1984 (7) TMI 332 - AT - Customs

Summary

Issues Involved:

1. Classification of "MOWIOL S 50B" under Chapter 39 or Chapter 29 of the Customs Tariff Act, 1975.
2. Applicability of additional (countervailing) duty of Customs with reference to Item 15A of the Central Excise Tariff Schedule.

Detailed Analysis:

1. Classification of "MOWIOL S 50B" under Chapter 39 or Chapter 29 of the Customs Tariff Act, 1975:

The primary issue in these appeals is whether "MOWIOL S 50B," a special kind of polyvinyl alcohol (PVA) with sulpho groups, should be classified under Chapter 39 (Heading 39.01/06) or Chapter 29 (Heading 29.01/45) of the Customs Tariff Act, 1975. The Customs authorities classified the product under Chapter 39, while the appellant, referred to as 'HOECHST,' contended for classification under Chapter 29.

Appellant's Arguments:

- Nature of Product: "MOWIOL S 50B" is not the same as normal PVA; it has sulpho groups added to the PVA chain through sulphonation.
- Statutory Note 2 to Chapter 39: This note applies only to goods produced by chemical synthesis, answering to descriptions like 'artificial plastics including artificial resins.' The product does not have plastic character or mouldability, as confirmed by Dr. Starck's report and Italab Pvt. Ltd.
- Technical Definitions: The product is not a polymerisation product because it does not consist of identical monomer units due to the introduction of sulpho groups.
- Previous Government Order: A 1971 order concluded that "MOWIOL S 50B" was not a plastic article and did not possess thermoplastic or thermosetting properties.
- Solubility: The product is soluble in water, which contradicts the definition of resins that should be insoluble in water.

Respondent's Arguments:

- Manufacturer's Literature: No literature was provided to support the claim that the product is a modified form of PVA.
- Declaration in Bills of Entry: The product was declared as Polyvinyl Alcohol (PVA) in powder form, and chemical tests confirmed it as PVA.
- Plasticity: The product need not be mouldable under heat alone; plasticity under pressure is sufficient.
- Polyvinyl Derivatives: The product falls within Heading 39.01/06 as a polyvinyl derivative, supported by technical literature and previous judgments.
- Chapter 29 Classification: Only separate chemically defined compounds are covered by Chapter 29. PVA and its sulphonated derivative do not fall under this category due to their undefined chemical structures.
- Chapter 38 Classification: Chapter 38 covers only chemical products not specified elsewhere. Since the product is more appropriately covered by Chapter 39, it cannot fall under Chapter 38.

Tribunal's Findings:

- Technical and Scientific Considerations: The classification must be based on technical and scientific parlance, not ordinary commercial parlance.
- Nature of PVA: Polyvinyl alcohol is a synthetic resin with plastic properties, capable of being shaped under external influence.
- Polyvinyl Derivative: "MOWIOL S 50B" is a sulphonated derivative of PVA, thus falling under polyvinyl derivatives in Heading 39.01/06.
- Statutory Note 2 to Chapter 39: This note applies to the entire Heading 39.01/06, not just specific parts.
- Plasticity: The product's plasticity under pressure suffices for classification under Chapter 39.
- Polymerisation Product: The product is a polymerisation product, as it is a polymer of vinyl alcohol with sulpho groups introduced in the chain.
- Chemical Synthesis: The product is a result of chemical synthesis, as defined in technical literature.
- Chapter 29 and Chapter 38 Classification: The product does not fall under Chapter 29 due to its undefined chemical structure and not under Chapter 38 as it is specified in Chapter 39.

Conclusion:

The Tribunal concluded that "MOWIOL S 50B" is correctly classifiable under Heading 39.01/06 of the Customs Tariff Schedule of 1975. Consequently, the product also falls under Item No. 15A of the Central Excise Schedule for additional (countervailing) duty. The appeals were rejected, affirming the classification under Chapter 39.

2. Applicability of additional (countervailing) duty of Customs with reference to Item 15A of the Central Excise Tariff Schedule:

The Tribunal confirmed that the product falls under Item No. 15A of the Central Excise Schedule, making it liable for additional (countervailing) duty of Customs.

Conclusion:

The appeals were dismissed, and the classification under Chapter 39 was upheld, along with the applicability of additional (countervailing) duty under Item 15A of the Central Excise Tariff Schedule.