2022 (9) TMI 1561 - AT - Customs

Bill of entry for clearance of import of goods declared as PVC Compound TZ - Whether co-polymers of vinyl chloride/vinyl acetate would fall under the broad category of polymers of vinyl chloride under heading 3904 and eligible for benefit of Notification No. 21/2002 in Sr. No. 480 - HELD THAT - In the present case there is no dispute to the classification of the goods and classification as claimed by the appellants under heading no 39042290 has not been amended/ modified by the lower authorities. Further during the argument both the sides have relied upon HSN explanatory notes and technical literature to establish that the impugned goods are/ are not poly vinyl chloride . We do not find any merits in the submissions made because the classification of the goods have been made under 3904 Thus it is quite evident that by classifying the goods under CTH 3904 22 90 revenue admits that the impugned goods are Poly vinyl chloride as that is the single dash entry preceding the CTH in which the classification has been held. Having held so revenue cannot for deciding the claim to exemption hold a contrary view. The exemption at Sl 480 is admissible to all poly vinyl chlorides classifiable under heading 3904. Impugned order is set aside and the appeal allowed.

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 21/2002-Cus, specifically under Sr. No. 480.
2. Classification of the imported PVC compound under the Customs Tariff Heading (CTH) 3904.
3. Determination of whether the imported PVC compound qualifies as "Polymers of Vinyl Chloride."

Detailed Analysis:

1. Eligibility for exemption under Notification No. 21/2002-Cus, specifically under Sr. No. 480:

The appellant filed a Bill of Entry claiming the benefit under Notification 021/2002 Sr. No. 480 for the import of PVC Compound TZ, arguing it falls under "Polymers of Vinyl Chloride." The assessing officer denied this exemption, instead extending the benefit of Sr. No. 559 of the same notification. The appellant contended that the addition of plasticizers, fillers, and stabilizers does not alter the chemical nature of PVC resin, and thus, the compound should still be considered under the exemption for "Polymers of Vinyl Chloride."

2. Classification of the imported PVC compound under the Customs Tariff Heading (CTH) 3904:

The classification of the imported PVC compound under Heading 39.04 was not disputed by the Customs department. The appellant argued that Heading 39.04 covers all forms of PVC, including plasticized PVC, and that the exemption notification should apply to all forms and grades of PVC under this heading. The revenue, however, argued that the imported goods, being a result of a compounding process, are chemically modified and thus do not qualify as "Polymers of Vinyl Chloride" under Sr. No. 480.

3. Determination of whether the imported PVC compound qualifies as "Polymers of Vinyl Chloride":

The Commissioner (Appeals) upheld the denial of the exemption under Sr. No. 480, noting that the polymer content of the imported goods was only 63%, whereas the subheading note requires 95% or more by weight of the total polymer content. The Tribunal, however, found that the classification under CTH 39042290 implicitly recognizes the goods as "Polymers of Vinyl Chloride." The Tribunal noted that the classification was not contested and that the goods were indeed classified under a heading that includes "Polymers of Vinyl Chloride." Therefore, the exemption under Sr. No. 480 should apply, as it covers all forms of PVC under Heading 3904.

The Tribunal referenced previous cases, including Ajay International Corporation Ltd. and Henkel Teroson India Ltd., where it was held that all forms of PVC, even those mixed with other substances, fall under Heading 3904 and are eligible for the exemption. The Tribunal concluded that the addition of plasticizers, fillers, and stabilizers does not disqualify the PVC compound from being classified as "Polymers of Vinyl Chloride" under the exemption notification.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal and granting the exemption under Sr. No. 480 of Notification No. 21/2002-Cus, thereby recognizing the imported PVC compound as eligible for the concessional rate of duty.