AI Drafter 
TaxTMI 
TaxTMI 
1975 (10) TMI 94
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....f V.P. Latex. In appeal from the proceedings before the Assistant Collector of Customs for appraisement of the said consignments for the purpose of imposition of customs duty and/or countervailing duty, the Appellate collector of Customs, Calcutta upheld the appellant's contention and classified V.P. Latex under Item 39 of the I.C.T. as raw rubber. The classification made by the Appellate Collector was revised by the Central Government in a proceeding initiated, suo motu, under Section 131(2) of the Customs Act, 1962. The Central Government held by the impugned order, that the said V.P. Latex was "an aqueous dispersion of synthetic resin", and hence classifiable under Item 87 of the I.C.T. prior to 1st March, 1970, and thereafter under the new Item No. 82(3) I.C.T. The Central Government by the same order further held that the said goods were liable to countervailing duty under Item No. 15A, C.E.T. both before and after 1st March, 1970. It is apparent that if V.P. Latex were to be classified under Item No. 87, higher duty will be leviable and that is the reason for the controversy in these appeals. 4. In Civil Appeal No. 2746 of 1972, the appeal is directed against the orde....
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....e value thereof is Rs. 40,33,000/- approximately. The appellant, Dunlop India Limited, consumes about 300 tonnes per year. The controversy between the parties centres round the real meaning of V.P. Latex, while the appellants submit that V.P. Latex is synthetic rubber in the latex form, according to the respondents it is not so, but on the other hand, it is what may be described as `resin'. 10. In order that the Court is able to appreciate the rival contentions, both sides addressed us referring to several standard authorities and treatises. 11. Before we proceed further it may be appropriate to see how rubber is described in the Encyclopaedia Britannica, Volume 19, 1965 Edition : "Rubber is the substance caoutchouc (q.v.), a milk like fluid that is obtained from certain tropical shrubs or tyres and then subjected to various processes of manufacture; or it may be a product of chemical synthesis."      *        *        *       * "The uniqueness of rubber lies in its physical properties of extensibility and toughness. In its natural st....
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....mperature to twice its length and held for one minute before release." 13. It also defines raw rubber as `vulcanised rubber'. According to H.J. Stern in his book "Rubber Natural and Synthetic", V.P. Latex is composed of butadiene styrene and vinvyl pyridine in the ratio of 70 : 15 : 15 respectively. A synthetic latex is produced as the first stage in the manufacture of most synthetic rubbers. V.P. Latex is one such synthetic rubber latex. An affidavit sworn by Mr. Mayer, Manager, Technical Services, Chemical Division, Goodyear International Corporation, states that V.P. Latex is a terpolymer rubber as defined in A.S.T.M. Specification DI-566-60T and that there is no measurable resin content in this product. It is claimed by the appellants that pyratex which is the commercial name for V.P. Latex, imported by them, is exactly similar to the V.P. Latex referred to in Mr. Mayer's affidavit, since it also contains butadiene styrene and vinyl pyridine in the same proportion of 70 : 15 : 15 with no measurable resin content. It is claimed that V.P. Latex is an emulsion of synthetic rubber and it is borne out by its chemical composition and by the physical properties. In the case of....
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.... as follows :- "Any of a group of man made elastomers which approximate one or more of the properties of natural rubber. Some of these are : sodium polysulfide (`Thiokol'); polychloroprene (neoprene); butadiene-styrene copolymers (SBR); acrylonitrile-butadiene copolymers (nitrile rubber); ethylene-propylene-diene (EPDM) rubbers; synthetic polyisoprene (`Coral', `Natsyn'); butyl rubber (copolymer of isobutylene and isoprene); polyacryloni-trile (`Hycar'); silicone (polysiloxane); epichlorohydrin; polyurethane (`Vulkollan')." Styrene-butadiene rubber (SBR, s. type elastomer) is the most common type of synthetic rubber. Manufacture involves copolymerization of about 3 parts butadiene with 1 part styrene. Its uses are for tires, footwear, mechanical goods coatings; adhesives; etc. 16. The appellants have also produced the Import Trade Control Policy, Volume I, for the year 1975-76 described during the arguments as the `Red Book' of the Commerce Ministry of the Government of India. It may be useful to quote the entire entry 150 at page 58 : Section II : Policy for individual items and the detailed policy for Actual Users : IMPORT POLICY ....
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....ile Butadiene Copolymer, Poly Chloroprene, Thikol, Poly Isoprene and Poly-butadiene Hypalon, Silicone rubber and Synthetic latex including Vinyl Pyridine latex and copolymer of styrene butadiene latax" (emphasis added). Again the Condensed Chemical Dictionary at page 741 describes "Pyratex" the trade name under which V.P. Latex has been imported as follows :- "Pyratex, 248 Trademark for a vinylpyridine Latex. Properties : Total solids 40-42% PH 10, 5-11, 5 : sp. gr. 0.96. Uses : To promote adhesion between rayon or nilon fibres and rubber, as in tire cord, belting, hose, etc." 18. The British Standard specification is as follows :- The British Standards Institution gives the specification of PSBR 41 latax as "(Vinyl) pyridine-styrene-butadiene rubber latex with a nominal total solids content with the range 40.0% to 49.9% and a nominal bound styrene content of less than 20.0% of the total polymer". In the Elastomers Manual, under Table XI, the International Institute of Synthetic Rubber Producers, Inc. enumerates "GENTAC" and "PYRATEX" as Emulsion Styrene-Butadiene and Butadiene Rubber Latices of S 41 P Class. The classification "S 41 P" properly decoded means as....
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....ex cannot be regarded as an aqueous dispersion of synthetic resin since it has no measurable resin at all. On the contrary the proper description of V.P. Latex would be to call it an emulsion of synthetic rubber and this is borne out by its chemical composition and by its physical properties. (7) The question of classifying a substance rests primarily on its chemical properties as borne out by technical tests. In the case of V.P. Latex, when coagulated, the coagulum answers fully the A.S.T.M. standards and tests prescribed for rubber. Its use in liquid state is commercially more expedient than its use in dry state but this should not be factor in classifying a product according to its technical and chemical composition. (8) V.P. Latex has been designed as a special synthetic rubber latex to be suitable for its use at the fabric cross-linking stage with rubber compound. In its application it is in no way different from any other natural rubber or synthetic rubber latices. V.P. Latex should, therefore, properly be regarded as a synthetic rubber latex. (9) It is not correct to say that all rubber latices when coagulated should have an absolute commercial dry ru....
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....the question boils down to consider whether synthetic rubber latex could be classified as `raw rubber' assessable under Item 39 I.C.T. irrespective of its usage known commercially or in the industry." 23. Then after nothing the definition of latex in the Chemical Dictionary and in the "Materials Hand Book" by Brady, the authority observed as follows :- "These definitions imply that latex is a material from which rubber is obtained and not rubber itself." Latex, according to the authority, is milk juice of the rubber tree which is source of rubber and is in common parlance referred to as rubber. The authority then refers to Chapter 40 of the Brussels Tariff Nomenclature (B.T.N. dealing with natural rubber latex (40.01) and synthetic rubber latex (40.02). 40.01. : "Natural rubber latex, whether or not with added synthetic rubber latex; pre-vulcanised natural rubber latex; natural rubber; balata, gutta-percha and similar natural gums." 40.02. "Synthetic rubber latex; pre-vulcanised synthetic rubber latex; synthetic rubber; factice drived from oils." The authority then observed as follows :- "Chapter 40 of the B.T.N. covers raw rubber, Heading No. 40....
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.... find use in a dry state. In fact it does not replace rubber in use though it has similar properties." [Emphasis added] 26. The last point considered by the authority was with regard to the resin content in V.P. Latex. The appellants claimed that V.P. Latex had no resin content. The authority repelled the contention in the following words :- "It appears that there is no accepted definition of the term `resin' in trade usage or technical literature and resins are identified by their use as resins and in this view V.P. Latex may well be considered as a resin latex." 27. Mr. Sanghi for the respondents has made a strenuous plea that V.P. Latex is not rubber raw and is synthetic resin. If it is correct that V.P. Latex is synthetic resin, it would come under Item 87 I.C.T. the residuary entry covering "all other articles not otherwise specified". 28. To revert to the order of the authority, it is clear that the authority would to have found no difficulty in coming to the conclusion that V.P. Latex in view of chemical composition and physical properties is rubber raw, if the same were commercially used as rubber. The authority, therefore, was principally infl....
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....cally, oranges, and lemons are berries, but otherwise no one would consider them as such." The Exchequer Court also referred to a pithy sentence from "200 chests of Tea", per story, J (1824) 9 Wheaton (US) 435 that "the Legislature does not suppose our merchants to be naturalists, or geologists, or botanists". 33. The above Planters Nut case (supra) was referred to with approval by this Court in Ramavatar Budhaiprasad v. Assistant Sales Tax Officer, (1962) 1 SCR 279. In Ramavatar's case, this Court was concerned with the meaning of the word `vegetable' occurring in C.P. and Berar Sales Tax Act, 1947. This Court held as follows :- "But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning `that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'. It is to be construed as understood in common language." 34. Again in the Commissioner of Sales Tax, Madhya Pradesh, Indore v. M/s. Jaswant Singh Charan Singh, AIR 1967....
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....nyl pyridine has been used to include a variety of resins, plastics, elastomers, etc. and that V.P. Latex exhibits outstanding adhesive properties. His main object is to show that V.P. Latex is resin which is "an omnibus term for a variety of hard brittle, solid or semisolid organic substances". It is however, seen from an extract from the Dictionary of Rubber Technology, 1969 edition, by Alexander S. Craig, produced by Mr. Sanghi that "vinyl pyridine is one component of terpolymer of butadiene, styrene and vinyl pyridine used in latex form to promote good adhesion between rubber and textiles, particularly rayon and nylon". We find the same description reiterated in a book "Latex Natural and Synthetic" by Cook (a Reinhold Pilot Book) where at page 145 it is stated that `there is one type of speciality rubber latex that deserves special notice. This is terpolymer of butadiene, styrene, and 2-vinyl pyridine. Under the trade names of "Gentac" and "Pyratex" it is extensively used in nylon tire cord saturation because it gives better adhesion between the cord and the rubber in which the cord is imbedded than do other latices'. Mr. Sanghi, however, emphasises that V.P. Latex is merely an....
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....eing a component of SBR which is admittedly classified under rubber raw. But assuming, and only assuming, that evidence is balanced, the best course in a fiscal measure is to decide and fix the entry under which the article comes, otherwise it will give rise to adoption of varying standards where uniformity should be the rule. 40. At one stage Mr. Sanghi pointed out that in certain Bill of Entry of Dunlop India Limited, their Agents, Messrs Mackinnon, Mackenzie & Co., Private Ltd., gave the I.C.T. Item No. 87 with regard to the imported V.P. Laitex. This, according to Mr. Sanghi, clearly shows how the appellants themselves have understood the matter. There is, however, no estoppel in law against a party in a taxation matter. In order to clear the goods for the Customs, the appellant Agents may have given the classification in accordance with the wishes of the authorities or they may even be under some misapprehension. But when law allows them the right to ask for refund on a proper appraisement and which they actually applied for, we do not attach any significance to this aspect of the matter pointed out by counsel. The question is of general importance and must be decided ....