly-acrylonitrile powder produced by I.P.C.L. factory was assessable to duty as 'other high polymers' under Item 15A(1), CET.2. M/s. Indian Petrochemicals Corpn. Ltd., manufacture acrylic fibre from acrylonitrile by a process of co-polymerisation wtth methyl aery late and dye-acceptor monomers. The Asstt. Collector held that the poly-acrylonitrile powder was not commercially known as artificial or synthetic resin plastic material and was not classifiable under sub-item (1) of item 15A of the Central Excise Tariff. However when Item 15A for the Central Excise Tariff was recast in accordance with the Finance Bill 1982, The Central Excise considered that the poly-acrylonitrile was a high polymer and would therefore fall under sub-item (1) of Item 15A in view of the amendment. A notice was issued calling upon I.P.C.L. to show cause why the poly-acrylonitrile used in the manufacture of acrylic fibre should not be classifiable under sub-item (1) under Item 15A and duty devided at an appropriate rate i.e. 40% adv. This notice was issued on 18-6-1982.

3. After hearing the party and taking into account its written submission, the Asstt. Collector came to the conclusion that the product was classifiable as other high polymers'which appears in the recast Item 15A(1) and that therefore it would be assessable under that item, although he had also come to the couclusion that it was not an artificial plastic or an artificial resin nor a silicone or a resol.

The discussions of the Asstt. Collector centred only on establishing that although the poly-acrylonitrile powder was not an artificial resin or a plastic resin, it would still fall under sub-item (1) of Item 15A because of the words 'other high polymers' which occur in the sub-item and which he held would qualify the powder.

4. The Appellate Collector agreed with the Asstt. Collector's decision to classify the poly-acrylonitrile powder under Tariff Item 15A(1). In discussing the dispute, he said that by virtue of the Explanation, which appeared in the Item 15A, the legislature had restricted the 'condensation' poly-condensation, polyaddition, polymerisation and co-polymerisation products' to the first part of the sub-item. The appellant's product did not answer to the description given in (a), (b) or (c) of Explanation II and therefore would have to be outside the first part. He therefore came to the conclusion that since the powder was a high polymer product, it must necessarily fall within the mischief of the expression 'other high polymers' and excisable under the second part of the sub-item. He accordingly rejected the claim of the factory that its product should be assessed under Tariff Item 68.

5. At the hearing before the Tribunal, a cross-objection was presented on behalf of the Department, but Mrs. Zutshi, the learned counsel for the department said that there was no need for a cross-objection and that it (cross-objection) should be ignored. We shall therefore not take the cross-objection into account.

6. The factory bases its case by claiming that the poly-acrylonitrile powder is not a plastic material and that it has no plasticity. This product formed is a polyvinyl derivative commonly known as vinyl co-polymer and is obtained by co-polymerisation of acrylonitrile (vinylcyanide), methylacrylate and sodium methylallyl sulphonate. This product cannot be moulded, extruded or formed like other plastic resins are capable of. The manner of forming acrylic fibre is to desolve it in nitric acid, in which a solution containing 15-20% powder with 80-85% nitric acid is obtained. The concentration of the acrylonitrile polymer is 20% of the weight of the solution the remaining 80% being dilute nitric acid. It has to be examined whether this process of solution spinning can be construed as a kind of extrusion. According to I.P.C.L.

this is not an extrusion of the kind to which plastics are subjected and not any kind of extrusion as generally understood in technology.

7. They referred to 'Fundamentals of polymer processing' by S.S.Middleman (McGrowhill, New York, 1977) which defines it as a process by which a molten polymer is conveyed at specified temperature, pressure, and flow rate to a die, through which it is forced in either a continuous or discontinuous form.

'Encyclopaedia of Polymer Science and Technology'-John Wiley and Sons, New York, Vol. 8 says that 'basically extrusion is a process by which a material is forced to flow in a more or less continuous manner through a forming die which is shaped to produce the required cross-section.

Inherent in the extrusion process is the softening by heat or solvents of the material being formed so that it can readily be conveyed and formed without destroying the desirable final properties of materials'.

A concise Guide to Plastics'-H.R. Simonds and J.M. Church, Remhold Book Corpn., 2nd Edition tells us that 'extrusion is limited to thermoplastic materials and to continuous forms such as filaments, rods, tubings, film, sheeting, wire coating and various profile shapes'.

8. From this it is seen that extrusion is a process generally applied to thermoplastics which are softened by heat to induce the characteristics of flow plasticitv to the melted polymer and is then forced through a die to be formed intc a shape as desired. On the other hand, solution spinning is a different process and is applicable to those polomeric fibre forming materials which cannot be softened by heat and which cannot be brought to a melt. Unlike extrusion, solution spinning is invariably performed at room temperature or below.

9. It is explained in the CCCN, Chapter 39 that formation of a plastic is done under external influence into shapes which are retained on the removal of the external influence, the external influences being heat and pressure, if necessary with solvent or plasticizer. The implication here is that the solvent is similar to a plasticizer and can confer on a material the characteristics of plasticity, I.P.C.L. draws attention to the definition of plasticization on 'Modern Plastic Technology-R.B.Seymour (Reston Publishing Co. 1975) in which plaslicizer is defined as a non-volatile additive with a solubility parameter value similar to that of the polymer. Addition of plasticizer reduces Tg of the polymer.

The plasticizer is retained by the polymer to confer on it the property of flexibility'.

'Encyicelopedia of PVC by L.I. Nass, Marcel Decker Vol. I defines a plasticizer as a substance or material incorporated in plastic or elastomer to increase its flexibility, workability or distensibility.

Plasticizer may reduce melt viscocity, lower the Tg or lower the elastic modulus of product'.

'Polymer Science-A Material Science Hand Book'-A.D. Jenkins (North Holland Publishing Co. Vol. I) defines plasticizers as a relatively low molecular weight substance of low volatility which when added to any material, changes the physical and chemical properties of the material, in such a manner that the finished product is in a more useful form.

More specifically plasticizer serves to alter such specific property as flexibility, hardness, tensile, strength, elasticity etc. In many cases, the plasticizer serves to reduce the melt viscocity of polymer to permit fabrication'.

10. I.P.C.L. argues that in a solution spinning like that for their powder, the weight percentage of the solvent i s of the order of 80%.

At this concentration of solvent a mixture is considered to be in true solutions where the role of the solvent is to keep the polymer powder in a dissolved state. Only when the concentration of polymer in solvent is greater than 60% by weight will the solvent begin to act distinctly as a plasticizer. For this he quotes; 'Physics of Plastics'-P.D.Ritchie, Iliffe Books Ltd., London and 'Polymeric Materials' by C.C.Winding and G.D. Mistt Mcgrawhill, New York'.

11. The I.P.C.L. also quoted certain judgements like the judgment of the Delhi High Court in the Indian Plastics and Chemicals v. Union of India- 1981 E.L.T. 108 (Delhi) in which the court held that the resins under Item 15A refer to the resins as fully manufactured and not to any solution of resins and secondly that the weight of the solvent should not exceed 50% of the weight of the solution. (This decision however related to an aqueous solution of phenolic resins. The court held that this was not the manufactured resin and was only an intermediate product in the production of finished phenolic resin. The court held that the aqueous solution does not mean that the product had reached the stage of completion. This decision therefore is not applicable to the matter before us).

12. Certificates were also produced from Sri Ram Test House, Sardar Patel University and National Chemical Laboratory to show that the poly-acrolinitrile powder did not possess plasticity. The certificates show that at temperature of 280C, the powder blackens and begins to decompose. (These certificates proved that the poly-acrylonitrile powder cannot be softened for moulding and/or working/fabrication by heating. They prove nothing more).

13. It was argued by the appellants that their poly-acrylonitrile powder was a polymerization product and therefore cannot be covered by the words 'other high polymers' that appear in Item 15A(1), contrary to the finding of the Asstt. Collector and the Appellate Collector. It is already in the main classification of the sub-item as a co-polymerization/condensation/addition product and therefore does not have to be classed in the residuary 'other high polymers' category of the sub-item.

14. The learned counsel for the department argued against the appellants to say that poly-acrylonitrile powder was classifiable under Tariff Item I5A(1).

The learned counsel argued that polyacrylonitrile powder should not fall under 'other high polymers'. To the objections of the learned counsel for the I.P.C.L. to the arguments of the department that polyacrylonitrile powder is an artificial plastic/resin, she answered that there was no estoppel in taxation and the Govt. can change its policy from time to time. She quoted a case of Indo-Afghan Agencies, AIR 1968 SC 718 and the Motilal Padumpat Sugar Mill's case, i.e. AIR 1979 S.C. 621, in which Supreme Court held that estoppel would apply in Govt. matters also. But in its latest judgement Jet Ram Shiv Kumar v.Stale of Haryana AIR 1980 S.C, 1285, the court held that there was no estoppel in taxation matter; she said this judgment must be followed in all subsequent cases. The counsel referred to the appellants argument that the show cause notice was not proper; that it speaks only of the polyacrylonitrile powder being a high polymer with a molecular weight of 80000 and classifiable under sub-item (1) of Item 15A with effect from 28-2-1982, that the show cause notice does not mention the words 'other high polymers' and it would not be proper to insert the word 'other' now. The departmental counsel refuted this by saying that the Asstt. Collector and the Collector (Appeals) may have classified the goods as 'other high polymers' but the show cause notice speaks of the product as 'high polymer' falling under 15A(1). The learned counsel for the department conceded that the show cause notice was not the happiest notice but the charges it sets out can still be argued on these bases.

15. The appellant desires the case to be assessed under Tariff Item 68 but this item can only cover cases which do not fall under any of the proceeded item. She referred to the Supreme Court's decision in Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India, AIR 1977 S.C. 597 drawing special attention to the court's rub that 'once an article is classified and put up in a distinct entry, the basis of classification is not open to question. It would not be proper to place the subject goods in the orphanage of Tariff Item 68 when its parentage can be discerned.' 16. She also referred to the definition of the word 'Plastics' in the book 'Modern Plastic Technology' by R.B. Seymour which defines plastics as any kind of matter that flows as the result of application of heat and or pressure. The American Society for Testing Materials has defined plastics as materials that contain as a special ingredients organic substances of high molecular weight which are solid in the finished state but are shaped by flow at some stage of their manufacture or during processing into finished articles. She has quoted a number of other authorities which have defined plastics and the characteristics of plasticity, and also which described the manufacture of polyacrylonitrile powder etc. etc.

17. We would like at this stage to say that we entirely agree with the assessment of the learned counsel for the department in which she said that the subject product polyacrylonitrile powder has the characteristics of a plastic and can be shaped by flow.

18. The learned counsel for I.P.C.L. not only contradicts this but also argued that this point cannot be taken up now since it never formed the basis for the show cause notice. As a matter of fact, the I.P.C.L.'s counsel pointed out, that the Asstt. Collector and the Collector (Appeals) accepted that the product had no plasticity and hence he claims that the learned counsel for the department cannot set out this case before the Tribunal. We are unable to agree with him for reasons that we will discuss below.

19. The I.P.C.L. itself claims that its product polyacrylonitrile powder is a product of polymerization and that it is brought about by chemical synthesis. We are not aware of any product of polymerization that is not plastic and does not have plasticity and polyacrylonitrile is no exception to this rule. The appellant says that since the powder blackens at temperature of 280C and more, it cannot be formed, shaped, fabricated; and if a product lacks these properties, it cannot be a plastic and it has no plasticity. But we have seen from the submission before us the polyacrylonitrile powder is extruded or drawn into acrylic fibre in wet spinning or solution spinning process in which the powder is dissolved in dilute nitric acid (60%) in the proportion of 20 : 80. This solution is forced through spinneretes and the polymer coagulates into solid filaments/fibre in a coagulating bath. I.P.C.L.

says that this is not extrusion in the accepted sense because when softening/ melting is required before extrusion forming/shaping, plasticizers are used. Plasticizers have been defined in Modern Plastics Technology by R.B. Seymours, Reston Publising Co. as a non-volatile additive with a solubility parameter value similar to that of polymer. Encyclopaedia of PVC by L.I. Nass defines plasticizers as a substance of material incorporated in plastics or elestomer to increase its flexibility, workability or distensibility. Plasticizers may reduce melt viscosity. I.P.C.L. argues that it is clear from this that a solvent should have similar criteria if it is to act as a plasticizer.

The appellant states that it is known that solvents like aromatic hydrocarbons chlorinated parafins and hydrogenated terphenyles are used as processing aids in the shaping of plastics.

20. What the learned counsel for I.P.C.L., however, overlooks is that the role of a plasticizer has only one definite aim, and that is to aid in the forming/shaping/fabrication of the resins. Some resins like PVC and cellulose esters are somewhat brittle and require paramatric modification of state to allow proper working. Others has too low extensibility to be useful as plastics. They require plasticization to increase flexibility or to decrease brittleness at room temperature or below. The book Polymeric Materials by Charles Winding and Gordon D Hyatt has this to say about solvent plasticization : "In the solvent type of plasticization powerful solvents of low volatility are employed to hold the molecules apart, causing irregularities in arrangements and lowering the attraction between chains. This permits more freedom of movement between the chains, with subsequent improvement of flexibility". It also tells that as more and more plasticizer is employed, increasing separation of the chains results and the behaviour of normal solution is more and more closely approached. And it says 'The Plasticizing group or groups may be permanently combined with the chain in the form of a stable derivative but the effect on flexibility will be much the same'. And a last quotation from this book 'whatever factors lead to increased solubility also lead to increased flexibility, as would be expected in view of the freeing of the linear polymer molecules from the influence of their neighbours'.

21. The book Polymer Science (Vol. I) by Jenkins discusses plasticizer as a relatively low molecular weight substance of low volatility which, when added to another material, changes the physical and chemical properties of that material in such a manner that the finished product is in a more useful form. More specifically, a plasticizer serves to alter such physical properties as flexibility, hardness, tensile strength, elasticity, etc. The book also says "simple plasticizers, being solvents for the polymer, are more efficient than polymerics and less is required to attain a given physical change in the formulation.

On the other hand, the polymeric plasticizers are more permanently fixed in the material because they exhibit low volatility, low mobility, and low extractability".

22. Encyclopaedia of Polymer Science and Technology (Vol. 8) by John Wiley & Sons of New York tells us that inherent in the extrusion process is the softening, by heat on solvents, of the material being formed so that it can be readily conveyed and formed without destroying the desirable final properties of the material. The machine in which this process takes place is called an extruder in the plastics industry. We are told by the same book that 'essentially all thermoplastic resins, and many thermosetting resins in their more fluid state, are required to undergo flow in the molten state during the course of manufacture and fabrication into products. Thus, such important processing operations as extrusion, moulding, calendering etc., all involve the flow of molten, or relatively fluid, polymer'.

23. A plasticizer is also known as a flexibilizer and to plasticize always means to soften a material to make it plastic or mouldable by addition of a plastici/cr or by using heat or both.

24. The learned counsel for M/s. I.P.C.L. argued that their product had not received a plasticizer and there is no plasticizer at the time of forming the acrylic fibre. The absence of plasticizer would prove that the product was not plastic and was not formed under the influence of a plasticizer. The argument suffers from a serious defect bscause as we know that many plastics require plasticizers; there are many others which do not. The role of a plasticizer is merely to aid in the moulditig of the matter, because the matter to be shaped or fabricated lacks certain desirable characteristics like extenda-bility, mouldability etc. etc. It is to be remembered that plasticization involves reducing the hardness of the substance to a state where it can be moulded, shaped, fabricated without breaking, a state in which it can be given a desired shape or form which shape or form will be retained after the fabrication process is over with or without any further process of fixing the new shape. M/s. I.P.C.L. argues that since the polyacrylonitrile powder is in solution when it is forced through the spinnerete to spin the acrylic fibres proves that it has no plasticity and cannot, therefore, be assessed as a plastic material under 15A(1).

25. The powder comprises polyacrylonitrile (vinyl cyanide) 90% or more, methyl acrylate less than 10% and sodium methyl allyl sulphonate less than 2%. This product is formed into a fibre by being forced through spinneretes when it is in a dissolved condition, the solvent being nitric acid (60%). The formed filament, after it comes through the orifice of the spinneretes, is coagulated in a coagulating bath where the substance solidifies into a fibre and the solvent is removed, drained away, recovered, etc. etc. The fibre thus formed of the coagulated matter is acrylic fibre. We are unable to understand why M/s. I.P.C.L. says that this proves that the acrylonitrile powder is not a plastic and has no plasticity. If the substance was not plastic, it would not form into a fibre which is conceived of as a continuous unbroken circular cross-section whose length is limited only by limitations of raw materials, preparations, availability, operational constraints etc, etc. It may be true that the dope when it reaches the spinneretes was a solution but this does not mean that the solute i.e.

acrylonitrile powder, was not plastic. It is its plasticity that permit it to be formed by this extrusion through the orifices of the spinnerete, and more importantly, to hold together as a filament or fibre of continuous unbroken length, a form well-known in plastic technology. It is useful to note that not all solutions can be used to produce similar products; for example, a water solution of, say, sugar or salt, will never produce a continuous unbroken cross-section of a fibre of sugar or salt. The virtue or qualities of a plastic material is that its mass holds together after forming from an inchoate, shapeless aggregate, to take the new form more or le ss permanently that it is given at the time of forming. The mass of plastic matter is always formed/shaped by the application of external influences like heat or pressure or both, keeping its substance and cohesion while changing its shape and its chemical alignment. In the manufacture of acrylic fibre, the shapeless dope solution or melt is given shape by the spinnerete to become an acrylic fibre. The mass of the solute the acrylonitrile powder, holds together as polymerized article when it is formed into fibre; the aggregate holds, together, each particle sticking to its neighbours to form a continuous length of fibre.

26. This quality exhibited by the acrylonitrile powder is exhibited by all plastic substances many of which are not resin; for example, clay and putty arc plastic and can be formed under pressure. Most metals have plasticity and can be formed, drawn, shaped or cast under heat and pressure in any manner desired. Even glass, that amorphous, non-crystalline substance, shows plasticity as it permits formation under heat and external pressure. Nobody who has seen a glassware manufacturing factory can fail to be struck by the plastic qualities of the molten glass in the hands of the skilled glass blower, who shapes the parison in any manner he chooses giving shape to a shapeless mass.

Metals like aluminium and copper are shaped by extrusion into rods, tubes and other shapes. This is possible because of their plasticity.

But a substance like earth, powdered wood, cannot be formed in this manner because the particles will not hold together but will break apart. They lack the cohesion of a plastic material. Of course, metals are not artificial resins, but the quality of plasticity is the same.

27. M/s. I.P.C.L. are in error when they suggest that because the acrylonitrile powder was in solution for its formation into acrylic fibre, it is not plastic. Many plastics articles are formed from solution. We need only name cellophane, cellulose acetate. Cellophane, one of the most useful plastic products, is produced by reducing the natural product cellulose, the predominant constituent of plant matter, into a soluble xanthate. This soluble xanthate, after treatment with carbon disulphide and sodium hydroxide to form a solution of cellulose, is forced through slit die openings into an acid bath containing sulphate salts of sodium or zinc. On contact with the salts in the bath, the cellulose gels immediately to form a film which is strong enough to be drawn through the bath under tension.

28. Cellulose acetate, another cellulose derived plastic, is produced by a process of obtaining a solution hydrolysed cellulose acetate in acetone, in which state it is forced or extruded through dies or slits to form fibre or film, into warm air. The warm air evaporates the solvent leaving the gel to solidify and harden.

29. The Encyclopaedia of Polymer Science and Technology: Plastics, resins, rubbers, fibres-Vol. 8 speaks of two spinning processes known as wet spinning and dry spinning which had been developed before melt spinning. [This book tells us that spinning in man made fibres manufacture refers to the formation of fibres by extrusion]. Wet spinning and dry spinning process differ in the method of regenerating the polymer from solution. In wet spinning the solution is extruded through fine holes into a liquid coagulant which precipitates the polymer in filamentary form. The same book tells us that inherent in the extrusion, process is the softening, by heat or solvents, of the material being formed so that it can be readily conveyed and formed without destroying the desirable final properties of the material. This is authority enough for saying that extrusion refers both to melt spinning as well as to solution spinning, the latter being the process of spinning in which, instead of the polymer being melted through heat, with, if necessary, the addition of plasticizers, there is spinning of a fibre produced from a polymer dissolved or reduced to a solution in a solvent, through spinneretes, the extruder.

30. It is not possible to describe all the different products that are produced from solutions. But whether it is a solution (PAN in nitric acid) or a melt, the aim is one : to reduce the viscosity in order to increase flow. This phenomenon is essential to all plastic forming.

Unless the material to be formed can be made to flow by the application of heat or force or both, plastic forming is not possible. Artificial resins are formed by the application of heat and/or pressure/force, both to bring about flow and to achieve the desired shape/form. All resin plastic materials, after they have thus been induced to take the new form/shape etc., retain it and do not reform. [Technologically, this is said to be lack of memory]. It is easy to conceive this when an attempt is made to bend a piece of plastic outside the conditions in which it can be shaped, as by bending it cold. The piece will bend to its stress recovery point; if stress is removed, it will return to its original shape/ line. If stress is applied beyond the recovery point it will simply break. On no account will it accept the new shape/form desired to be given to it. Hence, while shaping plastics, the material must be brougnt to a condition best suited for its further fabrication : not all artificial resins require the same parameters for shaping/forming. Their very characters differ widely : some are produced by a process called condensation, others by a process called addition. Condensation has been described as a process occurring during a reaction between pairs of functional groups to form a group not present in the reactants, with a minor compound being split out e.g.

H2O; and an addition process as occurring by opening of a bond in a reactant and the formation of similar bonds with other reactants without formation of a side product. These two kinds of resins exhibit different properties. But whatever the individual characteristics, every artificial resin must be brought to a condition suitable to its character and structure before it can be subjected to working, shaping, fabrication etc. That condition is reduction to a melt for some resins, while for others it is reduction to a solution. In both, the resins viscocity is lowered, increasing its plasticity/reformability.

31. Polymerization takes place in a number of ways, namely, bulk polymerization, solution polymerization, emulsion polymerization and suspension polymerization. Bulk polymerization of monomers may be carried out in the liquid, or gaseous state but presents some difficulties in large scale production. Yields from polymerisation of the gaseous monomer are likely to be low unless effected by high pressure or utilisation of a catalyst. Addition polymerizations are strongly exothermic and may proceed uncontrolably unless the heat evolved is removed. In some cases, the polymers are soluble in their liquid monomers, as a result of which the viscosity of the solutions increases rapidly, leaving problem in agitation and separation. In other cases, the polymer is not soluble, and it precipitates out after a certain degree of polymorization. Solution polymerization proceeds in a solvent suitable for both monomer and initiator. The polymer may remain in solution or may separate. Viscosity increases, and the solvent removal may cause difficulties but the heat evolved may be controlled by refluxing the solvent. In suspension polymerization, the monomer is suspended in water by agitation, and stab-lizers such as talc, fuller's earth and Bentonite are added to stablize the suspension and prevent polymer globules from adhering to each other. Normally, the initiator is soluble in the monomer. Each monomer globule polymerizes as a spherical pearl of high molecular weight. The heat of polymerization is removed by the water, permitting accurate temperature control. The stablizer must be separated from the polymer, however, and sometimes, because of partial miscibility of monomer and water, subsidiary polymerization may occur in the aqueous phase, producing a low-molecular weight polymer. Emulsion polymerization differs from suspension polymerization. Soap is added to stabilize the monomer droplets and form aggregates called micelles. The micelles take monomer into their interior and the initiator dissolved in the aqueous phase diffuse into the micelle to start polymer growth. At certain degrees of polymerization, the polymer is ejected from the micelle but continues to grow. The monomer diffuses into the micelle to replenish it.

Emulsions polymerization are rapid and can be carried out at relatively low temperature. The aqueous phase absorbs the heat evolved from the polymerization.

32. We have discussed the different ways of polymerization at a little length because it is necessary to remember that for polymerization to take place, monomers must combine to form polymers or large molecules.

Without this formation of large molocules, no polymerization can take place, and all polymerization takes place when the relatively simple molecules are made to combine, usually with the aid of a catalyst. It is this combination of a great number of simple molecules into large molecules or polymers that makes the technology of artificial plastics possible. And though various reaction of chemico physical methods are employed, each depending on the particular molecule or monomer to be worked upon, the objective is the same : to force the undeterminate single molecules to bind together by forming polymers in order to produce the products or shapes desired. The monomers will not form in their original state : only when they are part of a large molecule, the polymer. And when the polymers are formed, the entire mass becomes a homogeneous aggregate that is susceptible to manipulation and fabrication. Artificial plastic products are formed not from artificial plastic products, but from artificial unformed polymer resins. And as we all know, in thermo-sets, the resins, after setting into the end-product, cannot even be softened again, and attempt to reform/reshape such a product will more likely result in a broken article than anything else. This quality of chemically reacting to form new shapes is the most distinctive characteristic of artificial resins.

Malleable solids like metals do not reform chemically under heat and pressure; they can only be reshaped physically. But the plasticity is the same. Thus, a plastic material is a solid body substance that can undergo permanent change in shape when subjected to stress exceeding a given value, when in the proper state e.g. in melt. Artificial plastics must be brought to the proper state, namely melt or solution, in which state, the application of stress, likely extrusion, injection moulding etc. will produce a permanent change in the shape.

33. We are, therefore, not in doubt that the polyacrylonitrile powder that I.P.C.L. uses for the manufacture of acrylic fibre is a plastic material and has definite plastic property. Without such plastic property, the acrylic fibre will not form. A fibre is a long flexible object of uniform cohesive material of an approximately circular cross-section. All other fibres like polyester, cellulose acetate, nylon etc. etc. have the same characteristics of plasticity and it is this that enables them to be spun and drawn into fibres. All these materials are plastic materials and all the books of science and technology recognise them to be plastic articles. Acrylic fibres are extensively dealt with and discussed in books on plastics and plastic technology and we are unable to understand why, in spite of overwhelming evidence, M/s. I.P.C.L. still claims that polyacrylonitrile powder is not plastic in nature.

34. It is claimed by M/s. I.P.C.L. during the arguments that the argument of the department by which it tried to show that the polyacrylonitrile powder was a plastic material was a new case and a new case was impermissible according to various decisions quoted by the appellants. The appellants says that the Assistant Collector himself has held that the product was not a plastic product, and therefore, the department cannot now reverse itself to demonstrate plasticity of its product. But we think that there is really no new case; the appellants themselves argue that the product is not one that should fall under the category 'other high polymers' of Item (1) of Item 15(A). They argue that it is a condensation/addition polymerization product, (although they say that it should fall under 68 since it lacks plasticity). The appellants themselves, as we can see, contend that their product is a polymerization product. All we have to do, therefore, is to see if it can fall in Item 68 as they demand. We are of the opinion that this should be rejected straightaway for the very strong reasons that, as we have shown above, poly-acrylonitrile powder is a product of polymerization, which fact is also accepted by M/s. I.P.C.L.; and furthermore it is an article that possesses the properties of plasticity. Of the two headings, namely 15A(1) and 68 there can be no serious argument that 15A(1) is by far the more suitable for their product. The assessment under 15A(l) flows naturally from M/s.

I.P.C.L.'s own conentions about the product being a product of polymerization and from the fact that the powder can be processed to produce acrylic fibre and shows every attribute of a plastic material.

Therefore, the assessment under 15A(1) would be regular and is one which this Tribunal can properly order in the circumstances of M/s.

I.P.C.L's own arguments.

35. Indeed, the dispute resolves as one between 15A(1) favoured by the department and 68 favoured by M/s. I.P.C.L. Since only one of the two can be the correct heading and since we have not agreed that 68 can be a suitable entry for the powder, we are left only with Item 15A(l), an item which, from all points of view, we consider appropriate and suitable.

36. It is not difficult to reject Item 68 for all the reasons that we have discussed above. Nor is it difficult to say that between 15A(l)and 68 that the former is the only appropriate heading, in fact, the only one so appropriate in the entire tariff. There is much to be said in favour of 15A(1) and we have said it, and nothing whatever in favour of Item 68.

37. M/s. I.P.C.L. have quoted certain judgments in support of its case.

One is judgment of the Bombay High Court, Garware Nylon Ltd. v. Union of India-1980 E.L.T. 249 (Bombay). Here the High Court said that it is the taxing authority that should prove that the product is eligible to duty in the manner alleged in the show cause notice. [We think in the foregoing pages, the matter has been discussed threadbare.] In support of this, M/s. I.P.C.L. also quoted 1980 E.L.T. 268 (Bombay) Colgate Palmolive India Ltd. v. Union of India and Deputy Commissioner of Agricultural Income Tax and Sales Tax, Quilon v. Travancore Rubber & Tea Co. 20 STC 520 and the Bombay High Court judgment in Sangvi Non-ferrous Metal Industries v. Union of India, 1979 ELT J 543. All these judgments settled that the onus that a product is chargeable to duty in a particular manner lies squarely on the department. These are good and sound rulings and we all accept them.

38. M/s. I.P.C.L. also says that it is established that no new case which has not been known to the petitioner at the time of show cause notice can be made out in subsequent proceedings Xaca (India) Pvt. Ltd. v. Union of India-Misc. Petition No. 860 of 1973 decided on 26-6-79-1980 E.L.T. 227 (Bombay). We have discussed that the assessment under 15A(1) which we are deciding in favour of now, is directly the result of M/s. I.P.C.L.'s contention, which we also think is correct, that the polyacrylonitrile powder is a polymerization product and is a product of the combination of two or three monomers. The nature of the product and the fact that it is obtained by chemical synthesis, facts urged by M/s. I.P.C.L., would place it nowhere else except 15A(1). We have further shown that it possess properties of plasticity. So no case has been started which was not known to the appellants.

39. The appellants quoted the judgment in Bhor Industries Ltd, v. Union of India-1980 E.L.T. 752 (Guj.) in which it was held that if the classification of a product has been alleged by the Excise department under two alternate tariff items and, on adjudication, the product was held to fall under one of such tariff items, in such case the department cannot subsequently hold the same goods as falling under another tariff item unless a fresh show cause notice is issued. Saying the polyacrylonitrile powder falls under 15A(1) is the same as the department set out to do; it is not an assessment under another tariff item.

40. It was also observed by the Bombay High Court that if a subject matter had been raised in the assessment order which had neither been alluded in the show cause notice nor was any opportunity given to petitioner to meet the same, it was a violation of the principle of the natural justice 1980 ELT 235 (Bom,) Wimco v. Govt. of India, It is easy to see that this discussion has no application to the case here.

41. We have not been able to understand why the Assistant Collector said in his adjudication order that the goods did not have plastic properties. Not enough explanation has been given for this reasoning except that the product is not commonly known as artificial or synthetic resin/plastic material. A particular sentence that appears in his adjudication order is worth reproduction : - "by Explanation II in Tariff Item 15A this product has been excluded from the scope of description of polymerization and co-polymerization product. Therefore, this product cannot be classified as polymerization and co-polymerization product".

"it is amply clear that the product in dispute is a co-polymer of acry-lonitrilc and other monomers. The molecular weight of polyacrylonitrile is also about 80000. The product is obtained as co-polymerization product".

43. The Assistant Collector has completely contradicted himself; nor does Explanation II exclude this product from the scope of the description of polymerization and co-polymerization product.

44. We agree with M/s I.P.C.L.'s argument that the Appellate Collector was in complete error when he divided the subject Item 15A(1) into a first part and a second part. We see no logic or need for such a division, but for reasons we have detailed in our discussions above, that order is not very important now.

45. We accordingly reject the appeal and direct that M/s. I.P.C.L.

should pay the duty on the polyacrylonitrile powder under 15A(1) as demanded.

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