Customs exemption for HDPE with carbon black upheld where product remained identifiable as HDPE and no chemical change was shown

HDPE compounded with 2% carbon black was held to remain eligible for exemption under the relevant customs notification because the addition of carbon black for colour and strength did not, by itself, change the product's identity. The Tribunal followed earlier final decisions on identical goods and found no reliable material showing that the imported material had ceased to be HDPE or been chemically modified into a different product. On that basis, denial of the exemption was unsustainable and the impugned order was set aside.

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Issues: Whether HDPE compounded with 2% carbon black was entitled to exemption under Serial No. 477 of Notification No. 21/2002-Cus.

Analysis: The Tribunal found the present facts to be identical to earlier decided cases concerning HDPE compounded with carbon black. It accepted the settled view that addition of carbon black for colour and strength did not, by itself, justify denial of the exemption in the absence of material showing that the product had ceased to be HDPE or had been chemically modified into a different product. The earlier decisions on the same notification and similar goods had attained finality and were followed.

Conclusion: The exemption was available to the imported goods and the denial of benefit was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded.

Ratio Decidendi: Where HDPE compounded with carbon black remains commercially and legally identifiable as HDPE and no reliable material shows chemical modification into a different product, the exemption under the relevant customs notification cannot be denied.

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