TMI Blog1984 (7) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 and not under Chapter 29 as claimed by the appellant s (referred to hereinafter for bravity s sake as HOECHST ). 4. The refund claim filed by HOECHST claiming re-assessment of the product under Chapter 29 was rejected by the Assistant Collector of Customs, Bombay and the appeal against the Assistant Collector s order was rejected by the Appellate Collector of Customs, Bombay, by a detailed order. It is this order of the Appellate Collector that is now under challenge before us. 5. We have heard with considerable interest the arguments addressed by the learned Counsel for HOECHST and the learned Representative of the Respondent. We have also perused the record of the case. 6. The submissions for HOECHST before us may be summarised thus :- (a) The product MOWIOL S 50B (the record uses the names : MOWIOL and MOVIOL interchangeably) is not the same thing as normally Poly vinyl alcohol (PVA) in that Sulpho groups are added to the PVA chain by the process of Sulphonation resulting in MOWIOL . (b) The Customs authorities are taking the product under the group condensation, polycondensation, polyaddition, polymerisation and co-polymerisation pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 1983 (12) E.L.T. 174 in which it was held that resins classified under Chapter 39 have, among other things, characteristics of plasticity. (e) The Sulpho group which is introduced in the PVA molecule is present only in a few positions and not all along the chain as should be the case in a polymer. This would be evident by reading of the patent (a copy of which has been filed) which states that PVA shows the effect described in the patent even if, for instance, only one atom of sulphur is present for 500 CH2 - CH - OH - groups. (f) The classification of the subject product had come up for consideration by way of a revision application before the Central Government and, by an order dated 7-5-1971, the Government had come to the conclusion that MOWIOL S 50B was not a plastic article and, therefore, fell outside the scope of Customs Tariff items Nos. 82(6)(A)(i) and 82(6)(A)(iii) as the tariff stood at the relevant time. It is also stated in the said order that, on test of a sample of the product, the Central Revenue Control Laboratory, New Delhi, confirmed the presence of sulphur in combined form. It was also found that it did not possess thermoplasti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) were, the more important ones. (k) The correct classification of the product is under Chapter 29. Chapter note 1(a) would not stand in way of this classification even though the structure of the product is not well defined. (l) If, however, it is held that Chapter 29 is not appropriate, then the next appropriate heading would be 38.01/19(1). 7. The submissions of Shri Sunder Rajan, on behalf of the Respondent, may be summarised as follows :- (a) Hoechst has not produced any literature of the manufacturer in support of the contention that the subject product is a modified form of PVA into which sulpho groups have been introduced. (b) The declaration in the Bills of Entry was as Polyvinyl Alcohol which was also the description in the invoice - PVA in powder form. Chemical test also showed the product to the PVA and this has not been contested. Even Dr. Starck s report refers to the product as PVA. (c) The patent does not refer to Moviol S50B specifically or by implication. The test report furnished by Italab Laboratories shows that the product is not capable of being moulded by heat. It will suffice if a product is mouldable or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal (Appeal No. 599/80-C) (un-reported decision) holding that chloro-sulphonated polythelene, even though a rubber, would still fall under Chapter 39. (h) There is nothing on record to show the characteristics of sulphonated PVA. No evidence has been adduced to show that PVA s characteristics have been changed as a result of sulphonation. (i) Turning to the claim for classification under Chapter 29, reference was made to the fact that only separate chemically defined compounds are covered by the said Chapter. PVA being a polymer and the subject product being a sulphonated derivative of PVA are both of undefined chemical structures and, therefore, they do not fall under Chapter 39. (j) As regards the claim for classification under Chapter 38, it was submitted that the said Chapter takes in only chemical products and preparations not elsewhere specified or included. The subject product being more appropriately covered by Chapter 39 will not, therefore, fall under Chapter 38 because of the application of the Rules for interpretation 3(a) which is a part of the Tariff Schedule. (k) The argument that the subject product is put to an end-use which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 29 in Heading 29.01/45(1) or under Chapter 38 in Heading 38.01/19(1). The concomitant issue is whether additional (countervailing) duty of Customs was leviable on the product with reference to Item 15A of the Central Excise Tariff Schedule. 11. At the outset, we would like to observe that the problem has to be resolved purely based on technical and scientific considerations. Trade or commercial parlance, as ordinarily understood, does not enter into the picture. Of course, the parlance in the technically knowledgeable trade i.e. those who manufacture the goods and those who use it for further manufacture of formulations or preparations understand technical or scientific parlance. For this proposition, we derive support from the Bombay High Court judgment in the case of Chemicals and Fibres of India Ltd., reported in 1982 (10) E.L.T. 917 in which the Court held that since Chapter 39 employed highly scientific and technical terms, the words and expressions used therein must be construed with reference to scientific and technical parlance and not ordinary commercial parlance. 12. The product Mowiol S 50B is stated to be a special kind of polyvinyl alcohol (PVA). Special kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing power or as resin 15. Against the above background, we now proceed to determine the classification of the product under the Customs Tariff Schedule of 1975. At the commencement of this exercise, we must mention that the Government of India, in its Revision-Order dated 7-5-1971 (referred to earlier), had taken the view that the product fell outside the scope of tariff items 82(6)(a)(i) and 82(6)(a)(iii) as they stood at the relevant time, under which additional (countervailing) duty of Customs was charged. The order also contains an observation that in view of the changes in the Central Excise Tariff, the product would attract countervailing duty under Central Excise Tariff item 15A(1)(ii) with effect from 1st March, 1964. Much reliance has been placed on this order by the learned Counsel for the appellants in support of his submission that the product is not a plastic material. 16. We have, at this stage, to note a difference between Items 82(6)(a)(i) and 82(6)(a)(iii) as they stood before 1-3-1964 and the current Customs Tariff Schedule in order to appreciate the submissions of the appellants. The former item read as follows :- 82(6)(a) Plastics, all sorts; (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins; (b) silicones: (c) resols, liquid polyisobutylene and similar artificial polycondensation or polymerisation products. 19. We propose to proceed on the footing that the subject product does not have thermo-plastic or thermo-setting property under application of heat, as borne out by the different reports on samples of the product, including the report of the Central Revenues Control Laboratory. There is, however, no information on the point whether the product has get plastic properties under pressure. It is clear from the Condensed Chemical Dictionary (10th edition) revised by Gessner G. Hawley (page 821), that plastic is something capable of being shaped or moulded with or without the application of heat. In fact, the general notes appearing on page 563, Volume 2 of the CCCN, define artificial resins, and plastic materials as having the common characteristics of plasticity, i.e. of being capable or having been capable at some stage of being formed under external influence usually heat and pressure, if necessary, with a solvent or plasticiser, into shapes which are retained on the removal of the external influence. The shaping processes used include moul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our view, this discussion is academic. For, as statutory Note 2 (extracted in para 18 above) itself makes it clear, the definition given is of the expression condensation, poly-condensation, poly-addition, polymerisation and co-polymerisation products occurring in Heading No. 39.01/06 and not to any other expression occurring in the said heading. 23. As stated earlier, there is no direct information on the point whether the subject product has got plasticity under application of pressure. However, this, in our view, does not pose a problem in the way of ascertaining the classification of the product. In accordance with the general notes appearing on page 568 of Volume 2 of the CCCN, it would suffice if the artificial resin has the characteristic of plasticity, i.e. of being capable or having been capable at some stage of being formed under external influence. At the PVA stage, plasticity characteristic was very much there and, therefore, the subject product would fit in with this concept. Apart from this, we also note from the Merck Index (9th edition) (extracts filed by the D.R.) that Mowiol is shown as a PVA and the use of PVA as a class is shown as in the plastic industry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ... This invention relates to the production of aqueous emulsions or dispersions of very valuable properties by using as a dispersing or emulsifying agent a product obtained by introducing sulpho-groups into polyvinyl alcohol or a water-soluble derivative thereof. The sulpho-groups may be introduced by means of sulphonating agents, such as sulphuric acid, fuming sulphuric acid or chlorosulphonic acid, or by means of an aldehydesulphonic acid or some other organic body containing besides the sulpho-group another active group capable of reacting with the polyvinyl alcohol or water-soluble derivative thereof. ..... The advantage of a polyvinyl alcohol transformed in the manner described above as a dispersing agent, in comparison with pure polyvinyl alcohol, can be seen from the following : If it is attempted, for instance, to polymerise esters with addition of the usual catalysts, such as hydrogen peroxide, in the presence of an aqueous solution of polyvinyl alcohol of the following general formula - (CH 3 CH) X OH the polymerisation proceeds very slow and yields relatively coarse-grained products capable of being filtered from the aqueous liquor as-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... polymer but not a polymerisation product, is, in our view, mere play with words. The subject product, which is stated to be polyvinyl alcohol having sulpho groups introduced in the chain is, therefore, a polymerisation product. 27. Another point which was taken up before us by the learned counsel for Hoechst but not pressed much, is that the subject product is not a product of chemical synthesis. We state this argument only to reject it by observing that synthesis, as defined in the Condensed Chemical Dictionary by G. Hawley (page 989) is creation of a substance which either duplicates a natural product or a unique material not found in nature, by means of one or more chemical reactions . Nothing more needs to be said on this point. 28. The above discussions lead us to the conclusion that Mowiol S 50B falls for classification under Heading No. 39.01/06 of the Customs Tariff Schedule of 1975. It is not, therefore, necessary to consider the alternate classifications urged by Hoechst. Even so, we may observe that the product would not fall under Chapter 29 for the reason that Chapter Note 1(a) specifically provides that the Chapter is to be taken to apply only to separate chemi ..... 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