1998 (9) TMI 201 - AT - Customs

Tribunal Classifies Hypalon-40 Under Customs Tariff Act; Discusses Refund of Duty

The Tribunal classified Hypalon-40 under Heading 40.02 of the Customs Tariff Act, agreeing with the appellants' argument over the Department's ... Classification Issues Involved:1. Correct classification of Hypalon-40 under the Customs Tariff Act, 1975.2. Determination of consequential relief, specifically the refund of duty paid.3. Applicability of the principle of unjust enrichment.Detailed Analysis:1. Correct Classification of Hypalon-40:The primary issue in the appeal was the correct classification of Hypalon-40. The Department argued that it should be classified under sub-heading 39.01 of the Customs Tariff Act (CTA) as a synthetic resin, while the importers contended it should be classified under sub-heading 40.02 as synthetic rubber.- Appellants' Argument: The appellants relied on the precedent set by the Calcutta High Court in the case of National Insulated Cables, which classified Hypalon-40 under Heading 40.02. This judgment was also followed by the Tribunal in the case of Universal Cables and Another.- Department's Argument: The Department, represented by the learned DR, argued that Hypalon-40, being a chlorosulphonated polyethylene, is a saturated product and should be classified under Chapter 39. This argument was supported by the HSN Explanatory Notes to Chapter 39 and Note 4(a) to Chapter 40, which excludes saturated products from Chapter 40.- Tribunal's Decision: The Tribunal noted that the classification of Hypalon-40 as synthetic rubber under Chapter 40 had been previously decided by the Calcutta High Court and followed by the Tribunal in other cases. The Tribunal, therefore, agreed with the appellants and set aside the impugned order classifying the product under Chapter 39.2. Consequential Relief:The next issue was the determination of consequential relief, specifically the refund of duty paid by the appellants.- Appellants' Argument: The appellants argued that they fall under the jurisdiction of the Bombay High Court, which in the case of Solar Pesticides P. Ltd. held that the bar of unjust enrichment does not apply where imported goods are not sold as such but are consumed in further manufacture.- Tribunal's Decision: The Tribunal acknowledged that the lower authorities had not considered the aspect of consequential relief due to the classification being upheld under Chapter 39. The Tribunal directed the Assistant Collector to pass orders on the consequential relief of refund, applying the provisions of law and the judgment of the Hon'ble Supreme Court.3. Applicability of the Principle of Unjust Enrichment:The principle of unjust enrichment was also a point of contention in determining the refund eligibility.- Appellants' Argument: The appellants cited the Bombay High Court's judgment, which held that unjust enrichment does not apply in cases where the imported goods are consumed in further manufacture.- Tribunal's Decision: The Tribunal noted that the Hon'ble Supreme Court was seized of the issue of unjust enrichment and had reserved orders. The Tribunal directed the appellants to furnish a copy of the Supreme Court's order on the question of unjust enrichment and instructed the Assistant Collector to pass orders on the consequential relief accordingly.Separate Judgments:- Majority Opinion: The majority opinion, delivered by the Judicial Member and another Technical Member, concluded that Hypalon-40 should be classified under Heading 40.02 as synthetic rubber. They directed the jurisdictional Assistant Collector to pass orders on consequential relief in accordance with the law.- Vice President's Dissenting Opinion: The Vice President dissented, arguing that Hypalon-40, being a saturated chlorosulphonated polyethylene, should be classified under Chapter 39. He emphasized the statutory definition and HSN explanatory notes, which classify such products under Chapter 39. He rejected the appeal based on these grounds.Final Conclusion:In light of the majority opinion, the product Hypalon-40 is classified under Heading 40.02 of the CTA, 1975. The jurisdictional Assistant Collector is directed to pass orders on consequential relief, considering the Supreme Court's judgment on unjust enrichment.