1997 (12) TMI 173 - AT - Central Excise

Summary

Issues:
Classification of adhesive product under Chapter 39 or Chapter 35; Interpretation of Chapter Notes 3 and 6; Correctness of classification by the Assistant Collector; Consideration of chemical nature versus use for classification; Mis-declaration and retrospective classification change.

Analysis:
The appeal involved a dispute regarding the classification of an adhesive product named Titebond by the appellants. The appellants argued that their product, based on Polyvinyl Alcohol, should be classified under Chapter 35 as an adhesive and not under Chapter 39 as determined by the Assistant Collector and upheld by the Collector (Appeals).

The appellants contended that since their product did not involve chemical synthesis, it did not fall under Chapter 39 before 1988. They also highlighted the change in Chapter Note 6 in the 1988-89 Budget, emphasizing that adhesives based on Polyvinyl Alcohol should be classified under Chapter 35. They further pointed out that adhesives based on plastics were classified under Chapter 35, as per Notification No. 125/87.

The appellants also referenced a Supreme Court judgment regarding the classification of a similar product as a plasticizer under Chapter 3801.19(6) instead of Chapter 39. Additionally, they argued that the chemical nature versus use criteria for classification should be considered, citing various Tribunal judgments supporting their stance.

The Tribunal analyzed the provisions of Chapter 35 and Chapter 39 as they stood in 1986-87. It noted that glues and adhesives were classifiable under Chapter 35, with specific sub-headings for different types of adhesive products. The Tribunal emphasized that the use of the product as an adhesive was crucial for classification under Chapter 35, as indicated in various Tribunal judgments.

Based on the interpretation of the tariff entries and relevant case law, the Tribunal held that the appellants' adhesive product should be classified under Chapter 35. The Tribunal found that the classification list had been correctly approved provisionally under Chapter 35.06 and there was no mis-declaration involved. Consequently, the impugned orders by the authorities below were set aside, and the appeal was accepted in favor of the appellants.