Holding

Plasticizers are not resins and, where not specified elsewhere, must be classified under heading 38.01/19(6) of the Customs Tariff Act, 1975 as "Plasticizers, not elsewhere specified".

Summary

The respondent imported a chemical known as 'Sancticizer 429' and challenged the customs duty levied on it. The Assistant Collector classified it as a polymeric plasticizer under heading 39.01/06 of the Customs Tariff Act, 1975, a view upheld by the Appellate Collector. The Customs, Excise and Gold Control Appellate Tribunal reversed this, holding that plasticizers are not resins and should be placed under heading 38.01/19(6) as "Plasticizers, not elsewhere specified". The Supreme Court affirmed the Tribunal’s reasoning, emphasizing that the nature of a product as understood in trade and technical literature is decisive for tariff classification. Consequently, the Court dismissed the appeals filed by the revenue side.

Issues considered

Whether 'Sancticizer 429' should be classified under heading 39.01/06 (as a polymeric plasticizer) or under heading 38.01/19(6) of the Customs Tariff Act, 1975.
Whether plasticizers are to be treated as resins for the purpose of customs tariff classification.
Whether the description of the product in trade literature and technical references is relevant for statutory interpretation of tariff headings.

Legislation cited

Central Excise and Salt Act, 1944s. Section 130E(b)
Customs Act, 1962s. Section 130E(b)
Customs Tariff Act, 1975s. Chapter 28, s. Chapter 29, s. Heading 38.01/19(6), s. Heading 39.01/06

Subjects

customs dutytariff classificationplasticizerstatutory interpretationtrade literatureCustoms Tariff Actheading 38heading 39refund of duty

Judgment

>.
COLLECTOR OF CUSTOMS, BOMBAY
A
v•
. BHOR INDUSTRIES LTD.

APilIL 20, 1988

[SABYASACJIT MUKHARJI ANDS. RANGANATHAN, JI.] B

Customs Tariff Act, 1975: Chapters 28 & 29 & Headings 39.01/06
and 38. 0 l/ 19(6)-"Plasticizers not otherwise specified"-Interpretation
of-"Sancticizer 429"-Levy of duty on-Not separately defmed
chemical compounds.

Statutory ·lnterpretation:-Customs and Excise Statutes-Tariff C
entries-How goods are known in the trade· and trade literature--
Relevancy of.

The respondents who imported 'Sancticizer 429', contested the
levy of duty by the Department and rtled a claim for refund, which was D
rejected by the Assistant Collector on .the ground, that on test the
product was found to be organic compound (easter-type) of colourless
viscose liquid and as per 7.O· 046 should be considered a polymeric
plasticizer.

On appeal, the Appellate Collector came to the conclnsion that E
Chapter 38 of the Customs Tariff Act 1975 was residuary in natnre and
that if the item was uot covered by any other Chapter of the Tariff Act
only then it would fall under the said Chapter. He also found that linear
polysters were covered by CCCN 39.0l(E) and that the goods in ques·
_j · tion are formed by the condensation of diabasic acid within dihydric
f · alcohols and were similar to the polycondensatlon products of terpht· F
halic acid or adipic acid with ethanediel covered by the aforesaid CCCN
headings, which corresponds to 39.01/06 of the Cnstoms Tariff Act,
1975. The Appellate Collector upheld the decision of the Assistant
Collector. r

The respondent appealed to the Customs Excise and Gold Control G
1-l Appellate Tribunal which allowed the appeals taking the view that
plasticizers were not resins, but are added to resins to impart better
flexibility of plastic properties to the latter, that 'Sanctlcizer 429' is . ·
admittedly a plasticizer and would therefore not have fallen for classifi· .
cation under Heading No. 39.01/06 of the Customs Tariff Schedule as It
stood before amendment in 1978 and that the product was classlf"1able H
641
642 SUPREME COURT REPORTS [19881 3 S.C.R.
~
under heading 38.01/19(6) of the Tariff Act.
A
Dismissing the Appeals of the Revenue, this Court,

HELD: I. As per various technical authorities, plasticizers are
not resins. These are added to resins to impart better flexibility or
B plastic properties to them. These are not plastic materials by themselves ~
either. [6448 I

2. The goods under reference in the instant case, are not similar ,,
to resols or polysiobutylenes. Their classification under Heading ·~
39.01/06 of the Customs Tariff Act, 1975, prior to and even after its
amendment in 1978, should not be applicable. Not being separately
c defined chemical compunds, these would also not fall within Chapter 28 ~
or 29 of the Act. Since these are not specified elsewhere their

~
appropr}ate classification would be under Heading No. 38.01/19(6) as
"Plasticizers, not elsewhere specified". [645C I

D 3. In these matters how a good is known in the trade and treated
in the trade literature is relevant and significant and often decisive
factor. [645DI

"Encyclopaedia of Chemical Technology" 3rd Edition page 111
__..;
referred to.
E
Bhor Industries Ltd. v. Collector of Customs, Bombay, [1984118
E.L.T. 521 and Collector of Customs, Bombay v. Bhor Industries Ltd.
and another, [1985121E.L.T.291 approved.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 392- ~'
F 95of1988.

Appeal under Section 130E(b) of the Central Excise and Salt
Act, 1944 from the Order dated 15.12.1986 of the Customs Excise
and Gold (Control)-Appellate Tribunal, New Delhi in Appeal
Nos. C/2130 to 2132/86-C & 1027 /83 and Order No. 757-760/86.
G
B. Datta, ASG, Mrs. Indira Sawhney and P. Panneshwaran for
the Petitioners.

The Judgment of the Court was delivered by

H SABYASACHI MUKHARJI, J. These appeals under Section
COLLECTOR OF CUSTOMS v. BHOR INDUSTRIES [MUKHARJI, J.] 643

130E(b) of the Customs Act 1962 (hereinafter called the Act) are
A
against the order dated 15th December,· 1986 passed by the Ctistoms,
Excise and Gold (Control) Appellate Tribunal (hereinafter; called.
CEGAT). These appeals are related to a dispute regarding the duty of
custom imposed on the respondent. The department had levied duty
on the product known as 'Sancticizer 429' imported by the respondent.
The respondent had contested this duty and filed a claim for the B
refund. The Assistant Collector of Customs rejected this claim. The
Assistant Collector on test found it to be organic compound (easter-
type) inform of colourless viscose liquid and as per 7.0· 046m shbuld be
considered as polymeric plasticizer. The Appellate Collectoi found1

that Chapter 38 of the Customs Tariff Act, 1975 was residuary in
nature. According to him, if the item was not covered by any other
c

-
chapter of the Customs Tariff Act, 1975 then it would fall under Chap-
ter 38. The Appellate Collector further found that linear polysters
were covered by CCCN 39.0l(E). The Appellate Collector held that
the impugned goods are formed by the condensation of diabasic acid
within dihydric alcohols and were similar to the poly condensation
product of terphthalic acid or Adipic acid with ethanediel covered by D
above mentioned CCCN headings. The Appellate Collector held this
CCCN headings corresponds to 39.01/06 of the Customs Tariff Act,
1975. The Appellate Collector upheld the decision of the Assistant
Collector. The respondent challenged the aforesaid order of the
Appellate Collector before the Tribunal. The Tribunal allmted the
appeals relying on the two decisions of the Tribunal one being Bhor E
Industries Ltd. v. Collector of Customs, Bombay, [1984] 18 E.U.T. 521

- and the other Collector of Customs, Bombay v. Bhor Industries Ltd.
and another, 11985] 21 E.L.T. 291. The Tribunal was of the view that
the product was classifiable under the heading 38.01/19(6) of the
Customs Tariff Act. The decision of the Tribunal was later on followed
by the subsequent decision referred to hereinbefore. F

In Bhor Industries Ltd. v. Collector of Customs, Bombay
(supra), the Tribunal observed that these are ordinarily liquids and, in
rare instances, solids, as simple high boiling solV<lnts for the polymers.
These are neither resins nor do they seem to be plastic materials; on
the other hand, these are added to resins to impart better flexibility or G
plastic properties to them. It was further observed that there was no
.~. evidence had been produced before the Tribunal to show that
Sancticizer was a resin or plastic material as defined in Explanatory
Notes to C.C.C.N. lt was neither similar to resols or polysiobutylene
to attract the mischief of Note 2(c) to Chapter 39 nor a separately
defined Chemical Compound so as to fall within Chapters 28 or 29 of H
644 SUPREME COURT REPORTS 11988] 3 S.C.R.

A Customs Tariff Act, 1975. Hence, it was classifiable not under Head-
ing 39.01/06 as it stood before its amendment in 1978 but under
38.01/19(6) of Customs Tariff Act, 1975 as "plasticizer, not elsewhere
specified".

The Tribunal in its decision considered the technical leaflet on
B the product. Sancticizer 429 was described as a medium-high molecular
polyester plasticizer made from a glycol reacted with a dibasic acid.
Among the properties claimed for the product are good low tempera-
ture flexibility, excellent electrical properties, outstanding migration
resistance, humidity, stability and resistance to oil and solvant extrac-
tion. It is said to be an excellent plasticizer for making oil-resistant
C high temperature PVC wire and cable compounds. It is also stated to
be useful for plasticizing ethyl cellulose, mitrocellulose, acrylic caulk-
ing compunds, and adhesive systems based upon polyvinyl accetate, •
styrene-butadiene, and acrylic latices. Reference was also made to
Kirk-Othmer's "Encyclopaedia of Chemical Technology" 3rd edition
page 111, where it was observed as follows:
D
"A plasticizer is incorporated in a material to increase its
workability, flexibility, or distensibility. Addition of a
plasticizer may lower the melt viscosity, the second-order
transition temperature, or the elastic modulus of the
plastic. For effectiveness with polymeric materials, a
E plasticizer needs to be initially mixed with the polymer
either by dissolution of the resin in the plasticizer or the
plasticizer in the resin, by heat or dissolving both in a
common solvent and subsequent evaporation of the
solvent. In "Plastics materials" (4th edition, page 80), J.A.
Brydson refers to plasticizers-ordinarily liquids and in
F rare instances solids-as simply high boiling solvents for
the polymer. The action is explained by saying that
plasticizer molecules insert themselves between polymer
molecules reducing but not eliminating polymer-polymer
contacts and generating additional free volume; also as
some interaction between polymers and plasticizers off-
G setting the spacing effect; or both."

The Tribunal came to the conclusion that plasticizers were not
resins; these are added to resins to impart better flexibility or plastic
properties to the latter. Nor did they seem to be plastic materials by
themselves. The Tribunal found that Sancticizer 429 which is admit-
H tedly a plasticizer would, therefore, not have fallen for classification
COLLECTOR OF CUSTOMS v. BHOR INDUSTRIES [MUKHARJI, J.} 645
~
under Heading No. 39.01/06 of the Customs Tariff Schedule as it stood A
.
,--,·~. prior to its amendment in 1978 .

The said reasoning was reiterated by the Tribunal in the decision
of Collector of Customs, Bombay v. Bhor Industries Ltd. and another.
There, the Tribunal observed that as per various technical authorities,
B
plasticizers are not resins. Rather, these are added to resins to impart
~- better flexibility or plastic properties to them. These are not plastic
materials by themselves either. Fl'rther, goods under reference are not
similar to resols or polysiobutylenes. Therefore, their classification

( under Heading 30.01/106 of the Customs Tariff Act, 1975, prior to and
even after its amendment in 1978, should not be applicable. Further-
' more, not being separately defined chemical compounds, these would c
~- also not fall within Chapter 28 or 29 of the Act. Since these are not
specified elsewhere, their appropriate classification would be under
Heading No. 39.01/19(6) as "Plasticizers, not elsewhere specified" ..

It is well-settled in these matters how a good is known in the
D
trade and treated in the trade literature is relevant and significant and
often decisive factor.

In that view of the matter, the Tribunal was right in the view it
,. took. These appeals fail and are accordingly dismissed.
E
N.V.K. Appeals dismissed.

-J-'

. ~-