1990(05)LCX0023

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

S/Shri K.S. Venkataramani, Member (T) and G.P. Agarwal, Member (J)

HELI PLASTICS LTD.

Versus

COLLECTOR OF CUSTOMS

Order No. 452/90-C, dated 4-5-1990 in Appeal No. C/2408/88-C

Cases Quoted

INDIAN AIRLINES v. COLLECTOR - 1988 (38) ELT 679 . [PARA 2]

JAIN ENGINGERING v. COLLECTOR - 1987 (14) ECC 14 ..     .[PARA 2]

ICI (INDIA) v. COLLECTOR -  (1990) 26 ECC 98 (SB) .           [PARAS 2 & 4]

Advocated By : Shri R. Parthasarathy, Advocate, for the Appellants.

Shri S. C. Chakraborty, JDR, for the Respondents.

[Order per : K.S. Venkataramani, Member (T)]. - This appeal is directed against the order dated Nil passed by the Collector of Customs (Appeals), Bombay upholding the order in assessment dated 10-9-1986 passed by the Asst. Collector of Customs Group ‘G’ Bombay Customs House holding that the products called VESTOLEN. P 6522 Grey and VESTOLEN. P 6502 block, being block copolymers are ineligible for the exemption under Notification 227/76 dated 2-8-1976. It is an admitted fact that the products fall under Chapter 39 of Customs Tariff Act, 1975. The Asstt. Collector referred to the sub-heading note under Chapter 39 of Customs Tariff Act, and following it, found that block-copolymers are to be classified in the same sub-heading as homopolymer of predominant co-monomer provided that such copolymer is not specifically covered by any other sub-heading, and that looking to the sub-heading 3902 it is seen that copolymer of propylene had a specific sub-heading 3902.30. The Asstt. Collector concluded that in view of this block copolymers are classifiable under sub-heading 3902.30 of Customs Tariff Act. Based on this Classification the Asstt. Collector noted that exemption Notification 227 dated 2-8-1976 exempted polypropylene and that polypropylene’s molecular structure is different from the molecular structure of block copolymer and that the exemption under the Notification is given only to polypropylene and not to copolymer or block copolymer. This order in assessment of the Asstt. Collector was upheld in appeal by the Collector (Appeals).

2. Arguing for the appellants the learned counsel Sh. R. Parthasarathy submitted that they have no dispute regarding the classification of the goods but contest the decision to deny exemption to the goods under Notification 227/76. He referred to the literature regarding VESTOLEN. P in the paper book from which it may be seen that it is a brand name for polypropylene. All the polymers of VESTOLEN. P are polypropylene isotactic according to the literature. He further relied upon extracts from “Polymers and Resins: Their Chemistry and Chemical Engineering” by Brage Holding to say that polymers formed from several types of reactants are often distinguished by specific nomenclature like homopolymer and copolymer. Shri Parthasarathy urged that it is evident from the literature relating to VESTOLEN. P that it is marketed as polypropylene. He further contended that the notification applies to polypropylene classifiable under Chapter 39 of Customs Tariff Act, without further specification of any sub-heading. Hence, if the goods are essentially polypropylene they are eligible for exemption and in this connection relied upon case law reported in 1988 (38) ELT 679 Indian Airlines v. Collector of Customs wherein a 5-Member Bench of the Tribunal held that within the notification there is no necessity of considering classification and the case of Jain Engineering v. Collector of Customs -1987 (14) ECC 14 where a similar decision was given by the Supreme Court. He also cited a specific case with regard to polymers decided by the Tribunal ICI (India) v. Collector of Central Excise, (1990) 26 ECC 98 (SB) relating to Notification 241/82 exempting polymethyl methacryalate falling under Item 15A of Central Excise Tariff where the Tribunal held that it cannot be construed to exclude modified polymers from its purview and that the notification did not say that it covers only homopolymers or unmodified polymers.

3. Shri S. Chakraborty, learned D.R. contended that Notification 277/76 exempts polypropylene and the learned D.R. then referred to Hawlay’s Condensed Chemical Dictionary definition of its derivation to indicate that it is the product of polymerisation of propylene. It was the learned D.R’s argument that the term polypropylene when used without qualification will refer to a single type of mesomer or a homopolymer. It therefore, follows according to Shri Chakraborty that the notification exempting polypropylene exempts homopolymer whereas copolymer and block polymer are separately mentioned in Hawlay’s Condensed Chemical Dictionary and hence where a notification is designed to exempt homopolymer, it cannot be taken to apply to copolymer or block polymer. The goods imported having been found to be of the latter category are, according to the learned D.R. outside the ambit of Notification 227/76. Sh. Chakraborty also found it significant that subsequently a separate Notification 521/86 issued by the Govt. of India to exempt propylene copolymers, which goes to support the Department’s stand.

4. We have carefully considered the submissions of the learned counsel and the learned D.R. Notification 227/76 exempts each of the articles specified in the Table annexed thereto and falling within Chapter 39 of Customs Tariff Act, 1975 from duty which is in excess of 60%. Srl. No. 4 of the Table specifies the article exempted as ‘Polypropylene’. It is admitted that the goods in question, namely VESTOLEN. P 6502 and VESTOLEN. P 6522 fall within Chapter 39 of Customs Tariff Act, 1975. Yet the Department’s case is that the goods are block copolymer as distinct from polypropylene and hence are not eligible for exemption whereas the appellants say that it is eligible. Examining these contentions we find that the manufacturer’s literature “HULS PLASTICS: VESTOLEN. P Polypropylene (PP)” explains the nomenclature of the product as follows : “The isotactic polypropylene (PP) produced by the low pressure process by HULS is marketed under the trade name VESTOLEN P.” This shows that the goods are marketed as polypropylene. Even in the Asstt. Collector’s order the rationale for the distinction drawn by him is given as follows: “......it is seen that molecular structure of polypropylene is definitely different from molecular structure of block copolymer ...... They are classified as separate entries under different sub-headings, though in generic terms both are classifiable under Heading 39.02". But it is seen that the notification does not specify the sub-heading but only requires that the goods should fall within Chapter 39 of Customs Tariff Act, of which there is no doubt. The manufacturer’s literature further shows, ”VESTOLEN. P 6522 is polypropylene of high molecular weight and reduced crystallinity." Therefore, since the goods fall within Chapter 39 of Customs Tariff Act, 1975, since they are manufactured and marketed as polypropylene, and since even according to the Department the goods fall under Heading 39.02 of Customs Tariff Act, “Polymers of propylene or of other olefins, in primary forms,” only the sub-heading being different, it will be reasonable to conclude that the goods VESTOLEN. P 6522 and 6502 will also be eligible for the exemption under Notification 227/76. In this context the appellants’ reliance on case law (1990) 26 ECC 98 (SB) is well founded. In the circumstances there is a lot of substance in the appeal which is accordingly allowed.

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Equivalent 1990 (50) ELT 183 (Tribunal)