Tariff classification turns on evidence of product change, not mere market description as an adhesive.

Coatolex was held classifiable as latex under Chapter 40 rather than as a prepared adhesive under Heading 3506, because mere sale or description as an adhesive was insufficient to fix classification. The decisive factor was whether processing at the assessee's premises had actually increased the product's bonding strength, and there was no evidence of such change. Chapter 40 Note 5 was applied, with no material showing exclusion under Note 5(a) and minor substances being disregarded under Note 5(b) for classification under Heading 40.01. The Commissioner's classification and related exemption position were therefore upheld, and the Revenue's challenge failed.

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Issues: Whether the product "Coatolex" was classifiable as a prepared adhesive under Heading 3506 or as latex under Chapter 40, and whether the exemption notifications applied.

Analysis: Mere sale as an adhesive did not by itself determine classification under Heading 3506. The determining factor was whether processing at the assessee's premises actually enhanced the bonding strength of the latex product, and there was no material to show any such increase. Chapter 40, Note 5 was also examined, and there was no evidence that the product was excluded by Note 5(a); the small percentage of substances found in tests could be ignored under Note 5(b) for classification under Heading 40.01. In the absence of material to displace the Commissioner's view, the Revenue's challenge to the classification and the consequential exemption position failed.

Conclusion: Coatolex was correctly treated as latex under Chapter 40 and not as a prepared adhesive under Heading 3506. The exemption position accepted by the Commissioner was upheld and the Revenue's appeal failed.

Ratio Decidendi: For tariff classification, the mere market description or use of a product as an adhesive is insufficient; the department must establish, on evidence, that the processing has changed the product so as to bring it within the competing tariff heading, and chapter notes governing classification must be applied accordingly.

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