1. The question for consideration in this appeal is the classification of polyethylene glycol of various grades manufactured by the appellant.
2. The appellant manufacture polyethylene glycol ranging an average molecular weight of 200 to 6000 and claimed classification of these goods under chapter heading 29.13.00 of the tariff (in part of the period ) and under heading 29.40 (for the remaining period.) Notice issued to it proposed to classify the product in chapter 39 and also invoked the extended period of limitation in respect of the consignments cleared beyond six months from the relevant date. In the order impugned in the appeal, the Commissioner has held the extended period of limitation not to be applicable, since the appellant had made the department aware the nature of the product but confirmed the classification of the goods in heading 3907.20 of the tariff and demanded duty of clearances made within the normal period of limitation contained in Section 11A of the Act.
3. Chapter 29 covers specified organic chemicals and heading claimed by the appellant is for other organic compounds i.e. those organic compounds not specified elsewhere in chapter 29. The classification confirmed by the Commissioner is heading 39.07 which covers poly acetals, other polyethers and epoxide resins, in primary forms. Before going on to consider the contentions advanced, it is necessary to extract portions of the tariff in order to lay the appropriate background against which the classification could be discussed. Note 1(a) to chapter 29 provides that except where the context otherwise requires, the headings of the chapter apply only to separate chemically defined organic compounds, whether or not containing impurities. Note 2(b) of chapter 29 provides that except by the context otherwise requires, the heading of the chapter requires, the headings of the chapter apply only to separate chemically defined organic compounds, whether or not containing impurities. Note 2 (b) to chapter 39 provides that the chapter does not cover separate chemically defined organic compounds which it indicates would fall for classification in chapter 29. Note 1 to Chapter 39 says that throughout the tariff, the expression "plastics" means those materials of headings 39.01 to 39.14 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Note 6 (a) to chapter 39 provides that in heading 3901 to 39.14, the expression "primary forms" applies only (i) to liquids and pastes, including dispersions (emulsions and suspensions and solutions and (ii) blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms.
4. The first contention of the appellant is that for classification of the goods in heading 39.07, the requirement of Note 1 to Chapter 39, which has been reproduced above, must be satisfied and since this cannot be satisfied, the goods are not classifiable in Chapter 39. This contention is clearly unacceptable. Note 1 to Chapter 39 does not provide that for classification in any of the headings of the chapter, the goods must be plastics as detailed in it. This condition is only necessary in order to define the expression "plastic." The true import therefore is that if any commodity to be considered to be "plastic", for purposes of classification, whether in chapter 39 or elsewhere, it must comply with the requirement of that note. It is further not the departments claim that the item is a plastic. Heading 39.07 does not employ this word at all.
5. Accepting the appellant's contention in this regard would lead to a situation where only plastic can be classified in any of the headings of chapter 3901 to 30.14. This is clearly incorrect. Chapter 39 of the tariff is based on the chapter 39 of the Harmonised System of Nomenclature. Normally all the headings is the Chapter 39 of the tariff are identical to those in the nomenclature. The reference to the Explanatory Notes to determine the scope of the tariff is therefore justified. The Explanatory Notes explain the scope of the heading 3901 to 3911 which is governed by note 3 to chapter and the heading apply only to goods of a kind produced by chemical, synthetic, falling in the following categories (a) liquid synthetic polyolefin, (b) resins not highly polymerised of the coumarone-indene type (c) other synthetic polymers with an average of at least five monomer units, (d) silicones, (e) resols and other prepolymers. The Explanatory Notes explains that the goods in item (e) including other synthetic polymers with an average of at least five monomer units which "include plastics" as defined in Note 1 to this chapter. Thus, of the five categories of the goods here, it is only one group for the classification of which Note 1 to chapter 39 would be relevant. None of the other four categories would be a plastic as defined in Note 1. It is relevant to note that the Explanatory Notes explain that in general the chapter covers substances called "polymers" semi manufactured and articles thereof provided that they are not excluded by Note 2 to the chapter. It is a truism that all plastics are polymers but not all polymers are plastics. Apart from natural polymers which are excluded by application of Note 3, which restricts the headings only to goods of a kind produced by chemical synthesis, other polymers which are clearly not plastic would fall for classification in any of these headings. It is therefore incorrect to say that it is only goods which conform the description of the plastic contained in Note 1 to chapter 39 which can be classified in any of the headings 3901 to 3914 6. The next contention is that the item being a separately chemically defined compound is excluded by virtue of Note 2 to chapter 39 from classification to 39.13. The Harmonised System of Nomenclature defines (in the Notes to chapter 29) a separate chemically defined compound to be a substance which consists of one molecules species eg. covalent or ionic whose composition is defined by the constant ratio of elements and can be represented by a definite structural diagram. Note 2 (a) to chapter 39 excludes from its scope separate chemically defined compounds. Therefore, if any of the grades of polyethylene glycol, that we are concerned with, is conform to definition of separate chemically defined organic compound it would be excluded from chapter 39 and fall for classification in chapter 29. It is contended that detailed technical evidence was produced to demonstrate that the goods were separate chemically defined compound. Reference is first made to the US, British and Indian Pharmacopoeias in which polyethylene glycol and polyethylene medicament from these are referred to. US pharmacopoeia describes polyethylene glycol as an addition of polymer of ethylene exide and water represented by formula H (OCH2CH2)nOH in which N represents the average number of oxyethyelene groups. The average molecular weight is not less than 95% and not more than 105% of the labelled nominal value if the labelled nominal value is below 1000; it is not less than 90% and not more than 110% of the labelled nominal value if the labelled nominal value is between 1000 and 7000; it is not less 87.5% and not more than 112.5% of the labelled nominal value if the labelled nominal value is above 7000. The British Pharmacopoeia refers to polyethylene glycol 1540 which is represented by formula CH2(OH).(CH2OCH2)m CH2OH where m is 28 to 36. It refers to poly ethylene glycol 4000 represented by the same formula as above where m is 69 to 84 and two other grades of polyethylene glycol where m differs. Indian Pharmacopoeia also refers to such grades of polyethylene glycol. The extracts from the Encyclopaedia of Polymer Science and Engineering in a Table referring to properties of polyethylene glycol indicates the molecular weight, depending upon the designation to vary.
7. The extracts from the Encyclopaedia the Chemical Technology by Kirk Othmer which has been reproduced says the chemistry of these glycols centres around there of hydroxyl in which all their chemistry being common to that of the simple alcohols. They react readily to form esters, acetals, ketals, aldehydes, and other derivatives, characteristics of hydroxyl and containing compounds. The Encyclopaedia goes on to say that the commercially available polyethylene glycols are mixtures of many polyethylene glycols. These mixtures are quite reproducible in commercial practice and graphic representation of the distribution of species as given in figures too. The Condensed Chemical Dictionary again defines polyethylene glycol to be a series of colourant water soluble known volatile liquid compounds with an average molecular weight ranging from 200 to at least 6000 and that the general formula HOCH2(CH2 OCH2)n CH2 O or H (OCH2 CH2)n OH, the grades are numbered according to the average molecular weight.
8. These extracts in fact do not support the appellant's case at all.
They clearly indicate that polyethylene glycol is not a separate chemically defined compound in that every polyethylene glycol is the same chemical formula and molecular weight. The two hydroxyl groups which characterised them (CH2 OCH) to vary enormously and even in the same polyethylene glycol different samples may have different hydroxyl group. That is the reason why when reference is made to polyethylene glycol of a particular grade, it refers to an average molecular, weight therefore is not constant but varies. The commercial grades are usually inevitable numbers indicated from to approximate average molecular weights . Thus the average weight of PEG 200, 190 - 210, PEG 300, 285-315, PEG 400, 380-420, PEG 600, 570 - 630.
9. This discussion clearly indicates that polyethylene glycol with which we are concerned with is 300 onwards as clearly not a chemically defined compound. In the light of varying number of hydrosol groups and diferring molecular weight, that each of the grades is a mixture 10. It is not contended that the product in question will not be in primary forms because it is a liquid and requires "curing by heat or otherwise to form a plastic," and that curability is plastic. We have already dealt with this contention that it is only plastics which are classifiable in heading 39 and dismissed it. This contention is also therefore has to be dismissed.
11. Various items of technical literatures such as Encyclopaedia of Science and Chemicals are cited in order to claim that the Commissioner ignored the technical literature. However, it is not explained how this technical literature supports the appellant's case and a perusal by us does not lead us to conclude that it is so.CCE vs Premier Tyres Ltd 1985 (20) ELT 124 which has been upheld by the Supreme Court. The Tribunal in this decision was concerned with classification under the Customs Tariff Act, 1975, of polyethylene glycol 300. It records that the basis for the classification for polyethylene glycol claimed by the departmental representative was that the product was similar to resols, liquid polyisobutylene which latter products, despite having no feasible or obvious reasons plastic characteristics fell for classification in heading 3901/06 of Chapter 39, at the relevant time covered "artificial resins such as condensation, poly condensation, poly addition polymerisation, co polymerisation products; artificial plastic materials, silicones, natural resins, modified by fusion or esterification such as run gums or ester gums; regenerated cellulose; vulcanised fibre; hardened protiens; chemical derivatives of natural rubber; other polymers (including alginic acid, its salts and esters) linoxyn." Note 2 to Chapter 39 provided that in this heading polycondensation, poly addition, polymerisation, co-polymerisation products are to be taken to apply to goods of a kind produced by chemical synthesis answering to one of the following descriptions: (c) resols, liquid polyisobutylene and similar artificial polycondensation or polymerisation products." 13. The department's case before the Tribunal was that clauses (a) and (b) note were not relevant to the goods and therefore the Tribunal was required to determine whether PEG 300 is similar to resols polyisobutylene. It noted that no evidence has been produced by the department in support of its stand that PEG 300 is similar to resols polyisobutylene. It was of the view that Note 2 (c) requires that the similarity with resols and polyisobutylenes of either being resins polymerised to a particular stage or being capable of producing resins by further polymerisation made fully polymerised resins.
14. The structure of chapter 39 of the Central Excise Tariff Act, 1985 is significantly different from chapter 39 of the Central Excise Tariff Tariff Act, 1975. The reference contained in Note 2 (c) in the earlier tariff resols liquid polyisobutylene and similar artificial condensation of polymerisation products does not exist in the present chapter which covers all resols and other prepolymers. Any synthetic polymers with an average of 5 monomer is specified in Note 3 (c). This was not present in the earlier tariff. In the light of this significant and substantial difference, the decision is no authority for determining classification of the commodity in the present tariff.
15. Reliance is next placed upon the decision of the Tribunal in National Organic Chemical Industries vs CCE 2000 (122) ELT 461. In this decision, the Tribunal was concerned with the classification of PEG of the grades 300-1500. In this decision which disposed of appeal by National Organisation and by Vasudha Chemicals, the reasoning of the Tribunal which is contained in paragraph 9 of the reported order runs as follows: "Chapter 39 deals with plastic and articles thereof and Note 1 to chapter 39 lays down the definition of plastic for the purpose of Schedule to the Central Excise Tariff Act. If the product does not conform the definition of the plastic as given in the said Note 1, it cannot be classified as plastic" or articles thereof under chapter 39. We therefore find no substances in the submission of the learned Advocate when merely because the impugned product is 5 monomer units it does not merely by this fact alone would be classifiable under chapter 39 of the Tariff unless and until it is proved by bringing evidence on record that the product is plastic also. We find that no evidence has been brought on record initially which indicates that the products in question is plastic as defined in Note 1 to chapter 39. Nowhere the Chemical Examiner mentioned in the test report that the product tested by him is plastic. It is also mentioned in the test report that the product is polyethylene polymer. Similarly the Collector (Appeals) in the case of Vasudha Chemicals has itself recorded not by holding that once the product conforms to description of the products covered by heading they are not hit by any Chapter Note. This finding goes against the General Rules for Interpretation of the Schedule... The revenue further has not rebutted the finding of the Collector (Appeals) in the case of SM Dye Chemicals Ltd vs CCE that "all the products from PEG 300 to 6000 a separate chemically defined organic compound as they have kept defining molecular structure defined molecular weight which are represented by numbers 300 to 6000 mentioned after PEG... The department has thus not substantiated that the product is not separate chemically defined organic compound." 16. The two bases on which the Tribunal proceeds are that the product is not being shown to be a plastic, as not shown to be separate chemically defined organic compound. It is clearly brought out that there is no requirement in the chapter 39 that only plastic and no other product is classifiable therein. Note 1 of the general rules for interpretation provides that headings of chapters and sections are not to be taken into consideration while determining classification. The fact that the term "plastic" figures in the heading to chapter 39 therefore does not lead to the conclusion that only plastics are classifiable in that chapter. Similarly, unlike in the case of National Organic Chemical Industries Ltd vs CCE andCrust Chemicals vs CCE which followed National Organic Chemical Industries, in the absence of any evidence being produced as to the nature of the products, sufficient materials available before us to conclude that PEG is not a separate chemically defined organic compound.
17. As a result of these discussions therefore the product is rightly classifiable in chapter 39.07. The conclusion of the Commissioner classifying the goods in heading 39.07 has to be confirmed.