TaxTMI 
TaxTMI 
2002 (12) TMI 546
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.... the appellant declared the product as Butyl Acrylate Monomer and claimed the classification under heading 2916.12. The assessments were sought by the appellants as adhesives under the DEEC licence. 2. Enquiries were initiated by the Revenue against the appellants on the belief that the product imported by the appellant was defined organic chemical and was not an adhesive and the advanced licences covering imports of adhesives submitted by the appellant for clearance of the consignments under DEEC scheme availing the benefit of customs notification were not applicable in the matter of clearance of the goods in question inasmuch as the said licences were for import of adhesives and the product was not adhesive. Accordingly searches were conducted in the offices of the appellants and their statements, etc., were recorded. The customs clearing agent was also interrogated and efforts were made to find out as to whether the product in question was used as a bonding agent or not. Shri R.K. Jain in his statement recorded during such investigations deposed that the product was used as a bonding agent and on polymerisation the same become an adhesive. The Revenue also drew the sampl....
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....hich it was held that BAM was not adhesive and the benefit of the advance licences and the notification in question was not available to the importer. Accordingly the demand of duty was confirmed by invoking the longer period of limitation in respect of 14 bills of entries on the ground that the appellants had misdeclared the product in question. 6. It was also held by the Commissioner that the goods are liable to confiscation, but inasmuch as the same were not available, no redemption fine was imposed by him. Penalty of equivalent amount was imposed upon M/s. Sanghvi Overseas. The goods covered by the bill of entry dt. 8-5-97 and 19-3-98 which were under seizure by the Revenue were confiscated with an option to the appellant to redeem the same on payment of redemption fine of Rs. 6,00,000/- (Rupees six lakhs). Further penalty of Rs. 3,00,000/- (Rupees three lakhs) was imposed upon M/s. Sanghvi Overseas in relation to the importation of the goods under the above two bills of entries. Penalty of Rs. 65,00,000/- (Rupees sixty-five lakhs) was imposed on the second appellant Shri R.K. Jain on the findings that he was the main person behind the imports which le....
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....is used to keep the goods in storage condition. As and when the container is opened and the chemical comes into contact with light, air and heat at room temperature, BAM starts self polymerisation and gets the property of adhesive. Chemical composition of Butyl Acrylate Monomer and Butyl Acrylate Polymer is same. To speed up polymerisation some time initiator or extra heat may be given. No process or manufacturing process is required to Polymerise BAM. (iii) It is an admitted position that the BAM when polymerised becomes adhesive. Dispute in short is whether BAM in a packed condition without opening the box can be said to be adhesive. Goods in packed condition is of no use. It can only be used when it is opened and put to use. For all practical purpose BAM is an adhesive. Word "adhesive" was mentioned in the ex-Bond B/E inasmuch as the appellant sought release of goods under advance licences allowing adhesive as duty free import. In any event goods were chemically tested in the Customs House and goods were cleared after satisfaction of the proper officer that BAM is adhesive. The department was very much concious that goods were claimed....
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....ch were accepted by the jurisdictional/proper officer of customs. The show cause proceeded on hypertechnical notion that Butyl Acrylate Monomer is not adhesive "as it is" but it is adhesive only when it is polymerised. It is alleged that for polymerization a catalyst is to be put into it. Catalyst does not react but it speeds up formation of polymerization. BAM 'as it is' has no use 'as it is' BAM is a condition of storate and/or static condition which is achieved by putting inhibitor to prevent self polymerization. But if the box is open and BAM comes in contact with light and heat polymerization process starts suo motu. However to speed up polymerization extra heat may be given or any initiator/catylist may be dropped into it which would speed up polymerization. (vii) Adhesive is end-use of a chemical. It is admitted in the show cause that and end-use of BAM is adhesive in leather industry. However, a mala fide distinction is sought to be made that until monomer becomes polymer, it is not adhesive. It is alleged that in Monomer from BAM is not adhesive. By such absurt interpretation attempt has been made to divest BAM from the coverage of adhesive. (viii) ....
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....nexed to the reply and marked Annexure 'C' therein. Polyvinyl Alcohol is still released by this customs house as adhesive/binder. "As it is" Polyvinyl Alcohol is not adhesive. It is a dry powder. When dissolved into water it becomes adhesive. Bill of entry releasing Polyvinyl Alcohol as adhesive is annexed of the reply and marked Annexure 'C-1' therein. (xi) It is settled proposition of law that exemption notification are to be liberally construed. Requirement of opening of container, allowing BAM to contact with light and heat and even putting a catylist cannot detract from its being adhesive. "Adhesive" is not defined in the Act. It is now settled law that the words and expressions, unless defined in the statute have to be construed in the sense in which persons dealing with them understand i.e. as per trade and understanding and usage. Case made in the show cause notice resemble story of Merchant of Vanice where pound of flesh is demanded but objection was raised on out come of blood. (xii) It is admitted position in the show cause notice that Butyl Acrylate Polymer is an adhesive. BAM polymerises readily on heating or when it comes into conta....
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....estigations his name has surfaced as a person who dealt with importation and clearance of the goods through customs house agents. He supports that imposition of personal penalty upon Shri Jain may be upheld. 11. We have considered the submissions made from both the sides and have gone through the impugned order carefully. The issue required to be decided in the present case is as to whether the Butyl Acrylate Monomer is an adhesive or not for the purposes of allowing the duty free clearances against advanced licences issued under DEEC scheme. If the answer to the above question is in the negative then the valuation dispute is also required to be solved. A further question as to whether the demand is barred by limitation or not is also involved. 12. We find from the impugned order that the Commissioner has observed that on the issue as to whether BAM is adhesive or not, voluminous technical literature has been produced by both the investigating agency and the noticee concerned. He has observed that on careful examination of the literature brought on record by both the sides, it is seen that BAM in monomer and inhibited form does not have any adhesive properties and t....
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....tailored from these versatile monomers. Acrylic monomers were polymerised by various chemical processes such as Bulk polymerisation, Solution polymerisation, Emulsion polymerisation, suspension polymerisation, Ionic polymerisation etc. Usually free radical initiators such as Azo compounds or peroxides were used to initiate the polymerisation of acrylic monomers. Out of the above polymerisation processes, Emulsion polymerisation was the most important industrial method for the preparation of acrylic polymers. The principal markets for aqueous dispersion polymers made by emulsion polymerisation acrylic esters were the paint paper adhesive, textile, floor polish and leather industries where they were principally used as coatings or binders. Copolymers of either ethyle acrylate or butyl acrylate with methyl methacrylate were most common and such industrial acrylic emulsion polymerisation were usually carried out by Batch processes in jacketed stainless steel or glass lined reactor fitted with various equipments. In normal practice, inhibitors such as Hydroquinone (HQ) or the Mono methyl either of Hydroquinone (NEHQ) were added to acrylic monomers to stabilize them during shipment an....
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....rocesses were carried out at a elevated temperature in the presence of initiator. Polymerisation could be carried out in bulk, solution, or emulsion. The most important process is for producing Acrylics for adhesives - solution and emulsion polymerisation result in end product like adhesive". The Revenue has also relied upon on the information given in the product bulletin of M/s. Indian Petro-Chemicals Ltd. who are manufacturers of BAM in India. It is stated in the said bulletin that - "Butyl Acrylate was obtained by the esterification of Acrylic Acid and butyl alcohol. Butyl Acrylate was used to make solution polymers for imparting flexibility, tackiness and water resistence, in paint adhesive, leather and paper quotings". Manager of the said organisation Shri D.K. Chattopadhyay in his letter dt. 26-9-98 informed the Revenue that Butyl Acrylate Monomer, as it was could not be used as adhesive. Similarly ICI (I) Ltd. opinion was obtained which is to the effect that the chemical in its monomer form could not be considered to have adhesive property and adhesives could be prepared from this Monomer by polymerising them usually via suspension or emulsion, polymerisation into low molec....
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.... same become adhesive. Such polymerisation is self-polymeristion, when the chemical comes in contact with heat and light, it is only to increase the process of polymerisation that the temperature may be elevated and an initiator may be used. To the same effect are the findings of the Commissioner and in fact the submissions of the appellants. So the undisputed picture which emerges is that the imported chemical is in its Monomer form which becomes an adhesive on self-polymerisation. The appellants' case is that the self-polymerisation, which is nothing but increase in molecular weight takes place on the chemical coming out of the container. The question is that whether the solution in its Monomer form can be considered as an adhesive or not. According to the appellant it is not practical and feasible to import the product in its polymerised form and the same is always stored in its Monomer form. In fact inhibitors are added to avoid self-polymerisation of the product during storage. Taking an example from our day-to-day life, we are all aware that adhesives, as long as they are in a tube or container are in liquid or semi-liquid form, but when the same are taken out of the tube for....
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....nasmuch as the appellants had cleared the goods in question after declaring the same in the bills of entries and giving correct classification of the same. The Revenue has invoked the longer period of limitation on the ground that the word 'adhesive' was added by them in the ex-bond bills of entries along with the description of the product as 'Butyl Acrylate Monomer' and this was done by them deliberately to avail the benefit of the exemption notification. On the other hand the appellants' contention is that such word was added only for the clarification purposes and there was nothing which was suppressed by them. They have admittedly given the chemical name of the product and its correct classification. Availing of benefit of a notification, which the Revenue subsequently might find was not available, cannot lead to the charge of misdeclaration or misstatement, etc. And even if an importer has wrongly claimed his benefit of the exemption, it is for the department to find out the correct legal position and to allow or disallow the same. Their contention is that inasmuch as in the present matter the customs authorities have allowed the clearance of the goods by extending exemption ....
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....ial relief to the appellants. 22. [Assent per : S.S. Sekhon, Member (T)]. - I have gone through the order prepared by the Hon'ble Member (Judicial) and considered the submissions made and the material on records. I record the following order, as an assent order, to the final findings arrived at as regards allowing the appeals in this case. I am not repeating the facts to avoid this assent order to be prolix. (a) It is nobody's case that the assessments of the into-bond warehousing Bills of Entries have not been made assessed under the provisions of Section 17(2). Only in certain cases it is found that the assessments are provisional, as the goods under import have ordered to be tested and warehoused. The classification of the goods i.e. BAM under Chapter 2916.12 of the Customs Tariff is also not found to be under challenge or incorrect on the into-bond or and ex-bond bills of entries filed for clearance of the goods. The dispute is on the eligibility of the warehoused BAM to the benefit of Notfn. No. 79/95-Cus. on basis of the DEEC Licences/TRA produced and allowed. (b) Section 15(1)(b) of the Customs Act provides that i....
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....he Explanation referred to as the export products). Therefore 'materials' permissible, are not only raw materials but are also intermediates for such raw materials, which are required for manufacture of export products specified in the licences, which in this cases are 'Leather Industry' products. The term used as 'material required for manufacture of export products would encompass such entities also which are not only directly used or usable as such in the manufacturing processes but also which could be used with same processing. In the case Tata Oil Mills Ltd. - 1989 (43) E.L.T. 183 (S.C.) it was held by the Apex Court :- 6. We are of opinion that the view taken by the Excise Authorities as well as by the Tribunal proceeds upon too narrow an interpretation of the notification. It is true, as Mr. Ganguli contended, that an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption. But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption, and (b) the nature ....
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....with methyl methacrylate are most common". (Vol. 1, page 328) (underlining supplied) From this authoritative Book, it is apparent and can be concluded, that BAM, which is an Acrylate Ester, can be polymerised by using water to prepare the 'aqueous emulsion dispersion' which is used in the 'Leather Industry' as a 'Coating or Binder' to be an Adhesive. The aqueous preparation of this emulsion would not require any elaborate use of technology. Therefore BAM which is a monomer under import, could be considered to be like 'Dry Gum Arabic' which by themselves are dried nodules/exudates from Aracis trees, but when mixed with water and forming a dispersion in that within that medium to form an Emulsion of glues or adhesives. If Gum Arabic in the dried form classified under Chapter 15 of the Customs Tariff could be considered as import of an adhesive and binders, there is no reason why BAM which on similar acqueous dispersion even if classified under 2916.12 and can thereby function and used as a binder in 'Leather Industry' as per this authoritative Encyclopaedia on Technology, should be denied the benefit of considering the same as adhesives. When import of Adhesives which are not d....