1990 (5) TMI 107 - AT - Central Excise

Tribunal reclassifies 'Prescol Glue' under Central Excise Tariff, emphasizing technical definitions

The Tribunal held that 'Prescol Glue' should be classified under Item 15A(1) of the Central Excise Tariff as a condensation product and aminoplast, ... Classification Issues Involved:1. Classification of 'Prescol Glue' under Central Excise Tariff.2. Determination of whether 'Prescol Glue' falls under Item 15A(1) or Item 68 of the erstwhile Central Excise Tariff.3. Consideration of molecular weight and water solubility in classification.4. Application of functional test for classification.5. Relevance of technical and scientific definitions in tariff classification.6. Impact of subsequent processing on classification.7. Use of explanatory notes from BTN, CCCN, and HSN in classification.Detailed Analysis:1. Classification of 'Prescol Glue' under Central Excise Tariff:The primary issue was whether 'Prescol Glue' should be classified under Item 15A(1) or Item 68 of the erstwhile Central Excise Tariff. The Assistant Collector classified it under Item 15A(1), which pertains to artificial or synthetic resins and plastic materials. The Collector (Appeals) reclassified it under Item 68, a residual entry for goods not specified elsewhere.2. Determination of whether 'Prescol Glue' falls under Item 15A(1) or Item 68:The Tribunal noted that Item 15A(1) covered condensation products, whether or not polymerized, and included aminoplasts. The product, manufactured by condensation of urea and formaldehyde, was initially classified under Item 15A(1) until 1978. The Tribunal emphasized that the specific entry (Item 15A(1)) prevails over the residual entry (Item 68), as held by the Supreme Court in Dunlop India and Madras Rubber Factory Ltd. v. Union of India and Collector of Central Excise v. Jayant Oil Mills.3. Consideration of molecular weight and water solubility in classification:The respondents argued that 'Prescol Glue' was of low molecular weight and water-soluble, characteristics not typical of synthetic resins. They cited definitions from Hawley's Condensed Chemical Dictionary and Wettington's Dictionary of Plastics. However, the Tribunal found that the Tariff Entry 15A(1) did not stipulate specific molecular weight or water solubility requirements and included modified condensation products. The Tribunal cited various definitions and references, including the Indian Standard Glossary of Terms Used in the Plastics Industry, to support that synthetic resins can be water-soluble.4. Application of functional test for classification:The respondents contended that 'Prescol Glue' should be classified based on its function as glue, under Item 68. They relied on the Supreme Court judgment in Atul Glass Industries Ltd. and Others v. Collector of Central Excise and Others, which applied the functional test in the absence of statutory definitions. However, the Tribunal held that the product's classification should be based on its condition at the time of clearance, not its subsequent use. The Assistant Collector's finding that the product was not glue at the time of clearance, but became glue after adding extenders and hardeners, was upheld.5. Relevance of technical and scientific definitions in tariff classification:The Tribunal agreed with the respondents that Item 15A(1) is highly technical and scientific. It should be construed according to technical and scientific meanings, as held in Chemicals and Fibres India Ltd. v. Union of India and Others and Collector of Central Excise and Customs, Pune v. General Pharmaceutical Pvt. Ltd., Pune. However, the Tribunal found that the product met the technical definition of synthetic resin and aminoplast, as evidenced by various authoritative sources and the respondents' own descriptions.6. Impact of subsequent processing on classification:The Tribunal emphasized that classification should be determined based on the product's condition at the time of clearance from the factory. The subsequent processing and conversion into glue after clearance did not affect its classification. The Assistant Collector's observation that the product was not glue at the time of clearance was upheld.7. Use of explanatory notes from BTN, CCCN, and HSN in classification:The Collector (Appeals) had relied on explanatory notes from BTN, CCCN, and HSN to exclude 'Prescol Glue' from Item 15A(1). However, the Tribunal noted that classification under the Central Excise Tariff Act was not dependent on BTN, as held by the Supreme Court in Atul Glass Industries Ltd. and Others v. Collector of Central Excise and Others. The Tribunal found no material to show that the product was for retail sale in packages not exceeding 1 Kg, a condition for classification as glue under the explanatory notes.Conclusion:The Tribunal concluded that 'Prescol Glue' was correctly classified under Item 15A(1) by the Assistant Collector, as it was a condensation product and aminoplast. The Collector (Appeals)'s reclassification under Item 68 was erroneous. The appeal filed by the Revenue was allowed, and the impugned order was set aside.