Circular No. 2/89 Dated 4-1-1989

Central Excise - Chapter 39 - Classification of Polyols and Isocyanates, when supplied together for the production of polyurethane foam - Regarding.- A doubt has been raised as to whether Polyols and Isocyanates, when supplied together for the production of Polyurethane foam, should be assessed to duty as Polyurethane foam on the strength of section note (2) of Section VI and section-note (1) of section VII of the new CET, or should be assessed individually on merits even when those are presented together at the time of sale.

2. The matter has been examined by the Board. The Board observes that the subject goods even when supplied together for the production of polyurethane foam would not be covered by note (2) of Section VI and note (1) of Section VII of the Schedule to the Central Excise Tariff Act, 1985 as the said notes only cover those goods, put up in sets, which, after mixing, are ready for use whereas, in this particular case, the subject goods do not produce polyurethane foam simply by mixing. It requires the addition of other products like additives, fillers, blowing agents etc. In some cases, these are supplied separately. Thus the condition (b) of note (1) under Section VII of the Schedule to the Central Excise Tariff Act is not satisfied. The Board also took note of the decision arrived at on the same issue in the Conference of Collectors of Customs on Tariff held at Delhi on 2-11-1987, when a view was taken that note (3) to section VI and Note (1) to Section VII of the Customs Tariff [exactly similar to note (2) of Section VI and note (1) to Section VII of the CET] do not appear to cover goods like polyols and Isocyanates under their purview. These have to be mixed together under controlled chemical conditions and are quite unlike complementary products like the components of taraldite and certain paints and thinners and, as such, it has been concluded that Polyols and Isocyanates should be assessed to duty individually on merits even if they are imported in the same Bill of Entry.

3. Accordingly, it is hereby clarified that Polyols and Isocyanates, even when presented together at the time of sale, should be assessed to central excise duty individually on merits. The Deputy Chief Chemist, C.R.C.L., New Delhi has concurred with this view.

4. The above guidelines may be brought to the notice of the lower field formations and the trade interests may also be suitably informed.

5. All pending assessments may be finalised on the above basis.

[F. No. 93/22/88-CX.3]