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PETITIONER: COLLECTOR OF CUSTOMS, BOMBAY

       Vs.

RESPONDENT: BHOR INDUSTRIES LTD.

DATE OF JUDGMENT20/04/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 1351            1988 SCR  (3) 641  1988 SCC  Supl.  418     JT 1988 (4)   726  1988 SCALE  (1)907

ACT:      Customs Tariff  Act, 1975:  Chapters 28 & 29 & Headings 39.01/06  and   38.01/19(6)-"Plastz.cizers   not   otherwise specified"-Interpretation of-"Sancticizer  429"-Levy of duty on-Not separately defined chemical compounds.      Statutory Interpretation-Customs  and Excise  Statutes- Tariff entries-How  goods are  known in  the trade and trade literature-Relevancy of.

HEADNOTE:      The  respondents   who  imported   ’Sancticizer   429’, contested the  levy of  duty by  the Department  and filed a claim for  refund,  which  was  rejected  by  the  Assistant Collector on  the ground,  that on ted the product was found to be  organic compound  (easter-type) of colourless viscose liquid and  as per  7.0.046 should be considered a polymeric plasticizer.      On  appeal,   the  Appellate   Collector  came  to  the conclusion that  Chapter 38  of the  Customs Tariff Act 1975 was residuary in nature and that if the item was not covered by any  other Chapter  of the  Tariff Act only then it would fall under  the said  Chapter. He  also  found  that  linear polysters were  covered by  CCCN 39.01(E) and that the goods in question  are formed by the condensation of diabasic acid within  dihydric   alcohols  and   were   similar   to   the polycondensation products of terphthalic acid or adipic acid with ethanediel  covered by  the  aforesaid  CCCN  headings, which corresponds  to 39.01/06  of the  Customs Tariff  Act, 1975. The  Appellate Collector  upheld the  decision of  the Assistant Collector.      The respondent  appealed to the Customs Excise and Gold Control Appellate  Tribunal which allowed the appeals taking the view that plasticizers were not resins, but are added to resins to impart better flexibility of plastic properties to the  latter,   that  ’Sancticizer   429’  is   admittedly  a plasticizer  and   would  therefore   not  have  fallen  for classification under  Heading No.  39.01/06 of  the  Customs Tariff Schedule  as it  stood before  amendment in  1978 and that the product was classifiable 642 under heading 38.01/19(6) of the Tariff Act.

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    Dismissing the Appeals of the Revenue, this Court, ^      HELD:  1.   As  per   various  technical   authorities, plasticizers are  not resins.  These are  added to resins to impart better  flexibility or  plastic properties  to  them. These are not plastic materials by themselves either. [644H]      2. The  goods under  reference in the instant case, are not   similar   to   resols   or   polysiobutylenes.   Their classification under  Heading 39.01/06 of the Customs Tariff Act, 1975,  prior to  and even  after its amendment in 1978, should not  be  applicable.  Not  being  separately  defined chemical compounds, these would also not fall within Chapter 28 or 29 of the Act. Since these are not specified elsewhere their appropriate  classification would be under Heading No. 38.01/19(6)  as  "Plasticizers,  not  elsewhere  specified". [645C]      3. In  these matters  how a  good is known in the trade and  treated   in  the  trade  literature  is  relevant  and significant and often decisive factor. [645D]      "Encyclopaedia of Chemical Technology" 3rd Edition page 111 referred to.      Bhor Industries  Ltd. v.  Collector of Customs, Bombay, [1984] 18  E.L.T. 521  and Collector  of Customs,  Bombay v. Bhor Industries  Ltd. and  another,  [1985]  21  E.L.T.  291 approved.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal Nos. 392-95 of 1988.      Appeal under  Section 130E(b) of the Central Excise and Salt Act,  1944 from  the  order  dated  15.12.1986  of  the Customs Excise  and Gold  (Control)-Appellate Tribunal,  New Delhi in Appeal Nos. C/2130 to 2132/86-C & 1027/83 and order No. 757-760/86.      B. Datta,  ASG, Mrs. Indira Sawhney and P. Parmeshwaran for the Petitioners.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. These appeals under Section 643 130E(b) of the Customs Act 1962 (hereinafter called the Act) are against  the order  dated 15th  December, 1986 passed by the Customs,  Excise and  Gold (Control,  Appellate Tribunal (hereinafter called  CEGAT). These  appeals are related to a dispute  regarding   the  duty  of  custom  imposed  on  the respondent. The  department had  levied duty  on the product known as  ’Sancticizer 429’  imported by the respondent. The respondent had contested this duty and filed a claim for the refund. The  Assistant Collector  of Customs  rejected  this claim. The  Assistant Collector  on  test  found  it  to  be organic compound  (easter-type) inform of colourless viscose liquid and as per 7.0.046m should be considered as polymeric plasticizer. The  Appellate Collector  found that Chapter 38 of the  Customs Tariff  Act, 1975  was residuary  in nature. According to  him, if  the item was not covered by any other chapter of  the Customs  Tariff Act, 1975 then it would fall under Chapter 38. The Appellate Collector further found that linear  polysters   were  covered   by  CCCN  39.01(E).  The Appellate Collector  held that the impugned goods are formed by  the   condensation  of  diabasic  acid  within  dihydric alcohols and  were similar  to the poly condensation product of terphthalic  acid or  Adipic acid with ethanediel covered by above  mentioned CCCN  headings. The  Appellate Collector held this  CCCN headings  corresponds  to  39.01/06  of  the

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Customs Tariff Act, 1975. The Appellate Collector upheld the decision  of   the  Assistant   Collector.  The   respondent challenged the  aforesaid order  of the  Appellate Collector before  the  Tribunal.  The  Tribunal  allowed  the  appeals relying on  the two decisions of the Tribunal one being Bhor Industries Ltd.  v. Collector  of Customs, Bombay, [1984] 18 E.L.T. 521  and the  other Collector  of Customs,  Bombay v. Bhor Industries  Ltd. and another, [1985] 21 E.L.T. 291. The Tribunal was  of the  view that the product was classifiable under the heading 38.01/19(6) of the Customs Tariff Act. The decision of  the Tribunal  was  later  on  followed  by  the subsequent decision referred to hereinbefore.      In Bhor Industries Ltd. v. Collector of Customs, Bombay (supra), the  Tribunal observed  that these  are  ordinarily liquids and,  in rare  instances,  solids,  as  simple  high boiling solvents  for the polymers. These are neither resins nor do they seem to be plastic materials; on the other hand, these are  added to  resins to  impart better flexibility or plastic properties  to them.  It was  further observed  that there was  no evidence had been produced before the Tribunal to show  that Sancticizer was a resin or plastic material as defined in  Explanatory Notes  to C.C.C.N.  It  was  neither similar to resols or polysiobutylene to attract the mischief of Note 2(c) to Chapter 39 nor a separately defined Chemical Compound so as to fall within Chapters 28 or 29 of 644 Customs Tariff  Act, 1975.  Hence, it  was classifiable  not under Heading  39.01/06 as  it stood before its amendment in 1978 but  under 38.01/19(6)  of Customs  Tariff Act, 1975 as "plasticizer, not elsewhere specified".      The Tribunal  in its  decision considered the technical leaflet on  the product.  Sancticizer 429 was 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 compunds, and adhesive systems based upon polyvinyl accetate, styrene-butadiene,  and acrylic latices. Reference was also  made to  Kirk-othmer’s "Encyclopaedia  of Chemical Technology" 3rd  edition page  111, where it was observed as follows:           "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  plasticizers-ordinarily           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;

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         also as  some  interaction  between  polymers  and           plasticizers off  setting the  spacing effect;  or           both."      The Tribunal  came to  the conclusion that plasticizers were not  resins; these are added to resins to impart better flexibility or  plastic properties  to the  latter. Nor  did they  seem  to  be  plastic  materials  by  themselves.  The Tribunal found  that Sancticizer  429 which  is admitedly  a plasticizer  would,   therefore,   not   have   fallen   for classification 645 under Heading No. 39.01/06 of the Customs Tariff Schedule as it stood prior to its amendment in 1978.      The said  reasoning was  reiterated by  the Tribunal in the  decision  of  Collector  of  Customs,  Bombay  v.  Bhor Industries Ltd.  and another.  There, the  Tribunal observed that as  per various technical authorities, plasticizers are not resins.  Rather, these  are added  to resins  to  impart better flexibility  or plastic properties to them. These are not plastic  materials by  themselves either. Further, goods under   reference    are   not    similar   to   resols   or polysiobutylenes.  Therefore,   their  classification  under Heading 30.01/106  of the Customs Tariff Act, 1975, prior to and  even  after  its  amendment  in  1978,  should  not  be applicable.  Furthermore,   not  being   separately  defined chemical compounds, these would also not fall within Chapter 28  or  29  of  the  Act.  Since  these  are  not  specified elsewhere, their  appropriate classification  would be under Heading No.  39.01/19(6)  as  "Plasticizers,  not  elsewhere specified".      It is well-settled in these matters how a good is known in the trade and treated in the trade literature is relevant and significant and often decisive factor.      In that  view of  the matter, the Tribunal was right in the view  it took.  These appeals  fail and  are accordingly dismissed. N.V.K.                             Appeals dismissed. 646