1991(10)LCX0033

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

Shri S.K. Bhatnagar, Vice-President and Ms. Jyoti Balasundaram, Member (J)

CLASSIC PLASTICS (P) LTD.

Versus

COLLECTOR OF CUSTOMS

Order No. 761 to 762/91-C, dated 9-10-1991 in Appeals No. C/489 & 490/90-C

Advocated By : Shri N. Ramanathan, Consultant, for the Appellant.

Shri L. Narasimha Murthy, JDR, for the Respondent.

[Order per : Jyoti Balasundaram, Member (J)]. - The classification of “Metablen P-551 (acrylic processing aid)” and “Metablen C-201 (acrylic modifier)” falls for determination in these appeals which involve the common issue and which are being heard together and disposed of by this common order.

2. The appellants claim classification of the imported goods as prepared chemicals under sub-heading 3823.90 of the Customs Tariff Act and 3823.00 of the Central Excise Tariff attracting the rate of 70% basic duty and 40% auxiliary duty and 15% CV duty while the Department seeks classification as acrylic polymers under Heading 3906.90.

3. We have heard Shri N. Ramanathan, learned Consultant for the appellants and Shri L. Narasimha Murthy, learned DR for the respondent.

4. Bills of entry for home consumption for two consignments were filed in April, 1987 and both were assessed as prepared chemicals under sub-headings 3823.90 CTA and 3823.00 CET and released on execution of a PD test bond and after drawal of sample for test. The Department called for manufacturers’ literature in respect of both consignments which was submitted in July, 1987. Demand notices were issued in December 1987 wherein the reason for confirmation of demand was that the “test result confirms that the goods are having thermoplastic properties and is acrylic polymers and are assessable under Heading 3906.90 CET @ 100% + 40% and 40% CV vide Notifications 88/87-Cus. and 132/86-C.E." The importers wrote to the Assistant Collector on 28-7-1988 requesting for re-test at the National Test House, Alipur at their cost. On the same day by a separate letter they requested the Assistant Collector to furnish a copy of the test report of the Customs House laboratory relied upon for confirmation of demand. Some time in December, 1988 a certified copy of the test report was furnished to the importers and it revealed that each of the two samples was in the form of white powder and has the characteristics of an acrylic type of organic product. It was also found, on perusal of the analytical data maintained in the Customs House laboratory, that each of the two samples were having thermoplastic properties as exhibited by polymers, and in view of this, coupled with the information given in the literature relating to the goods, the two samples may be regarded as acrylic polymers. The adjudicating authority confirmed the demands on 3-5-1989. The lower appellate authority upheld the order of confirmation on the basis of the test report and hence these appeals.

5. During the course of hearing of the appeals on 21-1-1991, the Bench wanted the chemical composition of the items imported but the learned Consultant merely stated that no details are available as these are trade names and chemical composition is a trade secret which is not supplied by the supplier. The learned S.D.R. stated that he is not aware whether remnant samples are available and what is the shelf life of the same. The Bench wanted the information as to the process of manufacture for plastic and what role Metablen C & Metablen P play in the manufacture of plastic. The matter was adjourned to enable this information to be obtained. On 1-8-1981, the learned Consultant submitted that he was unable to obtain the information regarding the process of manufacture of plastic and the role played by the imported goods in such manufacture and submitted that the matter may be decided on the basis of documents available. The ld. SDR confirmed that no samples were available and therefore, the question of retest does not arise. The basis of the test report namely; the analytical data was not before the Bench on that date and the matter was therefore, adjourned to enable the SDR to obtain and place on record a copy of the analytical data with reference to the products in question. The appeals were treated as part-heard and adjourned to 13-9-1991.

6. On 13-9-1991, the ld. DR Shri L. Narasimha Murthy placed on record a copy of the queries addressed to the Chemical Examiner of the Chemical Laboratory, Custom House, Calcutta which resulted in the test report.

7. The manufacturers’ literature describes the imported items as follows :

“Metablen C

Acrylic Modifiers for Polyvinyl

Chloride (Improving Impact Strength of Rigid Vinyls)

Metablen C is a polyvinyl chloride (PVC) impact modifier, developed by Mitsubishi Rayon Co. Ltd., a leading manufacturer of polymethyl methocrylate and ABS resins.

It imparts excellent impact strength to PVC without deteriorating its chemical and physical properties such as clarity, stress whitening and solvent hazing Metablen C is well suited to a wide range of applications such as bottles, sheet, film and profiles, and it is cleared under the regulation in West Germany, France and PDA regulation in U.S. as an additive for polyvinyl chloride food contact article.

Metablen P

Acrylic Processing Aid for Polyvinyl Chloride Metablen P is a processing aid for polyvinyl chloride resins (PVC), also developed by Mitsubishi Rayon.

Metablen P facilitates the processing of PVC and helps to eliminate surface imperfections of the finished products in applications such as bottles, sheet, film profiles and pipes. In addition, products modified with Metablen P are improved in post-forming properties such as vacuum forming and bending. Metablen P is usually used at concentration of 0.5 to 10% replacement of PVC. A unique grade, Metablen P-700 is useful for long-run operation of PVC compounds stabilized with Ca-Zn or Ca-Sn stabilizer, since it functions as both processing aid and external lubricant for PVC and improves dynamic heat stability.

Metablen P was proved to help the processing of ABS resin.

All grades of Metablen P are cleared under the FDA regulation for food packaging use.

METABLEN C-201

Compounds modified with Metablen C-201 are free from fluorescence and Metablen C-201 gives excellent impact strength to PVC in lower lubricant formulations. It is well suited to such application as flow moulded bottles, sheet and film.

P-1 Properties of Metablen P Metablen P-501 & P-551

1. Improved hot elongation property.

2. Excellent post-forming property.

3. Faster and uniform fusion.

4. Better resistance to plate-out and draw-down.

5. Excellent clarity.

6. Improved glass and elimination of surface imperfections."

8. The All India Plastics Manufacturers’ Association has given a Certificate on 4-4-1991 certifying as follows:

“We hereby certify that Processing Aids and Impact Modifiers are not the Basic Plastic raw materials from which any plastic product could be manufactured. These are chemicals only which are used with the Basic Plastic raw materials in a very small percentage to give better processibility and higher impact strength to the finished products. Hence, these chemicals cannot be treated as Plastic Raw Materials or Acrylic Polymer.”

9. It is seen from the impugned order that the Collector of Customs (Appeals) refers to the Condensed Chemical Dictionary, (10th Edition) and Concise Chemical & Technical Dictionary by H. Bennett (4th Edition) on the definition of polymers. He has held that the impugned goods are polymers, comprising of more than 5 monomers and hence, correctly classifiable under Heading 3906.90 CTA & CET. It is pertinent to note here that the result of the test only stated that “each of the two samples is in the form of white powder and has the characteristics of an acrylic type of organic product.” The queries put to the Chemical Examiner read as follows :

Reports : - Each of the two samples is in the form of white powder and has the characteristics of acrylic type of organic product Remnant returned

Note : No reference and specifications of the samples described as Metablen P-551 or C-201 is available here. Manufacturer’s authentic Note stating its chemical composition, molecular weight and chemical formula may be forwarded to, if felt necessary for query No.2

Attested

13-8-1991

Chemical Examiner

Chemical Laboratory

Custom House Calcutta."

The note appended to the query makes very interesting reading as it is evident from it that query No. 2 has not been answered. Therefore, the Department has not been able to conclusively rule out the classification of the imported goods as prepared under Chapter 38. The test report is not categorical and clinching. It only reveals that the two samples were having thermoplastic properties as exhibited by polymers. The impugned order is based entirely on the test report which, in our opinion, does not decide the issue as there is no clear finding ruling out Chapter 38 and definitely classifying the goods under Chapter 39. The burden of proof of classification has not been discharged by the Department in this case.

10. In the light of the above discussion, we set aside the impugned order and allow the appeals with consequential relief.

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Equivalent 1992 (058) ELT 297 (Tribunal)