Classification of adhesive product as prepared glue rather than primary resin determines tariff treatment and exemption eligibility.

Goods produced through a one-stage reactor process with hardener added at the later stage, and then used directly for bonding, were treated as prepared glue rather than primary resin. The classification turned on the finished adhesive character of the product and the exclusionary effect of Chapter Note 6 to Chapter 39, which was inconsistent with describing the goods as resin in primary form. Revenue's comparison exercise was found unpersuasive because the manufacturing process and chemical comparability were not properly examined, and the supporting test report and invoice-based inference were not reliable on the facts discussed. On that basis, the article states that the exemption dispute depended on classification as prepared adhesive goods.

---

---

Issues: Whether the product manufactured by the assessee was classifiable as primary resin under Chapter 39 or as prepared glue under Chapter 35, and consequently whether exemption under the relevant area-based notification was available.

Analysis: The product emerged from a sequential one-stage process in the reactor/kettle with addition of hardening agent at the later stage, after which the resultant material was transferred for direct use in bonding. The nature of the process, the use of the product as glue, and the exclusionary effect of Chapter Note 6 to Chapter 39 were inconsistent with treating the goods as a resin in primary form. The comparison relied upon by the Revenue was not persuasive because the original authority had not properly examined the assessee's process or the chemical comparability of the products. The test report relied upon by the Revenue was also found unreliable in the circumstances, and the purchase-order based inference was not supported by the supply invoices.

Conclusion: The product was classifiable as prepared glue under Chapter 35 and not as primary resin under Chapter 39. The denial of exemption was unsustainable, and the demand and penalty could not survive.

Ratio Decidendi: A product that emerges after a controlled reaction with added hardener and is put to immediate use as glue is to be classified according to its finished adhesive character, and not as a primary-form resin, when the tariff note and explanatory notes exclude such prepared adhesive preparations from Chapter 39.

---