1975 (10) TMI 94 - SC - Customs

Court classifies V.P. Latex under Indian Tariff Act, rejects government's end-use classification.

DUNLOP INDIA LTD. & MADRAS RUBBER FACTORY LTD. Versus UNION OF INDIA AND OTHERS

The court classified V.P. Latex under Item No. 39 of the Indian Tariff Act, 1934, as 'rubber raw,' rejecting the Central Government's classification under ... Whether the substance known as Pyratax-Vinyl Pyridine Latex (for short, V.P. Latex) is not rubber raw classifiable under Item No. 39 of the Indian Tariff Act, 1934? Held that:- In the state of the evidence before the revisional authority no reasonable person could come to the conclusion that V.P. Latex would not come under rubber raw. The basis of the reason with regard to the end-use of the article is absolutely irrelevant in the context of the entry where there is no reference to the use or adaptation of the article. The orders of the authority are, therefore, set aside. In the result the appeals are allowed with costs. Issues Involved:1. Classification of V.P. Latex under the Indian Tariff Act, 1934.2. Imposition of customs duty and/or countervailing duty on V.P. Latex.3. Interpretation of the term 'rubber raw' and its applicability to V.P. Latex.4. Relevance of the end-use of V.P. Latex in its classification.Comprehensive, Issue-Wise Detailed Analysis:1. Classification of V.P. Latex under the Indian Tariff Act, 1934:The primary issue was whether V.P. Latex should be classified under Item No. 39 of the Indian Tariff Act, 1934, as 'rubber raw' or under Item No. 87 as 'an aqueous dispersion of synthetic resin.' The appellants argued that V.P. Latex is synthetic rubber latex and should be classified as raw rubber. The Central Government, however, classified it under Item 87, leading to higher customs duty.2. Imposition of Customs Duty and/or Countervailing Duty on V.P. Latex:The Central Government's classification of V.P. Latex under Item 87 resulted in a higher customs duty. Additionally, the government imposed countervailing duty under Item No. 15A, C.E.T. The appellants contested this classification, arguing that V.P. Latex should be classified under Item 39, which would result in a lower duty.3. Interpretation of the Term 'Rubber Raw' and Its Applicability to V.P. Latex:The appellants contended that V.P. Latex is a synthetic rubber latex and meets all the criteria for being classified as raw rubber. They cited several authoritative sources and technical definitions to support their claim. The court noted the chemical composition and physical properties of V.P. Latex, concluding that it is similar to other synthetic rubber latices and should be classified as raw rubber.4. Relevance of the End-Use of V.P. Latex in Its Classification:The Central Government's decision was primarily based on the end-use of V.P. Latex as an adhesive in the tyre industry, rather than its chemical composition. The court held that the end-use of the product is an extraneous consideration and should not influence its classification. The court emphasized that the classification should be based on the condition of the article at the time of importation and its common parlance understanding in trade and commerce.Judgment:The court concluded that V.P. Latex should be classified under Item No. 39 of the Indian Tariff Act, 1934, as 'rubber raw.' The court found the Central Government's reliance on the end-use of V.P. Latex to be an irrelevant factor in determining its classification. The court set aside the orders of the Central Government and allowed the appeals with costs. The court did not express an opinion on the issue of countervailing duty under Section 16AA of the First Schedule to the Central Excises and Salt Act, 1944.