1992(06)LCX0026

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

S/Shri V.P. Gulati, Member (T) and S.L. Peeran, Member (J)

COLLECTOR OF CUSTOMS

Versus

M.M. RUBBER LTD.

Final Order No. 194/1992-C, dated 29-6-1992 in Appeal No. C/1805/91-C

[REPRESENTED BY : Shri L.N. Murthy, JDR, for the Appellant.

Shri K.V. Kunhikrishnan, Consultant, for the Respondents.

[Order per : V.P. Gulati, Member (T)]. - This appeal is filed by the Revenue against the order of the Collector of Customs and Central.Excise (Appeals), Madras. The brief facts are that the Respondents imported consignments of natural rubber latex and claimed the benefit of Notification No. 21/85. The learned original authority however held that the item covered in the said Notification was natural raw rubber and natural rubber latex could not be taken to be covered by this description as the goods imported were found by the authorities to be in the form of white liquid with solid content being 61.5%, The authorities, however, assessed the goods under Chapter 40 which carries the heading natural rubber and rubber articles. Heading40.01 and sub-heading 4001.10 are reproduced below for convenience of reference:

The learned original authority has taken note of the fact that while this item heading among other things covers natural rubber and the latex is not mentioned therein, by virtue of interpretative Rule 3(a), the same is assessable under Chapter 40 ibid. The learned lower original adjudicating authority has held that Notification 21/85 covers only natural raw rubber whereas the item imported is natural raw rubber latex in the form of liquid and this is at a stage before production of natural raw rubber as natural rubber latex is collected from the rubber trees and after preserving with acid and water it attains the form of natural raw rubber in the required form in lumps or in irregular sheet without any specific shape. He has further observed that natural or synthetic rubber latex is specifically covered by Notification No. 82/86 and that benefit of assessment @ 40% is available in respect of this item and therefore the same has to be charged to duty at this rate. The said notification for purpose of convenience is reproduced below:

Chapter 40:82/17-3-1986 as amended by 233/86.

“The Central Government exempts raw rubber, natural or synthetic rubber latex, natural or synthetic (including mixtures thereof) whether or not prevulcanised; balata, gutta percha and similar natural gums, factice derived from oils, reclaimed rubber, waste and scrap of unhardened rubber, falling within Chapter40, from so much of the duty of customs as is in excess of 40%."

The Respondents’ claim however is under Notification 21/85 for assessment @ 20% duty as set out in the Notification which for convenience of reference is reproduced below:

40.01 : 21/1-2-1985 as amended by 103/86.

“The Central Government exempts natural raw rubber, falling under Heading No. 40.01 when imported into India from -.

(a) so much of the duty of customs as is in excess of 20%; and

(b) the whole of the additional duty.

2. The Collector (Appeals) however has allowed the Respondents’ plea for the benefit of Notification 21/85. His findings in this regard are as under :

“Notification 21/85 Cus dated 1-2-1985, as amended exempts Natural Raw Rubber falling under Heading 40.01 from the customs duty in excess of 20% ad valorem and from whole of the additional customs duty. Notification 82/86-Cus., dated 17-2-1986 as amended exempts raw rubber, synthetic or natural latex (including mixtures thereof) whether or not vulcanised, balata, gutta-percha, guayule, chicle and similar natural gums, synthetic rubber, factice derived from oils and such substance reclaimed, from so much of the duty of customs in excess of 40% ad valorem. In this case, the Department themselves have classified the imported goods under Heading 40.01 which is specifically mentioried for exemption under Notification 21/85-Cus., dated 1-2-1985. There is nothing in the definition given for ‘Rubber’ in the Chapter Notes under Chapter 40, so as to exclude natural raw rubber latex from the ambit of Chapter 40 as stated in the order of the Lower Authority.

Natural rubber latex is specifically classified under Heading 4001.10. Whether the imported goods are classified under Chapter 40 by virtue of description in Chapter Notes 1 or 3(a), it would not make any difference, as regards availability of concession under Notification 21/85 dated 1-2-1985 as amended."

3. The learned Collector is aggrieved against this finding of the Collector (Appeals) and has urged as under:

“The goods imported now are natural rubber latex which are different from natural rubber. Latex is the first stage before production of natural raw rubber. This will directly be collected from Rubber trees and after preserving the same in acid and water it attains the character of natural raw rubber in the required form i.e. lumps or in irregular sheet or without any specific shape. This natural or synthetic rubber latex is specifically covered by CN 82/86, with effective basic rate of duty @ 40% ad valorem whereas the CN 21/85 covers only the natural rubber. It is well settled law that a specific description will always prevail over any other general description. Hence the correct Notification applicable in this case is CN 82/86 and not 21/85.”

4. The learned Departmental Representative reiterated the grounds of appeal and urged that latex could not be equated with rubber as such and two are known as two different commodities in the trade and drew our attention to the definition of rubber as given in the McGraw-Hill Dictionary of Scientific and Technical terms. He pleaded that as it is there are separate Notifications, one covering rubber latex and the other covering natural raw rubber and for the purpose of the benefit of the Notifications, these have been treated as separate items and Notification which is specific for natural rubber latex would alone cover the said goods and therefore, the learned lower appellate authority was in error in extending the benefit of Notification 21/85 to the goods in question.

5. Shri Kunhikrishnan, the learned Consultant for the Respondents pleaded that the authorities had assessed the goods under sub-heading 4001.10 which answers to the description natural robber and the Respondents would be entitled to the benefit of the said Notification. He-pleaded that natural rubber latex itself should be considered as natural rubber. He further pleaded that by a simple process rubber in solid lump form and other forms is obtained from natural rubber latex. On a query from the Bench he clarified that rubber in globular form is present in the liquid latex and by addition of acid to the latex rubber in the solid form is obtained from the latex. He pleaded that entry 4001.10 covers natural rubber in various forms and therefore the term natural rubber used in the Notification should be taken to cover all such forms. He pleaded that just because there was another Notification extending the benefit to natural rubber latex among other things does not mean that Notification 21/85 has to be read in a restricted manner. He therefore pleaded that the benefit of Notification as allowed by the learned lower appellate authority is correctly maintainable.

6. We observe that to appreciate the pleas made before us it would be relevant to examine first as to the nature of natural rubber latex and raw rubber in solid form which emerges out of it. We observe that the term ‘latex’ as set out in the McGraw-Hill Dictionary of Scientific and Technical terms, Second Edition at page No. 896 is as under:

“Milky colloid in which natural or synthetic rubber or plastic is suspended in water.”

The term ‘rubber’ in the same dictionary at page 1389 is set out as under :

“A natural, synthetic, or modified high polymer with elastic properties and, after vulcanization, elastic recovery; the generic term is elastomer.”

It is also seen from the same dictionary that latex is derived from the rubber tree which carries the technical name ‘Hevea brasiliensis’, under the term rubber tree it is set out as under:

“A tall tree of the spurge family (Euphorbiaceae) from which latex is collected and coagulated to produce rubber.”

Under the term ‘rubber’ in McGraw-Hill Encyclopedia of Science & Technology following is set out on page 757:

“A useful way of visualizing rubber structure is to consider as a model bundle of wiggling snakes in constant motion. When the bundle is stretched and released, it tends to return to its original condition. If there were no entanglements, stretching the bundle would pull it apart. The more entanglements, the greater the tendency to recover, corresponding to cross-links in rubber. In rubbers, the characteristic property of reversible extensibility results from the randomly coiled arrangement of the long polymer chains. Upon extension the chains are elongated in a more or less orderly array. The tendency to revert to original coiled disarray upon removal of the stress accounts for the elastic behavior. Vulcanizing rubber increases the number of cross-links and improves the properties.

Natural rubber and most synthetic rubbers are also commercially available in the form of latex, a colloidal suspension of polymers in an aqueous medium (emphasis supplied). Natural rubber comes from trees in this form, many synthetic rubbers are polymerized in this form; some other solid polymers can be dispersed in water."

Under the term ‘natural rubber’ it has been further stated as under in the above Dictionary (Page No. 759).

“Although natural rubber may be obtained from hundreds of different plant species, the most important source is the rubber tree (Hevea brasiliensis). Natural rubber is cis-1,4 polyisoprene, containing approximately 5000 isoprene units in the average polymer chain. World annual production of natural rubber increased from 45,000 metric tons in 1900 to over 35,00,000 metric tons in 1980.

The economic competition from synthetic rubbers has stimulated research and development in natural rubber by increasing productivity in the field, improving uniformity and quality of the product and packaging, and developing modified natural rubbers with specific properties.

Increased productivity has been achieved by increasing the yield of the trees by cross-pollination of high-rubber-yielding clones of H. brasiliensis, use of chemical stimulants, and better tapping and collection methods. These methods .have resulted in large increases in yields on Malaysian estates, with much greater increases anticipated.

With improved productivity and better processing methods and controls, much better quality and uniformity have been reached. This has made possible the development of standard Malaysian rubbers (SMR) to meet specifications on a number of properties, including dirt and ash content, viscosity and copper and manganese content.

A number of modified forms of natural rubber have been developed, including the following:

Superior processing (SP), oil extended (OENR), special tire rubber, deproteinized (DPNR), pellet form, filler master batches, and chemically modified."

Under the term ‘latex technology’ in the same book, the following is set out:

“In addition to the technology of solid rubber, there is a completely different, relatively small but important part of the rubber industry involving the manufacture of products directly from natural rubber latex from the tree, synthetic latex from emulsion polymerization, or acqueous dispersions made from solid rubbers.

In latex technology, materials to be added to the rubber are colloidally dispersed in water and mixed into the latex, a process involving the use of lighter equipment and less power than the mixing of solid rubber compounds. The latex compound can then be used in a variety of processes such as coating or impregnating of cords, fabrics, or paper; in paints or adhesives; molding (such as in toys); dipping (for thin articles like balloons, or household and surgeon’s gloves); rubber thread (for garments) and production of foam. Latex technology is particularly important in producing articles for medical and surgical uses.

The term ‘rubber’as defined in the introductory chapter ‘Rubber’ in the Encyclopaedia Britannica 15th Volume is as under:

“Rubber is an organic substance obtained from natural sources or synthesized artificially which has the desirable properties of extensibility and toughness. Previously known as caoutchouc, a term that has become limited to the chemically pure form of the substance, rubber acquired its name from its ability to erase pencil marks.

Initially, all rubber was natural. Formed in a living tree it consisted of the solids separated (coagulated) from the milky fluid latex, which occurs under the bark of many tropical and sub-tropical trees and shrubs."

Further, under Chapter ‘Modern Production’ it has been stated that about one ounce (28 grams) of rubber is obtained per tree per tapping before the latex coagulates and flow stops. Process of Coagulation, under main heading Modern production is described as under:

“Coagulation. After collection, the latex is sieved to remove foreign objects; then water is added. Next, the rubber is coagulated_from the latex, by the addition of dilute acetic or formic acid and is deposited on aluminium partitions in horizontal tanks having aluminium partitions that allow the rubber to be removed in slabs rather than in a single lump. When necessary, the slabs are washed by passing them between horizontal rollers, moving at different, speeds and flushed with a copious supply of water. Excess water is removed by passing the rubber through a succession of rollers. Subsequent treatment depends upon the type and grade of rubber desired.

Wild rubber was originally recovered by heating latex over a fire while stirring it with a stick. The water was removed by evaporation, leaving behind a solid ball of rubber.

It is seen from this book that the type of rubber obtained from latex is processed into form pale crepe, smoked sheet, or skim rubber. Some of the relevant extracts, from the heading’ Chemical and Physical Properties’ are as under:

“Rubber has the empirical formula C5H8, indicating a molecule in its simplest form with five carbon and 8 hydrogen atoms, Many of these simple molecules commonly combine together producing a structure whose atomic weight varies within wide limits, depending upon conditions. The composition of raw rubber has been chemically determined both by breaking down the molecule into its .simplest form, or C5H8 monomer, and by the reverse process of building up rubber like materials from monomers (polymerization).

Rubber has certain peculiar and useful properties of which the most outstanding is its ability to stretch seven to eight times its original length. During extension, rubber gives out heat; as it contracts, it absorbs heat. The extent to which a piece of rubber can contract after being extended or stretched depends on temperature.

When defining the properties of rubber, care must be taken to distinguish between chemically pure substance and the commercial product. Commercial latex contains a. significant proportion of non-rubber material, much of which remains in the coagulated solid. Dried rubber typically contains 92 to 94 percent chemically pure C5H8, 0.13 to 1.20 percent water, 2.50 to 3.20 percent acetone extract, 2.50 to 3.50 percent nitrogenous substances, and 0.15 to 0.50 percent ash."

Distinctive uses of natural rubber and Distinctive uses of natural rubber latex under the sub-heading in this Encyclopaedia among other things are set out as under:

Distinctive uses of natural rubber. - Though natural performs well in most applications, some of the newer synthetics surpass it for specialised purposes. For example, acrylonitrile rubber has much better oil resistance, butyl rubber is much less permeable to air, and silicone rubber withstands higher temperatures.

Natural rubber is still preferred in applications that demand elasticity, resilience, tackiness, and low heat build up. Natural rubber also is chosen when it has no particular technical advantage over synthetics but is competitive for price or availability. Natural rubber is indispensable for the treads of tires for racing cars, bus and truck tires, airplane tires, and any other form of transport where conditions are particularly severe and. where a buildup of heat inside the tire could cause a failure.

Distinctive uses of natural rubber latex.

Latex represents rubber in its most tractable form (emphasis supplied). Criticism has long been made of the time and effort spent at plantations in removing water from latex to obtain solid rubber and the subsequent effort made at its destination to render the rubber process able. Dried latex, in fact has some better physical properties than conventional solid rubber, but the cost of transporting a material containing 60 per cent water across the world would be excessive. Concentration of latex to a content of 60 to 70 per cent dry rubber is performed either at the source or in the user country by means of centrifuging, evaporation, or a process known as creaming, in which an agent is added to the latex that causes the rubber particles to swell and rise to the surface of the liquid.

Latex is an excellent adhesive and is widely used in its natural stale, but for most industrial uses it needs additives and vulcanization. Accelerating agents for vulcanizing and other essential fillers are added. One of the oldest uses of latex is in the production of such dipped goods as rubber gloves and prophylactics. The process consists of dipping formers of the correct size and shape into compounded latex, then drying, repeating the operations, and vulcanizing.

Rubber (elastic) thread also is produced from latex. Initially, strips were cut from a thin sheet to form a thread of square cross section. Later, the much superior round thread was obtained by extruding compounded latex into a bath of coagulant through glass nozzles.

Foam rubber has been one of the most important latex products since its discovery in the 1920s. The confinement of thousands of gaseous bubbles in natural rubber cells provides ideal resilience. In the simple manufacturing process, excess ammonia is removed from the; latex, and after vigorous stirring with dispersion of soap, sodium fluorosilicate is added to the frothy mixture as a gelling agent, along with accelerating agents, zinc oxide, and antioxidant. After the liquid has stood in a mold for several minutes to permit gelling, it is vulcanized. In practice, the process requires the most careful control and the judgment of experienced personnel.

Foam products were made originally in individual molds, which progressed along a conveyor in series and into each of which a predetermined quantity of foam was inserted, the mold closing during its progress to the oven. Washing, drying and finishing completed the process. For large scale, production, a new method has supplanted this early method, which is still in active service. The process consists of filling a fixed mold with metered quantity of foam, sealing it with its lid, and evacuating the air; the foam expands to partly fill the resulting vacuum, and then is frozen; next, carbon dioxide gas is passed in to fill the remaining vacuum in the foam, and the temperature is raised to 104°C (219°F) for curing.

The carpet industry has made increasing use of latex not only as a separate form rubber underlay but as an undercoating on the carpet itself and as an anchoring matrix for tufted carpets. The latex may be either a vulcanizable natural rubber compound or a synthetic self-curing compound.

Foams frequently comprise a blend of natural and styrene-butadiene rubbers, the latter reducing the cost with some reduction in resilience."

7. According to the book ‘Rubber Technology’ edited by Maurice Morton, Director, Institute of Polymer Science, University of Akron, Akro, Ohio and published by Robert E. Krieger Publishing Company, Malabar, Florida, (Second Edition), natural rubber has the chemical name of polyisoprene and the true chemical name for this polyisoprene is Cis-1, 4 polyisoprene and natural rubber crystallizes on stretching resulting in high tensile strength. Natural rubber according to this book is vulcanized with sulfur compounds which can cross-link the chains because of the presence of the reactive double bonds. Under Chapter ‘Natural Rubber’ by Stephen T. Semegen, natural rubber has been cultivated principally in South-east Asia especially the countries of Malaysia and Indonesia and only one tree, Hevea Brasiliensis, is commercially significant. Under the heading ‘Plantation Rubber’ in the same chapter it has been stated that Ridley was the first to use acetic acid to coagulate the latex, permitting the coagulum to be rolled out into flat sheets for drying rather than the wet balls and lumps formerly dried on the ends of poles over a fire. Discussing the various aspects of tree tapping of the rubber trees it goes further to discuss the preparation of dry rubber under the heading ‘Dry Rubber Preparation’ in the said Chapter where the following is set out:

“Depending on the producing country, 10-20% of the tree latex is concentrated by creaming or centrifuging, and shipped to consumer countries, where it is used as such to make finished articles including foam for upholstery and bedding, a variety of tubing and dipped goods etc. The remainder is processed into dry rubber, as sheets, crepes, remills etc.”

Under sub-heading ‘Market Packing’ the following is set out:

“Originally, natural rubber was packed for shipping in wooden cases, following the practice of the tea Industry. Splinters in the rubber were sometimes a troublesome problem. In the 1930’s, burlap or jute bags were used, but stray fibers sticking to the rubber often required burning off. Finally, ”bare back" baling became the most standard practice. Rubber sheets were piled together under a hydraulic press to form a bale of five cubic feet, weighing 250 pounds."

“Latex is transported in the 60-62% concentrated form. About 0.7% of ammonia is added for mechanical stability, although other stabilizers can be used for special purposes. On land, bulk transport is by tank car, whereas large tankers are used for sea transport. Many consumers prefer to receive latex in 50 gallon drums coated internally to prevent corrosion or contamination.”

Composition is described as under:

“Commercial raw natural rubber has a small, but highly important number of non-rubber constituents. These may comprise as much as 5-8% of the total composition. Most important are the natural occurring antioxidants and activators of cure, represented by the proteins, sugars and fatty acids, Typical composition is as shown in Table 6.2.

TABLE 6.2 ANALYSIS OF REPRESENTATIVE NATURAL RUBBER

TABLE 6.3 APPROXIMATE CONCENTRATIONS OF NON-RUBBER CONSTITUENTS IN CENTRIFUGED LATEX CONCENTRATES

Under sub-heading ‘Product Uses’ in the same Chapter it has been set out as under:

“However, natural rubber is still the preferred polymer in many areas for the following reasons : superior building tack, green stock strength, better processing, high strength in nobblack formulations, hot tear resistance, retention of strength at elevated temperatures, high resilience, low.hysteresis (heat build-up) excellent dynamic properties, and general fatigue resistance”

“Natural Rubber Latex. - Natural rubber latex is still in strong demand, especially for blending with synthetic rubber latex, because of superior wet gel strength, tear resistance, strength properties, and wet tack. Main product areas are in latex foam for upholstery and bedding, carpet and rug backing, dipped goods, surgical and drug sundries, adhesives, and textile thread.”

Under Chapter 18 - Latex and Foam Rubber in the same book by T.H. ROGERS and K.C. HECKER, under sub-heading Latex v. Dry Rubber, following has been set out:

“While a latex differs in physical form from dry rubber, the properties of the latex polymer differ only slightly from its dry rubber counterpart (emphasis supplied). Unlike the dry polymer which must undergo mastication before use, the latex polymer need not be broken down for application, thus retaining its original high molecular weight which results in higher modulus products. Other advantages enjoyed by applications involving latex are lower machinery costs and lower power consumption since the latex does not have to be further processed into dry form and compounding materials may be simply stirred into the latex using conventional liquid mixing equipment. This is the major reason why latex products can be made by many small companies with low capitalization. However, latex does have some disadvantages when compared to its dry-polymer counterpart. The latex polymer cannot be reinforced with low cost pigments in the manner that carbon black reinforces dry polymers. Water must be removed to obtain a product and shrinkage occurs during this water removal. Because of the water removal problem, applications are generally limited to products having thin-wall structure or to cellular forms. However, a great variety of products fall into these categories as will be demonstrated later,”

The use of principal outlets for natural rubber latex is for foam rubber, dipped goods, and adhesives.

8. It is seen that under the Customs Tariff under Chapter 40, the term ‘rubber’ has been defined for the purpose of tariff as under :

“throughout the Nomenclature the expression ‘rubber’ means the following products, whether or not vulcanised or hard : natural rubber balata, gutta-percha, guayule, chicle and similar natural gums, synthetic rubber, factice derived from oils and such substances reclaimed.”

and Heading 40.01 covers natural rubber among other items as seen from the entry reproduced above in primary form or in plates, sheets or strip. The term ‘primary forms’ in Note 3 of Chapter 40 is stated to apply to the following form:

(a) Liquids and pastes (including latex, whether or not pre-vulcanised, and other dispersions and solutions);

(b) Blocks of irregular shape, lumps, bales, powders, granules, crumbs and similar bulk forms.

Further in Note 5(b), it has been stated as under:

The presence of the following substances in any rubber or mixture of rubbers shall not affect its classification in Heading No. 40.01 or 40.02, as the case may be, provided that such rubber or mixture of rubbers retains its original character as a raw material:

(i) emulsifiers or anti-tack agents;

(ii) small amounts of breakdown products of emulsifiers;

(iii) very small amounts of the following: heat-sensitive agents (generally for obtaining thermo-sensitive rubber latexes), cationic surface-active agents (generally for obtaining electro-positive rubber latexes), antioxidants, coagulants, crumbling agents, freeze-resisting agents, peptisers, preservatives, stabilisers, viscosity-control agents, or similar special-purpose additives."

It is seen that tariff entries under Chapter 40 and also the notes of Chapter 40 are the same as given in the Harmonized Commodity Description arid Coding System (HCD & CS). In the explanatory note to this HCD & CS apart from the Chapter notes which have been incorporated in the Customs Tariff there are tether explanatory notes given after the chapter notes under heading ‘GENERAL’ and also under new Tariff Heading 40,01 and others. Under this general heading, apart from the further discussion of the definition and scope of the term ‘rubber’ both natural and synthetic, scope of the chapter is also spelt out and the relevant portions in regard to the scope are reproduced below:

“This Chapter covers rubber, as defined above, in the raw or semi-manufactured states, whether or not vulcanised or hard, and articles wholly of rubber or whose essential character derives from rubber, other than products excluded by Note 2 to this Chapter.

The general arrangement of the heading is as follows:

(a) Subject to Note 5, Headings 40.01 and 40.02 essentially cover raw rubber in primary forms or in plates, sheets or strip.

and the scope of the term primary forms under Headings 40.01 to 40.03 and 40.05 is as under:

‘The expression ‘primary forms’ is defined in Note 3 to this Chapter it should be noted that pre-vulcanised latex is specifically included in the definition of ‘primary forms’ and is therefore to be regarded as unvulcanised. Since Headings 40.01 and 40.02 do not cover rubber or mixtures of rubbers to which an organic solvent has been added (See Note 5), the expression “other dispersions and solutions” in Note 3 applies to Heading 40.05 only."

Under Heading 40.01 which covers tariff entry under which the goods have been assessed, relevant sub-entry 4001.10 is similarly worded in the HCD & CS as in the Customs’Tariff, as under:

“Natural rubber latex, whether or not prevulcanised”

and the sub-entries are also similarly worded as under:

“Natural rubber in other forms.”

It has been set out under this heading that this heading includes:

“(A) Natural rubber latex (whether or not pre-vulcanised). Natural rubber latex is the liquid secreted principally by rubber trees and, in particular, by the species Hevea brasiliensis. This liquid consists of an aqueous solution of organic and mineral substances (proteins, fatty acids and their derivatives, salts, sugars and glycosides) containing in suspension 30% to 40% of rubber (i.e. polyisoprene of high molecular weight).

This part includes:

(1) Stabilised or concentrated natural rubber latex. Rubber latex tends to coagulate spontaneously a few hours after tapping; it must therefore be stabilised in order to ensure preservation and to prevent putrefaction or, coagulation. This is usually done by adding ammonia to latex in the proportion of 5 to 7 grams per litre of latex, which produces a product known as “full ammonia” or FA type. A second stabilising method which produces “low ammonia” or LA type is to add a very small quantity (1 to 2 grams per litre of latex) of a low concentration mixture of ammonia and substances such as tetramethylthiuramdisulphide and zinc oxide.

There are also freeze-resistant natural rubber latexes stabilised by the addition, in particular of minute quantities Of sodium salicylate or formaldehyde and intended for use in cold countries.

Natural rubber latexes are concentrated, (mainly for transport purposes) by various methods (e.g. by centrifuging, evaporating, creaming). ,

The rubber contcnt of commercial latexes is usually between 60% and 62%; higher concentrations are also found and in some cases the solid content may exceed 70%".

“(B) Natural rubber in other forms.

For the purpose of this heading, the term ‘natural rubber’ applies to Hevea rubber as traditionally shipped from the place of production, generally after it has been treated in plantation factories either for the purpose of transport and preservation or to give the natural rubber certain special characteristics which will facilitate its subsequent use or improve The Equality of the finished products. To remain classified here, the rubber so treated must not however, have lost its essential character as a raw material; further, it must not contain any added carbon black, silica or any other substance of a kind forbidden by Note 5(a).

Coagulation of natural rubber latex takes place in tanks-of various shapes, which may be fitted with movable partitions. In order to separate the rubber globules from the aqueous serum, the latex is coagulated by slight acidification with, for example, 1% acetic acid or 0.5% formic acid. At the end of the coagulation process the coagulum is either as slabs or as a continuous strip. Subsequent treatment differs according to whether smoked sheets or pale or brown crepes, re-agglomerated granules or free-flowing powders are being produced."

9. It is interesting to note that the term ‘natural raw rubber’ as such and which’ is eligible to the benefit of Notification 21/85 has not been defined either in the technical books of Encyclopaedia Britannica as set out above nor its definition mentioned separately in the Customs Tariff or the HCD & CS. The tariff talks about the rubber in primary forms and in the HCD & CS in the notes as reproduced above the scope of Tariff Items 40.01,40.02 and 40.03 is limited to rubber which is in primary form which has not lost its essential characteristic as. raw material. The question therefore that arises for consideration is whether in the context of tariff entry which carries the main heading ‘natural rubber’ and under which natural rubber latex is specifically mentioned under sub-heading 4001.10, and natural rubber in other forms under sub-headings 4001.21, 4001.22 and 4001.29, whether the latex imported can be taken to be natural raw rubber. Before going into this question we have to consider as to whether what can be the scope of the term ‘natural raw rubber’. Rubber as such is a generic term and as brought out above, historically it was obtained from the Plant and origin and major source of the; same is Hevea brasiliensis and the latex dried from that was found to contain rubber globules which, on coagulation showed the ability to rub off pencil marks and therefore came to be known as rubber. In the tariff the term ‘rubber’ is made applicable to natural rubber among other things whether or not vulcanised or hard and as seen from the tariff the term ‘rubber’ is taken to cover latex also. The latex imported on test has been found to be natural raw rubber latex in the form of white liquid with solid content of 61.5%. This latex as seen from the expression in the technical books is stabilised or concentrated from the original latex obtained from trees for convenience of transport etc. To get rubber in solid form out of this requires some process of coagulation by reducing the water content. As seen from the general notes in the HCD & CS, latex has been specifically included in Chapter 40. In terms of Chapter Note 3 which also figures in the Customs tariff as primary form of rubber, and the term ‘primary forms’ includes liquid and pastes (including latex, whether or not pre-vulcanised and other dispersions and solutions, and blocks of irregular shape, lumps, bales, powders, granules, crumbs and similar bulk forms. The question therefore that arises is having included in the tariff natural rubber latex as primary form of rubber, in the absence of any specific definition of natural raw rubber in the tariff or any specific definition in the technical books in this regard, whether the rubber latex imported by the appellant tan lie considered as natural raw rubber. The plea of the Revenue is, for the kern to be considered as natural raw rubber, it has to be rubber in solid form. This plea, in our view, would have force in case it can be held that natural rubber latex as such cannot be used as raw material as rubber. It is seen from the extracts reproduced from Encyclopaedia Britannica and other technical books that as it is, natural rubber is taken as a product cultivated from the trees Hevea brasiliensis and it has rubber globules dispersed in liquid medium and when obtained from the tree it has about 30 to 40% suspension and by processing, as mentioned in the technical books, the suspension can be increased to 60% or more. The latex as such can be used as raw material for formation of rubber foam and for some other purposes for manufacturing rubber products and in fact is more useful as raw material for certain end-products such as dipped goods, surgical and drug sundries, adhesives and textile thread etc. etc. as the expensive process of mastication can be avoided in the use of latex as raw material compared to solid rubber. The tariff itself recognises this as natural rubber and latex also figures in Encyclopaedia Britannica and other technical books under heading ‘natural rubber’. In view of this, there cab be no difficulty in accepting that natural rubber latex in the form it has been imported is natural rubber in raw form and therefore it can be considered as raw natural rubber. It may be seen that tariff as it is worded under 4001.10 covers natural rubber latex under main heading ‘Rubber’ whether or not pre-vulcanised and then carries further sub-heading ‘natural rubber in other forms and these figure under Headings 4001.21, 4001.22 and 4001.29. This clearly shows that sub-heading 4001.10 covers one form of natural rubber and the other forms are covered by other tariff headings. The inference being natural rubber latex is considered as a form of natural rubber and again being in the nature of raw material in primary form, it therefore, can be considered as natural raw rubber.

10. The Revenue has laid a lot of stress that Notification 82/86 specifically 3 covers natural synthetic rubber latex and Notification 21/85 is specific for natural raw rubber and pleaded that the framers of the statute have considered natural raw rubber as not to include natural rubber latex and that is why a separate Notification for rubber latex was required to be issued. We observe that the two Notifications have been issued at two different points of time and while Notification 82/86 covers most of the items falling under Chapter 40, Notification 21/85 gives higher benefit in respect of only one item i.e. natural raw rubber. This item along with rubber latex is covered by Notification 82/86 under description ‘raw rubber’. The objective and reasons for issue of two notifications have not been placed before us and we have to go by the description as given in the respective Notifications and so long as it can be held that a particular item is covered by a description under a particular Notification, the benefit of that Notification has to be given if claimed. In this case we have held that natural rubber latex is covered by the term natural raw rubber. Therefore, the benefit of Notification 21/85 has to be given to the Respondent. In view of the above we hold that the learned lower appellate authority’s order is maintainable in law and the appeal of the Department is rejected.

Equivalent 1992 (62) ELT 401 (Tribunal)