TaxTMI 
TaxTMI 
1999 (8) TMI 442
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the products in which each of the resins and the polyisocyanate was classified under Chapter 39. Subsequent enquiries by the department led it to believe that each of the products should be rightly classifiable under Chapter 39. Seven notices were therefore issued, proposing recovery of differential duty and imposition of penalty. The first notice was for clearances between July, 1988 to April 1992 invoking the extended period in the proviso to Section 11A. Each of the other notices was for the period of 6 months or less. Each of the notices proposed imposition of penalty. The notice for the longer period also proposed confiscation of land, building and machinery. 2. The Commissioner did not accept the various submissions raised before him by the appellant and confirmed the proposals to recover the duty. He also imposed a penalty. Hence this appeal. 3. The dispute revolves around the scope and applicability of the note 2 to Section VI of the tariff and Heading 35.06. The heading and the note read as follows : "Heading 35.06: prepared glue and other prepared adhesives under elsewhere specified or included." "Note 2 : Goods put up in sets consisting of two o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f, since it does not contain only (sic) only or other since not falling in that chapter". The "adhesives are stated to be polyutherene plastic; being chemical polyutherene primarily form" which are classifiable under Heading 3906.60. The notice relies upon the fact that the appellant claimed classification for the same product for export, under Chapter 39, in support. It is alleged that there cannot be two classifications under the tariff for the same heading. Reliance is also placed upon the report of the Dy. Chief Chemist to say that the adhesive does not satisfy the definition of plastic based adhesive as given in tariff. There is a also reference to the HSN Explanatory Notes which say that the Heading 35.06 covers only products put up for sale as adhesive in packages of not exceeding net weight of 1 kg. The goods in the present case are cleared in bulk. The Commissioner also relies upon the test report of the Dy. Chief Chemist which adopts the view that the final product is polyurethene plastic classifiable under Heading 3906.60. 6. The report No. Cex/39-BT-397/92/787 of the Chemical Examiner classified the product as a "colourless thick liquid. It is composed of polyes....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are mixed together to obtain an adhesive and such an adhesive is classifiable under Heading 35.06. The Commissioner's reference to note (3) at page No. 564 of the HSN Explanatory notes is not clear. This page in the volume-II of 1996 edition of the of the Explanatory Notes refers to Heading 38.07. Possibly, he refers to note 1 at page 596. This note provides explanation to goods in Heading 39.01 to 39.14. It says that "when these goods in the form of liquids and pastes are used or inter alia as glues". That note would apply to one of these products. 9. It is the appellant's contention that when these two products mixed together it has an adhesive property. This is referred to in the product literature. The Chief Chemist also refers the two goods as two component adhesive. The brochure put up by the appellant (at page 165 to 179 of the appeal paper book, volume-I) refers repeatedly to the two components being mixed together to obtain an adhesive. It is also indicated that the pot life of the adhesive is limited. The following extract is significant : "Pot Life : It is best not to mix more adhesive than will be used in the next 8 hours. It is possible to store leftover mi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this relative proportion as being complementary to another. These requirements are satisfied when presented together for home consumption. We did not find anything unusual in the explanation offered by the advocate for the appellant that the export market did not support the sale of both the components. The buyer might have preferred to buy one of the two components at a lower price elsewhere. 12. The contention raised by the departmental representative that the goods are not put up for retail sale packing is again irrelevant. Heading 35.06 in the Central Excise Tariff differs from the same heading in the HSN Explanatory Notes. The clause "products suitable for use as adhesive" is present in both and is followed in the Explanatory Notes by the clause "put up for retail sale as glues or adhesive not exceeding net weight of 1 kg." This last clause is absent in the Central Excise Tariff. The only conclusion that can be drawn is that the intention to classify the prepared glues or adhesive not elsewhere specified under Heading 35.06, irrespective of their being put up for retail sale is clearly shown in the Central Excise Tariff, no longer contrary to the intention in the HSN ....