TMI Blog1990 (3) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... nt packed in 25 kg bags Product Code 0 9952 with Melt Index from 3.0 to 5.5 Density 0.922/993". However, when the documents were received through the banker, the appellants found the description of the goods as - L.D.P.E. Virgin off Specs Natural Film Grade by Dupont with small amount of Surlyn and Ava Melt Index approximately 2.0, Density 0.922". This was the description of the goods in the invoice of M.G. Chemical Inc., Lloyd s Certificate of Insurance, the Packing List, the Certificate of Origin and the Bill of Lading. On the appellants contacting the suppliers agent regarding the discrepancy, the appellants, it would appear, were informed that the goods were L.D.P.E. virgin material, slightly off specification, mixed with a small amount of Surlyn which was a modified L.D.P.E. of the same grade. According to the appellants, on the basis of this assurance, they agreed to overlook the discrepancy, accepted the documents and the consignment. Twelve bills of entry were filed for clearance of the goods. Examination of the goods by the Customs revealed that they were wet and mixed with impurities. At this, the appellants sent a telex to the suppliers on 6-1-1988 protesting that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bags at random from various section of the stacks and the said bags were subjected to detailed inspection as regards condition of the contents. (3) Out of the number of bags inspected, 5% bags contained apparently sound cargo. (4) In the balance 95% of bags the contents were discoloured and/or wet and/or admixed with foreign matter including some powdery substance. The globules in these bags also were of different shades. (5) Samples of sound and contaminated cargo were drawn and was subjected to analysis. The sample of contaminated cargo contained 9.01% (by weight) excess moisture/extraneous matter as compared to the sound sample. In view of the fact that all the bags were externally intact and sound, it would not be possible to segregate the bags with sound contents from the rest and therefore we had to confine the inspection to inspection of the 10% bags. Since the bags have arrived destination without any external damage, in the absence of any indication to show that the damage was caused en route we infer that the goods were packed in the same condition as was shown to us. A third survey conducted apparently on behalf of the Steamer Agents by C.P. Dave Sons re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to test with the following results - (1) KCL/IMP/686/5-8-1988 Test Report. Sample is in the form of transparent granules of polyethylene type . A note has also been attached as under :- Note : The observations determined on the samples under reference are fairly in agreement with those given for surlyn". In the literature available here surlyn has been described as polyethylene comethacrylic acid - a modified polyethylene manufactured by M/s. Dupont. (2) KCL/IMP/687/5-8-88 Test Report. Samples as received is heterogeneous mixture containing powdery material, transparent granules and very small amount of whitish granules. It is polyethylene type. The test report was having a note attached. Note : The powdery material is low density polyethylene whereas observations determined on the transparent granules are fairly similar to surlyn. Regarding the details of surlyn, attention is invited to note to T.M. No. 898/5-8-1988. (3) KCL/IMP/688/5-8-1988 Test Report. Sample as received is heterogeneous mixture containing transparent granules, whitish granules, with very small amount of powdery material. It is of polyethylene type. The note attached with the test rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more of the co-polymer which is classifiable under the heading appropriate to the polymer of that monomer. In this context, he relies also on statutory Chapter Note 4 to Chapter 39 of the Schedule. In the present case, ethylene is the predominant monomer in the co-polymer Surlyn . Hence, the latter is classifiable under sub-heading No. 3901.10 as LDPE. 7. The learned Departmental Representative Shri Sunder Rajan s reply to the above submissions is that the goods, as revealed by the test results, are a physical mixture of L.D.P.E. with Surlyn. Therefore, Chapter Note 4 to Chapter 39 does not come into play. (Shri Srinivasan clarifies that he referred to this note only with reference to Surlyn ). A co-polymer must comprise of two monomers. Here, the goods are a physical mixture of L.D.P.E. and Surlyn. There is no evidence as to the percentage of L.D.P.E. present in Surlyn. While LDPE is classifiable under sub-heading No. 3901.10, Surlyn, being a modified polymer, will fall under sub-heading No. 3901.90. The goods being a mixture, the Collector has rightly invoked Section 19 of the Customs Act and classified the goods under sub-heading No. 3901.90 which carries the higher rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e test report. It is a co-polymer according to technical literature. 11. Chapter Note 4 to Chapter 39 of the Schedule reads as follows : 4. For the purposes of this Chapter, except where the context otherwise requires, copolymers (including co-polycondensates, co-polyaddition products, block copolymers and graft copolymers) and polymer blends are to be classified in the heading covering polymers of that comonomer which predominates by weight over every other single comonomer, comonomers whose polymers fall in the same heading being regarded as constituting a single comonomer. If no single comonomer predominates, copolymers or polymer blends, as the case may be, are to be classified in the heading which occurs last in numerical order among those which equally merit consideration. The expression copolymers covers all polymers in which no single monomer contributes 95% or more by weight to the total polymer content." 12. As noted earlier, surlyn is considered as a copolymer in technical literature. It would appear that, by virtue of Chapter Note 4 of Chapter 39 of the Schedule, the predominant comstituent, namely, LDPE will determine the heading under which the substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . - Except as otherwise provided in any law for the time being in force, where goods consist of a set of articles, duty shall be calculated as follows : (a) .. .. .. .. (b) articles liable to duty with reference to value shall, if they are liable to duty at the same rate, be chargeable to duty at that rate, and if they are liable to duty at different rates, be liable to duty at the highest of such rates:" It should be noted that the provision applies to goods consisting of a set of articles. While the term set has not been defined, it is not a difficult term to understand. According to The Concise Oxford Dictionary , it means inter alia a number of things or persons that belong together as essentially similar or as complementary to each other, group, collection. The examples given are : set of studs, chairs, stamps, novels, golf-clubs, lectures etc. For the present purpose, however, these examples would not serve the purpose because a set of chairs of studs would conceivably attract the same rate of duty. The classic example which comes to mind is a set consisting of a fountain pen and a pencil. These are complementary to one another and are similar in funct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration." In the present case, Rule 3(b) would, in our opinion, be the more appropriate application, since, on test, the goods have been found to consist of a mixture of LDPE and Surlyn. In the present case, the LDPE component of the mixture, being the predominant constituent, gives the mixture its essential character. The subject goods would, therefore, be classifiable under sub-heading 3901.10. 17. The appellants have declared the goods on the bills of entry exactly as they have been described in the import documents. It appears that the fact that the goods were wet and contaminated with foreign particles came to light only after the bills of entry were filed. Even otherwise, the conduct of the appellants in taking up the matter without delay with the suppliers, in having the goods surveyed by three agencies and filing a suit in a United States District Court against the suppliers for supply of goods not conforming to the import documents - all this shows, in our view, not mala fide conduct of a person with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at these are not disposal goods, seeing that they are not prime material. 20. Shri Srinivasan has relied on the Bombay High Court s judgment in Abdul Husein Mohammedally Master v. Union of India Ors. [198l E.L.T. 936 (Bom.)], followed by the Tribunal in Collector of Customs, Cochin Ors. v. Rajan Universal Exports (Mfrs.) Pvt. Ltd. Ors. [1985 (21) E.L.T. 207 (Tri.)] in support of his submission that the present goods are not disposal goods. These are not second-hand goods though they be contaminated goods, not strictly conforming to Du-pont s specifications for L.D.P.E. Shri Sunder Rajan, however, points out that the goods in the case before the Bombay High Court were brand new goods, though remaining in stock for long. The decision has no application. In the case before the Tribunal (supra), the goods were stock lots. The age of the goods cannot determine whether they are disposal goods. This decision, again, has no application. In the present case, the goods were contaminated, had sweepings etc. They are not new goods. Further, they were not in original packings of the manufacturers. They are, therefore, disposal goods. 21. The term disposal goods has not been defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the U.S. District Court, New York, a suit against the suppliers. These circumstances point to the strong probability of the appellants having been landed with a supply of goods, not conforming to their order, whether such supply was inadvertent or deliberate. The circumstances noted by the Collector do not, in our opinion, add up to the strong probability that the goods are disposal goods. 25. In the case of Rajan Universal Exports -1985 (21) E.L.T. 207 (Tri.) - the goods were ball roller and taper roller bearings of Russian origin, shipped as per the company s suppliers in Japan from Australia where they were lying for over seven years, they having been originally packed in Russia between 1968 and 1972. The order was concluded on the basis of two stock lists sent by the Japanese suppliers. The lists referred to various taper bearings with their code number, the individual quantity available for sale being in odd numbers (and not multiples of ten or of dozens and the like). However, the prices quoted were per piece. The minimum order acceptable was said to be U.S. dollars 3000. The Collector of Customs, Cochin held that the goods were disposal goods which term would co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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