S/Shri S.S. Sekhon, Member (T) and T. Anjaneyulu, Member (J)

SUPREME INDUSTRIES LTD.

Versus

COMMISSIONER OF CUSTOMS, SHEVA

Order No. A/970/2004-WZB/C-III, dated 18-8-2004 in Appeal No. C/486-R/99-Bom.

Advocated By :        Shri M.H. Patil, Advocate, for the Appellant.

Shri A.K. Saxena, DR, for the Respondent.

[Order per : S.S. Sekhon, Member (T)]. - The appellants had imported a consignment declaring it as synthetic resin and claiming classification of the same under Heading 3904.90 of the Customs Tariff Act, 1975. The goods were tested and pending the clearance, they were cleared on a warehousing Bill of Entry after classifying the same under 3904.90 and from the warehouse they were cleared under protest under a Ex-Bond of Bill of Entry. The classification of these goods have been claimed to be as master batch and their use has been as such Master batches is classified under Heading 3204.90.

2. Technical specifications of the goods is found to be that it contained 9 to 11% additive in polyethylene resin. Their use was to assist in the moulding of LDPE article which the appellants were engaged. The additive is submitted to be Glycerol Monostearate, there was no technical literature on the said active ingredient available with the appellants. However, it was mentioned in the Hawley’s Chemical Dictionary to be a ‘well defined chemical’ The lower authority found that the Hawley’s Chemical Dictionary defined one of the uses of glycerol monostearate among other things as an emulsifying agent and therefore he held that the same was a solution/dispersion of surface active agent and therefore held that the goods in question were a solution/dispersion of surface active agent (i.e. glycerol monostearate) in an organic solvent agent i.e. polyethylene) and therefore they were clearly identifiable as surface active preparation and classifying under Heading 3402 of the Customs Tariff Act. The Commissioner (Appeals) confirmed these findings. Hence this appeal.

3.  From the test report of the Deputy Chief Chemist vide his report No. S/22/96-Lab JCH, dated 5-3-1997 the lower authority have observed that this test report records as of “the sample is in the form of spherical pallets?. It is composed of polyethylene synthetic resin and additive (glycerol monostearate type) having specific gravity less than 0.94. It is not a synthetic organic matter”.

4. For the goods under import i.e. synthetic resin AF 543 F3, there is an opinion of Dr. Sen, Deputy Chief Chemist given vide 12/22/04/94 in S.5/Test-114/93 (IIA) which reads as follows page 29 (underlining supplied)

“Seen the test certificate and the write up from the party. The goods under reference is stated to contain 9-11% of additives, the active ingredient being glycol monosterate, the base resin, being low density polyethylene. It is mixed with the virgin material in the ratio of 3-4% for the preparation of foamed/cellular polyethylene sheet.

It is seen from the technical references available here that glycerol monostereate has been mentioned to be used as a opacifier and resin lubricant. It is also known to be used as a surface active agent/emulsifying agent surface active agent which is used to facilitate foaming and stabilizing the froth which is usually spread on a support.

Thus from the above, it could be said that the goods under reference is polyethylene resin containing about 9-11% of glycerol monosterate an organic chemical. Hence it may be considered to be a chemical master batch on analogy of colourant master batch,” (underlining supplied)

From the underlined portion, the particular resin can be classified, as per the opinion given by the Deputy Chief Chemist, as a master batch, the classification of master batch is under Heading 3204.90 and therefore, there is no merit in the revenue authorities holding this item to be classified under Heading 3402.90 surface active agent properties by referring to the show cause notice which reads as “service active agent would be the products which when mixed with water at a concentration 0.5% at 20°C and left to stand for one hour at the same temperatures. Whereas the material under import cannot be surface active agent as per the stipulations for a surface active product since the item used for the production of plastic bubble foams, plastic furniture as well as plastic laminated films and items will not mix water at any temperature. The claim of the appellants that of the product as LDPE based master batch & lower authority also failed to set aside the claim of the appellants that the product used as a master batch when they are manufacturing expandable polyethylene used the very fact that the products will not mix with water will rule out its classification as surface active preparation under Heading 3402.90 as arrived at by the lower authorities. The classification on master batch under Heading 3204.90 as claimed by the appellants has to be upheld.

5. When it is held that the classification as declared under Heading 3204.90 is to be upheld we find no merits to sustain the orders of the lower authorities.

6. Consequently, the order is set aside and this appeal is allowed.

Equivalent 2004 (174) ELT 0071 (Tri. - Mumbai)

Equivalent 2004 (065) RLT 0205 (CESTAT-Mum.)