Customs classification of Hypalon-40 turned on statutory tariff definitions and trade understanding, not chemical analysis alone.

Hypalon-40 was treated as synthetic rubber, not synthetic resin, because the customs tariff classification had to follow the statutory definition in Chapter 40. The Court gave weight to trade and commercial understanding, earlier appellate classifications, and the Government's import-export policy, and did not treat chemical reports as conclusive. The exemption notification relied on by customs was not accepted as controlling for tariff classification. On that basis, the consignments were permitted to be cleared against payment of duty on the synthetic rubber classification, subject to security for the difference in duty.

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Issues: Whether Hypalon-40 was classifiable as synthetic rubber under Heading 40.01/04 of the First Schedule to the Customs Tariff Act, 1975 or as synthetic resin under Heading 39.01/06, and whether the petitioners were entitled to clearance of the imported goods on the basis of the former classification.

Analysis: The tariff contained a statutory definition of synthetic rubber in Chapter 40, and the classification question had to be decided primarily on that basis rather than by chemical report alone or by a general chemical description. The chemical material placed before the Court was not treated as conclusive against the petitioners. Weight was given to the fact that Hypalon-40 was recognised in trade and commerce as synthetic rubber, that earlier appellate orders had classified it as such, and that the Government's import and export policy also treated Hypalon as synthetic rubber. The exemption notification relied on by the customs authorities was not accepted as for tariff classification.

Conclusion: Hypalon-40 was held to fall within synthetic rubber and not synthetic resin. The petitioners were entitled to clear the consignments on payment of duty on that basis and on furnishing security for the difference in duty.

Final Conclusion: The petitioners succeeded on the core classification issue and obtained release of the goods on protective security terms, while the revenue's contrary classification was not accepted at this stage.

Ratio Decidendi: Where a customs tariff entry contains a statutory definition, classification must follow that definition, and the character of the goods must be determined by the statutory scheme read with trade understanding and the overall evidentiary record, not by chemical test alone.

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