1. The appellants are aggrieved with the order-in-appeal passed by the Collector (Appeals) Bombay rejecting their prayer for granting the benefit of notification No. 88/89-Cus. (Sr. No. 3) as amended by notfn.
No. 301/88-Cus. and 133/86-CE as amended by 55/88-CE (Sr. No. 14) in respect of their imported product "Noryl brand styrene modified Polyphenylene oxide''.
2. The benefit of the above said notification were denied to them on the ground that these are blend of PPO and polystyrene. A show cause notice dt. 6.2.1989 was issued to them on the ground that the goods Noryl modified PPO is not a plain PPO but a blend of PPO polystyrene.
It was contended that since the goods were co-polymers of PPO and not only PPO, the benefit of exemption notification No. 88/87-Cus. (S. No.3) cannot be extended. For the same reason, it was contended that benefit of notification No. 133/86-CE as amended by notification No.55/88-CE under Sr. No. 14 covering PPO could not be extended. It was alleged that the goods are modified PPO to the extent that these are the blend of PPO and polystyrene. It was alleged that the goods cannot be considered as even chemically modified PPO; as in the later case the chemical chain of the PPO has to be modified, when in the imported goods, it is not so. A technical opinion of the goods was taken as per T.O. No. 1650 dt. 24.2.1988 and it was relied upon. This Technical opinion stated that the goods are blend of polyphenylene oxide and in fact polystyrene. It further states that it is not straight polyphenylene oxide resin. The importer's Test report relied by them, also was cited in Show Cause Notice, and department claimed that even by this technical opinion, the goods are polyblend of PPO and in fact, modified resin are polystyrene and polybutadiene styrene. The department also relied on the literature of the goods produced by the importer and quoting from it, alleged that nowhere it established that the goods are straight PPO; nor chemically modified PPO but are polymeric blends. Therefore, under these circumstances, the importer was called upon to explain as to why their claim for the benefit of the notification in question should be denied and goods be assessed to normal rate at 100% + 45% + 40% CVD.3. The importer filed a detailed reply to the SCN by its reply dt.
14.3.1989 during the contention of the department. It was contended that the goods described in the Bill of Entry and other relevant documents is as 'polyphenylene synthetic Resin.' They are sold, marketed and known in trade parlance as 'PPO'. It was contended that the goods have all the properties and characteristics of PPO. The specific gravity, Rockwell, hardness, tensility and temperature range and other properties of the subject goods are in the range of PPO. It was contended that the imported goods have all the essential characteristics of PPO like being double in most aromatic and chlorinated hydrocarbons; being insoluble in alcohols, ketones, aliphate hydrocarbons and water and that they are highly resistent to hydrolysis, acids and bases and detergents. They relied on the definition of the term 'PPO' as appearing at page 856 of the Harleys 'The Condensed Chemical Dictionary'. They also contended that the imported goods are derived by oxidative polymerization of 2,6 dimethly phenol in the presence of a catalyst; relying on the indenting agents' letter dt. 20.2.1989. They also rely on the suppliers literature titled 'NORYL MODIFIED PPO Resin", by which it could be gathered that the basic properties, application and use of the subject are that of PPO.They contended that although polystyrene is present, yet it does not change the nomenclature identity, properties and use of the subject goods as PPO. They contend that the presence of polystyrene merely help in processing the blend in conventional plastics processing equipments since PPO purely by itself is not amenable to processing on conventional plastic processing equipments like injection moulding machines or extruders. They contend that polystyrene is suitably added to achieve processibility, keeping in view the end product parameters.
They contend that despite the presence of polystyrene, the subject goods have all the properties characteristics, chemical resistance and diamentional integrity of PPO.4. They have further contended that the description polyphenylene oxide given against Sr. No. 3(i) of the table annexed to the said notification is by itself generic. They contend that the term "polyphenylene oxide" includes all forms, kinds and grades of PPO. They contend that as long as the subject goods have all the attributes and physical properties of PPO, the same are covered by the description given against the said sr. No. 3(i) of the table annexed to the said notification No. 88/87-Cus. regardless of the presence of polystyrene.
They contended that the said notfn. No. 88/87-Cus. does not specify any particular grades, forms of PPO with certain parameters or properties to which alone the benefit is restricted and hence, they contend that the imported goods are also included in the definition of 'polyphenylene oxide' given in sr. No. 3(i) of the table annexed to the said notification No. 88/87-Cus.
4. They contended that in the notification No. 301/88-Cus. the term used, are "including chemically modified PPO" and therefore, the imported goods are included in this notfn. also. They have stated that by reliance on the Test opinions, the goods are entitled for the benefit of the notfn. in question.
5. The Asstt. Collector after affording full opportunity he has held that: i) The original product when tested by the infra red spectra shows presence of both PPO and polystyrene.
ii) The separation of PPO and polystyrene is possible by physical methods. The amount of polystyrene is 5 to 6%; 94-95% being PPO. iii) The two separated components when examined under Infra red spectra give graph which compare well with the standard graph of PPO as obtained from literature and standard graph of polystyrene taken in the laboratory.
iv) The results of the spectra therefore, conform that the product of Noryl under consideration is physically modified PPO containing S to 6% of polystyrene.
6. Therefore, the Asstt. Collector rejected the importer's claim that the imported item in polyphenelene oxide. He has held that polyphenylene oxide is a chemical name and it refers to the said polymer without any modification in primary form, whereas, the imported item as per TR/TO is a polyblend. He has relied on the book 'The Modern Plastics Encyclopaedia 86" at page 36 which states that blends of PPO with polystyrene form true alloys, by allowing the resin, gains better moldability and a wide range of physical properties become available.
He rejected the Trade and commercial parlance understanding on the ground that as per the manufacturers' literature itself the item has been described as modified polystyrene oxide as distinct from the unmodified PPO resins.
7. As regards the objection of importer regarding interpretation of chapter notes into the notification, the Asstt. Collector has held that the preamble to the notification states that the exemption is given for goods falling under chapter 39. He observes that in order to find out which of the goods fall under chapter 39, the reading and application of chapter notes become relevant. The Asstt. Collector has held that polyphenylene oxide is also not a chemically modified polythylene oxide. He has further held that polyphenylene oxide is a scientific term, which is the name of specific polymer having a particular chemical structure and therefore according to Asstt. Collector, polyphenylene oxide and chemically modified polyphenylene oxide are both being distinct and separate identifiable commodities and hence the benefit of the notification could not be extended to them.
8. The learned Collector (Appeals) has upheld the findings of the learned Asstt. Collector. He has observed that the goods are marketed under the brand name of "NORYL" as modified PPO resin and that they are various grades of such modified PPO resins like NORYL 160, NORYL 180, NORYL SE 90 etc. He has also held that commercial availability of a product is not the criteria to interpret or to widen the scope of any entry in a notification. He has held that if the goods differ from the description given in the notification, then the goods cannot be included under that notification by giving further meaning if not explicitly provided therein. As such the importers' pleas for benefit of notification were all rejected by the Collector (Appeals).
9. We have heard Shri Vikram Nankani, learned advocate for the appellant and Shri L.N. Murthy, learned JDR for the revenue. Shri Nankani highlighted the contention of the importer raised in their reply to the show cause notice. He referred to the words occurring in the amended notification No. 301/88 dt. 1.11.1988 which stated "polyphenylene oxide including chemically modified polyphenylene oxide". He contended that the product had not undergone any chemical change and it was merely physically modified without any change in chemical formula or its properties which fact the department had not disputed and had accepted it. In this connection, he relied on the certificate of Dr. Potnis an expert, who had opined that polystyrene had been added for improving the quality of PPO and such addition of polystyrene would not in any way deprive them from claiming the benefit. In this connection, he contended that the description in the notification was only generic in nature and therefore, would cover all kinds of PPO without any restriction and would thus include plain ones, chemically and physically modified ones also. He contended that the PPO imported was with 5% styrene only and by its addition the PPO had not changed in its name, character properties or its use. He relied on the following rulings: In this case, the description in the notification was PMM co-polymer. The product in question was obtained from PMM copolymer, yet the benefit of the notfn. was extended.
10. He contended that Chapter notes were not relevant for interpreting the notifications and in this connection relied on the rulings as given in the case of (i) Keltron Power Devices v. CC (ii) Guest Keen and William (sic) Ltd. v. CC .
10A. He contended that what is implicit in notification had been made explicit by amending the notification by adding the words "including" and in this connection relied on the ruling rendered in the cases of (i) Regional Director ESI Corporation v. High Land Coffee Works and Ors.--as . (ii) 1983 ECR 65--Commissioner 11. He contended that the lower authorities have not given any finding on exemption of additional duty as provided under notification No.133/86-CE dt. 1.3.1986. In this connection, he relied on the rulings rendered in the case of AC Jain Engineer (sic) v. CC Bombay .
11A. He contended that entire 15,000 kgs. of the imported material is available for exemption from "Cus. duty and CVD regardless of classification". However, he contends that 9500 Kgs. would be exempted from duty after the amendment to the notification. However, he stated that the Asstt. Collector can still verify for the exemption for CVD under Tariff 3909.30.
12. Shri L.N. Murthy, learned JDR countering the arguments of the learned advocate submitted that admittedly the goods were modified PPO and that they were neither pure or even modified PPO. Referring to the definition of the term 'blended' and 'modified (PPO)' as appearing at p. 139 and 699 and 856 respectively in 'Hawley Condensed Chemical Dictionary' X Edn., he submitted that the imported product is different from the one mentioned in the notification and thus the lower authorities are justified in rejecting the prayer for the exemption.
Shri Murthy also relied on the Test report as well as the party's product literature in support of this contention. He contended that the notification did not specify all type of 'PPO' and blended PPO being different, the benefit of the exemption cannot be extended in this case. He relied on the following citations in support of his arguments.Dairy Products Co. Regd. Gauhati v. The Union of India Shri Nankani in reply referred to pages 25, 35, 49, 60 and 78 of paper book to assert that the impugned product is not different from PPO by mere addition of styrene.
13. We have carefully considered the submissions made by both the sides and examined the case records. The question that arises for our consideration is as to whether the imported goods described in Bill of Entry as "polyphenylene synthetic Resin" classified under Chapter heading 3901.10 of the First Schedule of Customs Tariff Act, 1985 (sic) is entitled to the benefit of exemption notification No. 88/87-Cus. dt.
1.3.1987 (sr. No. 3) as amended by the notification No. 301/88-Cus. dt.
1.11.1988 and for the same reason the benefit of notifn. No. 133/86-CE as amended by notfn. No. 55/88-CE under Sr. No. 14.
13A. The relevant portions of the notification No. 88/87-Cus. dt.
1.3.1987 (Sr. No. 3) notification No. 301/88-Cus. and notfn. No. 133/86 as amended by notfn. No. 55/88-CE (Sr. No. 14) is reproduced below: Effective rates of duty have been prescribed for specified plastics and articles thereof.
In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Govt. of India in the Ministry of Finance (Department of Revenue) No. 150/86-Customs, dated the 1st March, 1986, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) specified in column (2) of the Table hereto annexed, when imported into India, from so much of that portion of duty of customs leviable thereon which is specified in the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table: Provided that nothing in this, notification shall affect the exemption granted under any of the notifications of the Government of India for the time being in force, from the duty of customs specified in the said First Schedule in respect of the goods referred to in this notification.03.
The following goods, namely:- 20% ad valorem i) Polyphenylene oxide 301/88-Cus. dt. 1.11.1988: Concessional rate of 20% basic duty available for chemically modified polyphenylene oxide also--In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 88-Customs, dated the 1st March, 1987, namely: In the Table annexed to the said notification, against Sl. No. 03, in column (2) for the words "polyphenylene oxide" the words "polyphenylene oxide including chemically modified polyphenylene oxide" shall be substituted." (Cen-Cus Customs Tariff 1988-89 P. IV/534).
Effective rates of duty for various thermosetting resins and engineering Plastics: In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in Column (3) of the Table hereto annexed and falling under the heading Nos. or subheading Nos. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon, which is specified in the said Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table.
The Table1.
3909.30 Polyphenylene oxide 20% ad valorem Explanation: For the purpose of this notification the expression "resins", wherever it occurs shall be taken to include moulding powders of such resins also.
2. This notification shall be in force upto and inclusive of the 30th day of June 1988.
(Notification No. 133/86-CE, dated 1.3.1986 as amended by Notifications No. 89/87-CE, dated 1.3.1987; No. 239/87-CE, dated 26.10.1987 and No. 55/88-CE dated 1.3.1988).
The department drew samples of the impugned goods and the extract of Test report No. 1868 dt. 6.5.1988 is reproduced below: Sample is in the form of granulex. It is styrene modified poly (phenylene oxide) resin.
The goods had been warehoused under-bond on 9.5.1988. It was assessed to duty under Schedule 3901.10 of the First Schedule of the Customs Tariff Act, 1975 and assessed to duty at the rate of 100% + 45% + 40% ad valorem. On 1.10.1988, the appellants are said to have filed Bill of Entry for ex-bond clearance for home consumption.
However, at this stage, a dispute arose and the appellant approached Bombay High Court in writ and the Hon'ble High Court directed the department to clear the goods on the admitted duty and on furnishing bond for duty difference. The department thereafter issued show cause notice dt. 6.2.1989 asking them to show cause as to why the duty should not be charged at the rate of 100% + 45% + 40% ad valorem on the grounds enumerated above. The appellants' case is also suited. Their reliance is on their product literature appearing at page 35, which states that ':NORYL is a modified polyphenylene oxide (PPO) resin manufactured by General Electric Plastics". It slates "Typical NORYL resin properties, dependent upon the grade lie within the following range:D648) 900-l50C*lzod impact 75-400 J/m*UL Flammability Ratings 94HB 94V-0.94-5V*Flexural modulus 2000-10000 MPa The above combination of properties which can be adopted to the needs of each particular application, makes NORYL resin the material of choice for highly automated low cost manufacturing of engineering application.
Noryl resins comprise a family of products, all featuring the following unique combination of properties.
Query: Whether modified polyphenylene oxide and Polyphenylene oxide mentioned in the notification 150/86 are same and whether benefit of Notification is available for the goods.
Noryl is the trade name of General Electric from PPO (Polyphenylene oxide) based Engineering thermoplastic for blend of polypropylene oxide and impact polystyrene. It is styrene modified polyphenylene oxide resin. It is not a straight polyphylene oxide resin. Hence, both cannot be the same.
Appraising Department may decide the applicability by Notification No. 150/86.
The terms "blend" "modification" and "PPO" as appearing at pages 139, 699 and 856 of the Harleys Condensed Chemical Dictionary (Tenth Edition) is also reproduced below: Blend--A uniform combination of two or more materials, either of which could be used alone for the same purpose as the blend. For example, a fabric may be blend of wool and nylon, both of which are themselves unable as fabrics. Instances of materials that are often blended are: Modification. A chemical reaction in which some or all of the substituent radicals of a high polymer are replaced by other chemical entities, resulting in a marked change in one or more properties of the polymer without destroying its structural identity. Cellulose, for example, can be modified by substitution of its hydroxyl groups by carboxyl or alkyl radicals along the carbon chain. These reactions are usually not stoichiometric. Their products have many properties foreign to the original cellulose, e.g. water solubility, high viscosity, gel and filmforming ability.
Other polymeric substances that can undergo modification are rubber, starches polyacrylonitrile and some other synthetic resins. See also cellulose, modified.
PPO.--Trademark for polyphenylene oxide. Properties: Engineering thermoplastic. Light beige, opaque sp. gr. 1.06; Rockwell hardness (R scale); 118-120; tensile modulus at 22.7"C 3.6 to 3.8 x 10 psi; self-extinguishing, useful temperature range of more than 3320 C; excellent mechanical properties and dielectric characteristics; soluble in most aromatic and chlorinated hydrocarbons; insoluble in alcohols, ketones, aliphatic hydrocarbons, and water. Highly resistant to hydrolysis, acids, bases and detergents.
Derivation: Oxidative polymerization of 2.6 dimethyl-phenol in the presence of a copper-aminecomplex catalyst.
Uses: Dielectric components; hospital and laboratory equipment; pump housings; impellers, pipe, valves and fittings required by chemical and food industries; substitute for die-cast metals; nose cones for space vehicles.
14. The definition of PPO' appearing at page 721 of the Ninth Edn.
extracted at page 75 of the Paper Book is also reproduced below: PPO. Trademark for polyphenylene oxide. Properties: Excellent engineering thermoplastic. Light beige, opaque sp. gr. 1.06, Rockwell hardness (R scale) 118-120; tensile modulus at 730 F 3.6 to 3.8 x 10 psi; self-extinguishing, useful temperature range of more than 6000 F, excellent mechanical properties and dielectric characteristics; soluble in most aromand. and chlorinated hydrocarbons; insoluble in alcohols, ketones, aliphatic hydrocarbons and water. Highly resistant to hydrolysis, acids, bases and detergents.
Derivation: Oxidative polymerization of 2.6 dimethyl-phenol in the presence of a copper-amine-complex catalyst.
15. Now it has to be seen in the light of these materials on records as to whether the impugned product is eligible for the exemption of the notifications in question.
16. In this case there are two notifications in question one under the Customs Tariff Act and another under the Central Excise Tariff Act. The Customs Act notifn. No. 88/87-Cus. dt. 1.3.1987 and notifn. No.301/88-Cus 1.11.1988; while the Central Excise notfn. is No. 133/86-CE as amended by notfn No. 55/88-CE. The Customs notifn. Exempts goods specified in Schedule falling under Chapter 39 of the First Schedule of Customs Tariff Act, 1975. The impugnned goods have been classified under chapter sub-heading 3901.10 of the First Schedule of Customs Tariff Act, 1975. The Excise notifn. No. 133/86-CE as amended by notifn. No. 55/88-CE exempts "polyphenylene oxide" falling under sub-heading 3909.30. This notfn. has not been considered. But there is the opinion of Dy. Chief Chemist at page No. 49 of Paper Book. On this point the Dy. Chief Chemist has to say as follows: While Central Excise Tariff specifically mention polyphenylene oxide under chapter sub-heading 3909.30 such a mention is not there in the Customs Tariff, by eliminating the sub-heading 39.20 covering other polyethers covers appropriately for polyphenylene oxide.
Under both these sub-headings in this two tariffs there is no separate entry like 39.09.39 other or by 39.07.29 either to cover copolymers and polyblends etc. Hence, by virtue of the sub-heading note 14 NORYL would merit classification as polyphenylene oxide only.
17. Both the lower authorities have considered both the notifications although the learned Asstt. Collector has not given specific findings.
In view of this piece of material, we are considering the applicability of both the notifications.
18. The main reason for the lower authorities to deny the benefit of the notifications in question is that the product in question is not pure PPO but has the presence of styrene and therefore both commercially and chemically they are different products. The importer has heavily relied on the evidence produced by them and have asserted that the presence of styrene does not in any way change the name, characteristics & properties of the PPO and it continues to be the same. Both the parties are relying on the chemical opinion. The Chemical examiners report dt. 25.5.1988 (at page 60 of Paper Book) is that "it is styrene modified poly (phenylene oxide) resin. It is not a straight polyphylene oxide resin. Hence both cannot be same." But the Test report dt. 6.5.1985 of the samples reads "Sample is in the form of granules. It is a styrene modified poly (phenylene oxide) resin." Therefore, the Importer has admitted the presence of styrene. But their contention, as stated earlier, is that this presence of styrene docs not change the PPO. In support of this contention, they rely on the certificate dt. 28.3.1989 of an expert Dr. Potnis (at page 83 of PB) Department of Chemical Technology, University of Bombay states that he has physically examined the five grades of 'Noryl' modified PPO resin imported by Importer herein by Chemical Tests, separation and studying the original products as also separated components by the infra spectra and has given his findings and his opinion is as follows: With my knowledge in the field of plastics for the last 33 years and the results of actual testing using chemical methods and infraved spectroscopy, I confirm that the product under consideration is PPO chemically modified with 5-6% of polystyrene; Because the product is 95% plus PPO it is to be taken as polyphenylene oxide only, for all purpose including excise/customs classification.
19. Although Dr. Potnis is a plastic expert, he is not an expert on classification. It is observed that in most of his opinions and certificates produced on his behalf in many cases coming before us, he is giving his opinion on the classifications under excise and customs also. Such an exercise should be avoided by him; just as the Chemical Examiner of the department has been advised by this Tribunal and Higher Authorities. However, the department has not challenged this certificate and therefore, the. credibility remains on record. The IPC Ltd. has also given their opinion, which is extracted above. The write up extracted above states: Due to its high melt viscosity and high processing temperature, processing of PPO in its pure form is difficult. However, to utilise the property advantages offered by PPO in various engineering applications it is modified; by blending polystyrene to obtain improved processability.
20. This slight modification of PPO to make it processability make it a different product or goods. The best answer to this question is to find out as to whether this process is a merely physical one or such a process as to make it a completely different one and what emerges from the processing results into a different commercial product or goods.
The evidence on record including the department's reports do not suggest that the product by physical mixing of styrene in PPO has made PPO lose all its properties both physical, chemical and its nature is also changed. Therefore, even by such physical/chemical mixing of styrene, the product remains as PPO' as noted by experts, whose opinion we cannot change unless the department had placed better evidence before us, which has not been done. To say that by physical/chemical mixing of styrene to an extent of 5% requires an clinching evidence both of technical and commercial, which is not available on record. The appellants have discharged their burden to claim benefit of the notification No. 88/87-Cus. As regards the amended notification No.301/88-Cus. dt. 1.11.1988, the words are "Polyphenylene oxide including chemically modified polyphenylene oxide." Therefore, by this inclusive clause, the modified PPO by styrene comes into this clause. The opinion at page 79 states 'polyphenylene oxide is the Regd. trademark for 1,4 (2,6 diamethylphenyl) oxide manufactured by M/s General Electric plastics. This thermoplastic material is produced by oxidative coupling reaction of 2,6 dimethyl phenyl in presence of a catalyst. In the process of reaction water molecules are eliminated along with formation of the polymer.' 21. Dr. Potnis has given the process of PPO being modified. Therefore, by reading these materials the modified PPO would also be eligible for the benefit.
22. In the case of ICI India Ltd. v. CCE (supra) the question was interpretation of sl. No. 8 of notifn. No. 241/82 which mentioned "polymethyl methacrylate." It was held that the notification did not stipulate that the concessional rate of 15% ad valorem duty is applicable to polymethyl methacrylate in its pure form or only to polymethyl methacrylate Homopolymer resin and not co-polymer resin.
Therefore, on this reasoning, it was held that the concessional rate of duty could not be denied to the appellants' products which were admittedly polymethyl methacrylate merely because they are copolymer resin containing some other methacrylate monomers in addition this ruling is of assistance to the appellants in this case.
23. In the case of Heli Plastics Ltd. the notifn. No. 227/76-Cus.
exempted each of the articles specified in the Table annexed thereto and falling within Chapter 39 of the CTA 1975 from payment of duty. Sl.
No. 4 of the Table specifies the article exempted as 'polypropylene'.
The goods in this case were Vastolen P. 6522 Grey and Vestolen 6502, which was classified under Chapter 39 of the CTA 1975. The department had urged that these goods are block co-polymer as distinct from polypropylene and hence not eligible for exemption. This bench after examining the case held that the goods were marketed as polypropylene.
It was also observed that the notification did not specify the sub-heading but only required the goods should fall within Chapter 39 of the Customs Tariff Act 1975 of which there was no doubt. Therefore, it was held that both these goods were entitled for the benefit of the notification.
24. In Bakelite Hylam Ltd's case (supra) the question of grant of exemption to product "Hylak Polyster Resins" came up for consideration while interpreting the notification No. 70/84 which exempted "maleic resins" and the bench concluded as follows: The question then boils down to whether the subject resins are "maleic resins". On this question we have the expert evidence (in the shape of affidavits) of Dr. Potnis and Dr. Mukherjee to the effect that the synthetic resins prefixed by the grade reference 'HSR' manufactured by the appellants, are nothing but chemically modified maleic resins. The Chemical Examiner of Customs has held that the presence of phthalic anhydride militates against the products being called maleic resins. But this aspect has been explained by both the above experts who have stated that phthalic anhydride is used for modification of the resin based on only maleic acidlanhydride and polyhydric alcohol which has got problems of gelation. (The opinion has been referred to earlier). This remains uncontrovertcd. Chemically modified maleic resins are included in the definition of "maleic resins" in notification No. 70/84.
It is not the Revenue's case that the subject goods are blends of maleic resins with other artificial of synthetic resins which are excluded from the definition of "maleic resins.
In the light of the foregoing discussions, we are of the view that the subject goods are "maleic resins" within the meaning of the term in notification No. 70/84. Accordingly, we set aside the impugned order and allow the appeal with consequential relief to the appellants.
25. In the case of Guest Keen Williams Ltd. case (supra) it has been held that the Section notes and Rules of Interpretation of the Customs Tariff Act 1975 are explicitly intended to be for the interpretation of the Tariff and its various Headings and not to the interpretation of the exempted notification. This citation answers the finding of the Asstt. Collector in the Order-in-original that Chapter notes are relevant to interpret the notification. Therefore, the Asstt.
Collector's said observation is not acceptable 26. The learned JDR relied on the ruling of M/s Health Ways Dairy Product (supra) the Hon'ble Supreme Court was examining the question of classification of condensed milk and condensed skimmed milk and held it to be the different products.
27. After considering the materials on record the Hon'ble Supreme Court has held that as follows: In common parlance milk means the full cream milk as milched from the cattle. It becomes skimmed milk when cream i.e. fat is extracted from milk. Thereafter the skimmed milk which also can be called a form of preparation of milk is known as such. It becomes easy to digest and is used in preparation of outer milk products which are different from the milk products prepared from full cream milk." The Hon'ble Court further held that Central Govt. when it mentioned condensed milk in the notfn. dt. 1.3.1970 it meant to exclude from exemption only condensed milk full of cream milk and not the condensed skimmed milk prepared from skimmed milk, for purpose of levy of excise duly. Therefore, the Hon'ble Court held that skimmed milk was not excluded from exemption under the said notification.
28. Thus this ruling is clearly distinguishable from the facts of this case and is not applicable.
29. The oilier two rulings relied by learned JDR are Goodlass Nerolac Paints (supra) and Reichhold Chemicals India Ltd. (supra). In Reichhold's case the Bench was examining the question of exemption of duty under notification No. 156/65 and 122/71 under TI 15A in respect of polyster resins and held that the products polylite 8001 and polylile 93-410 were "alkyd resins" and gave a finding that the expression "alkyd resins" came to be defined by way of an explanation only on 1.6.1971 by amending notification 122/71. It was held that the definition introduced on 1.6.1971 cannot be applied to the prior period to the disadvantage of the, appellants, particularly in the context of the overwhelming evidence in technical literature to conclude that in technical parlance, polyster resins were covered by the broad description of "alkyd resins". The contention of revenue is that the explanation introduced on 1.6.1971 was classification in nature was also rejected. The department had taken a view that the two products were not alkyd resins but unsaturated polyster resin. Thus it can be clearly seen that this ruling has no application to the facts and circumstances of the case.
30. In Goodlass Nerolac Paints dt. 1.6.1971 as amended and to consider as to whether "modified Short Oil Linseed Oil Alkyd" for internal consumption inside the assessee's own factory is covered by the expression Alkyd resin as defined in the said notification. The Test report had revealed that this product is "composed of synthetic resin based on polybasic acid, polyhydric alcohol, mono basic fatty acid, resin and formaldehyde and the assessee had used about 15% of paraformaedehyde on phthalic anhydride content. It was contended that in view of the test report, this product would not come within the scope of definition of the said notification for claiming exemption from payment of duty under TI 15A. As can be seen from these facts and the wordings of the notification in question, the expression had to be interpreted in the restricted definition and scope of the term "Alkyd Resin" used in the notification. Hence, the facts and circumstances of this case is not applicable to the present case.
31. There is no restricted scope or definition of the expression 'polyphenylene oxide' in the notification No. 88187-Cus. dt. 1.3.1987.
By amending notification No. 301/88-Cus. dt. 1.11.1988 the word "Polyphenylene oxide" has been amended to mean "polyphenylene oxide including chemically modified polyphenylene oxide." 32. In view of our findings and the rulings relied by the learned Advocate, the appellant has made out a clear case for the grant of the exemption in the notification in question.
larger Bench has held that mixing of duty paid epoxy resin with fillers to make the resin more readily usable does not amount to manufacture as no new commercial product has emerged. This ruling of non emergence of a new product by mere mixing of epoxy resin with fillers is more apt to the present case than the ones relied by the revenue. The rulings relied by the learned Advocate are also applicable to the facts of this case.
34. In the result, the appellants succeed and the appeal is allowed with consequential relief, if any.