Trade understanding of synthetic tanning agents determined that melamine remained covered by the advance licence.
Melamine was treated as covered by the advance licence under the expression "syntan" because trade understanding, licensing practice, and technical material showed it to be a synthetic tanning agent capable of producing the tanning effect, even if only through reaction with another ingredient. The licensing authority and later licences also treated melamine as a permissible import for that purpose. On that basis, exclusion of melamine from the licence was not justified, and the exemption under Notification No. 203/92 could not be denied.
Issues: Whether melamine was covered by the advance licence as a permissible import under the expression "syntan", and whether the exemption benefit under Notification No. 203/92 could therefore be denied.
Analysis: The material showed that melamine, though not itself the final active tanning substance, was commonly understood and accepted in the trade and by the licensing authority as a synthetic tanning agent. The technical opinions did not rule out its use in leather tanning; rather, they indicated that melamine, with formaldehyde or by polymeric formation in situ, could produce the tanning effect. Subsequent licences also treated melamine as an item permissible for import as a synthetic tanning agent. In that view, the Commissioner (Appeals) was justified in holding that the goods were covered by the licence.
Conclusion: The exclusion of melamine from the licence was not justified, and the Revenue's appeal failed.
Final Conclusion: The order allowing the importer the benefit of the licence and the exemption was upheld, and the appeal was rejected.
Ratio Decidendi: Where a licensed item is understood in trade and licensing practice to include a substance capable of being used as a synthetic tanning agent, the import is to be treated as covered by the licence even if the substance operates through reaction with another ingredient to produce the active tanning effect.
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