TMI Blog1991 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... onse to a query, the appellants stated that Glyoxal Solution 40% could be considered as Synthetic Organic Tanning Agents and a Penetrator used in leather industry as per the Condensed Chemical Dictionary, Tenth Edition, by Gessner G. Hawley (page 506) and the Chemistry and Technology of Leather by OTHA (page 420). Samples were drawn from all the nine consignments and sent to the departmental laboratory for tests. The test reports confirmed that the goods were Glyoxal but the report stated that the goods were not a Synthetic Organic Tanning Agent or Penetrator. As such it was considered by the authorities that the import licence produced was not valid and that a specific licence for Glyoxal covered by Entry No. 202 of Appendix 3A of the Import Policy was required for the clearance of the goods and further that the benefit of Notification 224/85-Cus. was not applicable and the goods were assessable, on their merits, to duty under Heading 2912.49 at 70% adv. (basic duty) plus 45% adv. (auxiliary duty) plus 15% adv. (additional duty). A notice was issued to the appellants calling upon them to show cause why the goods collectively valued at Rs. 5,69,946 c.i.f. should not be confiscate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed synthetic organic tanning agent and not Glyoxal. In this view of the matter, he held that the import was unauthorised. As regards the benefit of Customs Notification 224/85, the Additional Collector held that the goods were neither Penetrators as claimed by the appellants nor were they for use in leather industry as the appellants were traders and the goods were imported for stock and sale. He therefore, found no reason to extend the benefit of the notification. By the order of adjudication, dated 2-11-1989, which is challenged in the instant appeal, the Additional Collector confiscated the goods but gave an option to the appellants to redeem them for home consumption on payment of a fine of Rs. 5,70,000/-. He also denied the benefit of Customs Notification 224/85 and ordered that the goods to be assessed to duty under Heading 2912.49 of the Customs Tariff Schedule. However, noting that the appellants had no mens rea and that they were influenced by the fact of release of similar goods at Bombay and Madras, he did not impose any penalty on the appellants. 2. We have heard Shri M.M. Jayakar, Advocate, for the appellants and Shri M. Jayaraman, SDR, for the respondent-Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been obtained and placed on record. 5. The Sr. D.R. Shri Jayaraman in his reply submitted that since the matter was before the Bombay High Court, final decision on the appeal could await the High Court s judgment. However, on the merits of the dispute, Shri Jayaraman submitted that the Chemical Examiner s report had not been contested. He further stated that there was no evidence that Glyoxal 40% was a tanning agent. All that the evidence on record pointed to was that it could also be used as a tanning agent. He contended that what was given up before the lower authorities could not be agitated before the Tribunal (At this, the Counsel for the appellant stated that no concession whatsoever has been made before the lower authorities and that the Department s contentions had all been opposed before the Additional Collector). Shri Jayaraman, Sr. DR, further submitted that the available literature did not say that the predominant use of Glyoxal was as synthetic tanning agent or penetrator. It was further submitted that since the notification extended exemption to goods intended for use in leather industry, the use must be proved particularly because the appellants were not engaged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the place of formaldehyde for the preparation of phenolic resins which are used in syntan manufacture. 11. The Additional Collector has noted the following material placed on record by the appellants in support of their contention that Glyoxal was a synthetic tanning agent: (i) Chemistry and Technology of Leather , edited by Flasherty William T. Reddu and Robert M. Lollar of the University of Cincinnati, U.S.A., showing its application as a Tanning Agent in leather industry. Glyoxal is described as a typical dialdehyde which may be used as a linkage material between hide and organic resins. This type of tannage is similar to formaldehyde tannage. (ii) Physical Chemistry of Leather Making by a Russian author - Kryszt of Dionkiewicz - confirming that Glyoxal 40% is used as a tanning agent. (iii) The National Carbon Chemical News by National Carbon Company (India) Limited to similar effect. (iv) The order of the Bombay High Court wherein the Deputy Chief Chemists of Bombay and Madras have confirmed in their test reports that Glyoxal 40% is a synthetic organic tanning agent or syntan. (v) The letter, dated 31-10-1985 from the Central Leather Research Institute (re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemistry Technology of Leather by OTHA - relevant extracts from which are reproduced in the appellants letter dated 23-2-1988 to the Assistant Collector of Customs (page 35-37 of the Paper Book). These read :- GLYOXAL is a bi. functional aldehyde, consisting of two aldehyde groups joined together by a C-C bond. It has a melting point of 15 C and has a Boiling point of 50.4 C. Glyoxal resembles formaldehyde in many respects. It surpasses formaldehyde in additive power and in its reaction with water to form a stable hydrates, thus: This property of Glyoxal may be of importance in view of the fact that Tanning of hide with aldehyde has been believed by some, to be the reaction between the Enol form of the peptide linkage of the Collagen and the hydroxal form of the aldehyde to establish an ether linkage stable toward hydrolysis. However, most investigators believe the reaction to be between the amino or imino group in the protain molecule and the aldehyde group of the tanning agent. According to the recommended procedure the first step in dialdehyde tannage, is to treat the prepared skin or hide with aldehyde. THIS WATER SOLUBLE MOLECULE PENETRATES THE FIBRES REPlDLY. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910 (IX of 1910) of goods for use by it in the generation or distribution of such energy: ........ ........ ........ The submission on behalf of the State of Haryana was that in order to get the benefit of the exemption, it was required that it should be established before the tax authorities that the cement supplied by the assessee was actually used by the Board (State Electricity Board) in an activity directly connected with the generation or distribution of electrical energy. Repelling this submission, the Court observed as follows in para 10 of the Report: 10. We are unable to accept the submission of Mr. Bana that, in order to get the exemption it must be shown that the goods in question, namely, the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of such energy (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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