1990 (11) TMI 218 - AT - Customs

Classification dispute: Isocyanate under Heading 3909.50 upheld, but Heading 2929.10 applied in separate judgment.

VOLTAS LTD. Versus COLLECTOR OF CUSTOMS

VOLTAS LTD. Versus COLLECTOR OF CUSTOMS - 1991 (52) E.L.T. 48 (Tribunal) Issues Involved:1. Classification of Isocyanate under Heading 2929.10 or 3909.50 of the Customs Tariff Act (CTA), 1975.Detailed Analysis:Classification of Isocyanate:The primary issue in these appeals is whether 'Suprasec DND Isocyanate' should be classified under Heading 2929.10 or 3909.50 of the Customs Tariff Act, 1975. The appellants, Voltas Limited, imported 'Suprasec DND Isocyanate' and 'Daltolack 1235 Polyol' for the manufacture of Polyurethane. The Assistant Collector of Customs classified Isocyanate under Heading 3909.50, which was confirmed by the Collector of Customs (Appeals), Bombay. The appellants contested this classification, arguing that Isocyanate should be classified under Heading 2929.10 as it is a chemically defined organic compound.Appellants' Arguments:1. Nature of Isocyanate: The appellants argued that Isocyanate is a raw material used for making Polyurethane and by itself cannot be classified as Polyurethane. They contended that Note 2(b) under Chapter 39 of the Customs Tariff excludes chemically defined organic compounds falling under Chapter 29, and Isocyanate is one such compound.2. Definition of Mixing: The appellants referred to definitions from the Condensed Chemical Dictionary, stating that mixing involves a uniform dispersion of ingredients, which is not the case here as Polyurethane is produced through a chemical reaction involving other items, not just by mixing Polyol and Isocyanate.3. Past Classification: The appellants mentioned that previous consignments of Isocyanate had been classified under Heading 2929.10 by the Customs authorities.Respondent's Arguments:1. Classification under Chapter 39: The respondent, represented by Shri Chandersekharan, argued that Isocyanate falls under Tariff Heading 3909.50 and Chapter 39 in terms of Note 1 to Section VII of the Tariff. He emphasized that the items were brought together with the intention to mix for the manufacture of Polyurethane, thus justifying the classification under Heading 3909.50.Tribunal's Observations:1. Undisputed Facts: The Tribunal noted that the appellants imported Polyol and Isocyanate in the same container but packed separately for the manufacture of Polyurethane.2. Intention to Mix: The Tribunal observed that the Department's view was that since the items were brought together with the intention to mix for manufacturing Polyurethane, Isocyanate should be classified under Chapter 39.3. Lack of Evidence: The Tribunal pointed out that the appellants did not produce any evidence to show that Isocyanate was a chemically defined organic compound to be excluded from Chapter 39.4. Relevant Provisions: The Tribunal referred to Note 1 of Section VII, which states that goods put up in sets intended to be mixed together to obtain a product of Section VI or VII should be classified in the heading appropriate to that product.Separate Judgment:1. Reference to Previous Case: One of the members referred to a previous order in the case of Polyfoam Industries v. Collector of Customs, which held that Isocyanate was classifiable under Heading 2929.10 of CTA. The member noted that there was no reason to differ from this ruling.2. Chemically Defined Compound: The member emphasized that there was no dispute regarding Isocyanate being a chemically defined organic compound. The appellants produced evidence from the Condensed Chemical Dictionary to support this.3. Process Involved: The member highlighted that Polyurethane is not produced merely by mixing Polyol and Isocyanate but involves a process with other items like catalysts and blowing agents. Thus, the conditions stipulated in Section Note 3 to Section VI and Note 1 to Section VII were not satisfied for classifying Isocyanate under Heading 3909.50.Conclusion:The Tribunal concluded that the commodity Isocyanate should be classified under Chapter 39 as a constituent of Polyurethane in terms of Note 1 to Section VII of the Customs Tariff. The appeals were dismissed. However, a separate judgment by one member classified Isocyanate under Heading 2929.10, applying the ratio of the ruling in the Polyfoam Industries case.Summary:The Tribunal upheld the classification of Isocyanate under Heading 3909.50, dismissing the appeals. However, a separate judgment classified Isocyanate under Heading 2929.10, citing it as a chemically defined organic compound and referencing a previous ruling.