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Bhor Industries Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(18)ELT521TriDel
AppellantBhor Industries Ltd.
RespondentCollector of Customs
Excerpt:
.....40% corresponding to the central excise duty leviable under item no.15-a(1) of the central excise tariff schedule (get). after clearance of the goods on payment of the duty so assessed, bhor filed a claim for refund of excess duty on the footing that the product was assessable as a plasticizer under heading no. 38.01/19(6) at 60% (basic) plus 15% (auxiliary) duty.the assistant collector of customs rejected the claim as unsubstantiated since bhor did not produce the documents asked for by him.in the appeal before the appellate collector of customs, bhor contended that the product "santicizer 429" was the trade name of monsanto's polymeric plasticizer whose function was only to be used as a plasticizer for pvc resin, that heading no. 38 01/19(6) of the customs tariff schedule was specific.....
Judgment:
1. The captioned appeal was initially filed as a Revision Application before the Central Government which, in terms of Section 131-B of the Customs Act, 1962, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal presented before us.

2. The dispute is about the classification of a product called "SANTICIZER 429" imported by the appellants (hereafter referred to as Bhor) at the port of Bombay. The Customs authorities classified the goods under Heading No. 39.01/06 of the First Schedule to the Customs Tariff Act, 1975 and charged duty at the rate of 100% (basic duty) plus 20% (auxiliary duty) plus additional (countervailing) duty at 40% corresponding to the Central Excise duty leviable under Item No.15-A(1) of the Central Excise Tariff Schedule (GET). After clearance of the goods on payment of the duty so assessed, Bhor filed a claim for refund of excess duty on the footing that the product was assessable as a plasticizer under Heading No. 38.01/19(6) at 60% (basic) plus 15% (auxiliary) duty.

The Assistant Collector of Customs rejected the claim as unsubstantiated since Bhor did not produce the documents asked for by him.

In the appeal before the Appellate Collector of Customs, Bhor contended that the product "Santicizer 429" was the trade name of Monsanto's Polymeric Plasticizer whose function was only to be used as a plasticizer for PVC resin, that Heading No. 38 01/19(6) of the Customs Tariff Schedule was specific for plasticizers since they were not specified elsewhere in the Schedule and that the product was not "Artificial or synthetic resins and Plastic materials and articles made thereof" within the meaning of Item No. 15-A CET. The product was used for imparting flexibility to PVC resin and was by itself, not a synthetic or artificial resin but only a high molecular weight organic compound which could not be used like plastic materials for moulding purposes. Bhor also relied upon Tariff Ruling No. 17 of 1975 (page 567 of the Indian Customs Tariff Guide) classifying polymeric plasticizers under Item No. 87. of the old Customs Tariff without levy of additional duty under Item No. 15-A CET. They also relied upon certain technical authorities in support of their contentions. The Appellate Collector, in his order dated 26-4-1979, held that the subject product was a polycondensation product similar to resols and liquid polyisobutylene and was covered by Note 2(c) to Chapter 39 of the Customs Tariff Schedule. However, he held that the goods were not covered by Item No.15-A of the CET and as such not liable to additional duty.

It is thus against the classification of the product under Heading No.39.01/06 that Bhor has come up in appeal before us.

3. In the transferred revision application (the appeal before us), it is urged that Heading No. 39.01/06 of the Customs Tariff Schedule, as it stood on 31-10-1977-the date of filing of the bill of entry-did not cover polymerisation products which were not synthetic resins or artificial plastics. They also relied upon an order-in-appeal on a similar issue in Appeal No. S/49-1034/ 78R dated 20-8-1979 passed by the Appellate Collector of Customs, Bombay.

4. In the course of the hearing before us on 27-6-1984, Shri Deshpande, the learned Counsel for Bhor, contended with reference to Note 2 to Chapter 39 of the Customs Tariff Schedule, that the phrase "similar artificial polycondensation or polymerisation products" qualified only Sub-clause (c) and not Sub-clauses (a) and (b). The point was that the subject product was not an artificial plastic nor artificial resin, nor silicone, nor was it similar to "resols or liquid polyisobutylene".

Reference was made in this connection to the manufacturer (MONSANTO)'s letter dated 30-6-1979 to Bhor and to the technical leaflet on the product. It was urged that the product was only a plastisizer-not a plastic by itself. Reference was also made to the Bombay Appellate Collector's order of 23-4-1980 on the same product in Bhor's favour.

5. On behalf of the respondent, the learned SDR submitted that in the order dated 23-4-1980, the Appellate Collector was making a distinction between plasticizers having resinous and those not having resinous properties. The Appellate Collector considered the subject product with reference to Chapter Note 2 (a) and Note 2 (c) as Shri Deshpande would have it. Reference was made to "A.B.C. of Plasticizers"-Oil and Colour Trade Journal-published from London. At pages 70-71, there is a reference to Santicizers but not the particular product designated by the No. 429. In the end, she defended the Appellate Collector's order for the reasons stated therein.

6. Before considering the rival contentions, let us look at the technical leaflet on the product. Santicizer 429 is described as a medium-high molecular polyester plasticizer made from a glycol reacted with a dibasic acid. Among the properties claimed for the product are good low temperature flexibility, excellent electrical properties, outstanding migration resistance, humidity, stability and resistance to oil and solvant extraction. It is said to be an excellent plasticizer for making oil-resistant high temperature PVC wire and cable compounds.

It is also stated to be useful for plasticizing ethyl cellulose, mitrocellulose, acrylic caulking compounds, and adhesive systems based upon polyvinyl acetate, styrene-butadiene, and acrylic latices.

7. According to Kirk-Othmer's "Encyclopaedia of Chemical Technology" (3rd) edition on page 111), a plasticizer is incorporated in a material to increase its workability, flexibility, or distensibility. Addition of a plasticizer may lower the melt viscosity, the second-order transition temperature, or the elastic modulus of the plastic. For effectiveness with polymeric materials, a plasticizer needs to be initially mixed with the polymer either by dissolution of the resin in the plasticizer or the plasticizer in the resin, by heat or dissolving both in a common solvent and subsequent evaporation of the solvent. In "Plastics Materials" (4th edition, page 80), J.A. Brydson refers to plasticizersordinarily liquids and in rare instances solids-as simply high boiling solvents for the polymer. The action is explained by saying that plasticizer molecules insert themselves between polymer molecules reducing but not eliminating polymer-polymer contacts and generating additional free volume; also as some interaction between polymers and plasticizers off-setting the spacing effect; or both.

8. It is thus clear that plasticizers are not resins; they are added to resins to impart better flexibility or plastic properties to the latter. Nor do they seem to be plastic materials by themselves.

Santicizer 429 which is admittedly a plasticizer would, therefore, not have fallen for classification under Heading No. 39.01/06 of the Customs Tariff Schedule as it stood prior to its amendment in 1978.

Resols are known otherwise as "A-Stage" resins consisting primarily of partially condensed phenol alcohols. Such resins can be converted into insoluble, infusible cross-linked "C-Stage" resins. (Hawley's Condensed Chemical Dictionary). Polyisobutylene is one of several thermoplastic stereo-regular polymers of isobutene and finds its use as cable insulation, polymer modifier, an adhesive component, a base for chewing gum, a tackifier for greases, as a motor oil additive etc. (See Condensed Chemical Dictionary by Hawley, p. 829 and Plastic Materials by J. A. Brydson, p. 245). Looking at the technical data placed before us, Santicizer 429, to our mind, is not similar to resol or polyisobutylene to attract the mischief of Note 2(c) to Chapter 39 of the Customs Tariff Schedule. ' 9. According to the Customs Cooperation Council Nomenclature (C.C.C.N.) Explanatory Notes (Page 568 b), artificial resins and plastic materials are products of various kinds and different constitution having the common characteristic of plasticity, that is of being capable, or of having been capable at some stage of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticizers) into shapes which are retained on the removal of the external influences. The shaping processes used include moulding, casting, extruding, rolling, etc. No evidence has been produced before us to show that Santicizer 429 has resinous or plastic properties.

10. In our opinion, therefore, the product "Santicizer 429" did not fall under Heading No. 39.01/06 as it stood before its amendment in 1978. Since the product is not a separately defined chemical compound, it would not have fallen within Chapter 28 or 29. The appropriate chapter would be 38. Since the product was not specified elsewhere, the appropriate classification was 38.01/19 (6) as "Plasticizers, not elsewwere specified".

11. We allow the appeal. Consequential relief shall be granted to the appellants within three months from the date of communication of this order.


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