Customs, Excise and Gold Tribunal - Delhi
Tamil Nadu Electricity Board vs Collector Of Customs on 18 December, 1982
Equivalent citations: 1983ECR145D(TRI.-DELHI), 1983(12)ELT174(TRI-DEL)
ORDER
1. Tamil Nadu Electricity Board imported exchange resins from the United States. The Madras Custom House assessed the resins under Item 39.01/06 Customs Tariff and charged countervailing duty under item 15A of the Central Excise Tariff as artificial resins and plastic material. In order-in-appeal No. C.3/2589/79, dated 27-12-79, the Appellate Collector upheld the assessment already made as in order on the ground that the said resin had been tested and the test result reports the goods as synthetic ion exchange resin, a copolymerisation product. This is an appeal against this order of the Appellate Collector.
2. It is urged in the appeal that the exchange resins removed undesirable particles during watertreatment in the demineralisation plant. The demineralised water which is of a very high purity of 99.99995 is used in the boilers of the power stations which operate round the clock. Because of insufficient and uncertain supply from the local manufacturers there was urgent need to import resins to operate the boilers under optimum conditions. The importer resins was used to replace the old resin in the demineralised plants.
3. The resins are not used anywhere as a raw-material for any further product. It is used only as a chemical in removing mineral and other impurities. The demineralised water is used in boiler for producing steam for power generation.
4. Dr. D. Shankara Narayanan of the Electricity Boord who attended the hearing urged that Cation and Anion resins are not resins for the purposes of Customs Tariff Item 39. The resins are used only for treatment of the water, a process vital for a boiler plant as untreated water is harmful to the machinery and the boiler. Its importation was not as a resin but as a chemical whose sole use is in the treatment of water and therefore should be entitled to assessment as water treatment chemical under item 38.01/19(9).
5. The rejection by the Custom House of the claim to assessment under item 38.01/19(9) is based solely on the ground that the test report of the goods showed that they were synthetic ion exchange resin copolymerisation products. The Appellate Collector in his order cites the same reason for agreeing with the assessment made by the Assistant Collector.
6. It is true, and there is no dispute on this, that the goods are copolymerisation product i.e. synthetic ion exchange resin. The goods DOWEX MCR and DOWEX SBP-P-CL were shown in the documents as having been imported at the port of Madras by the Tamil Nadu Electricity Board by ship SS Viswa Sobha under Bill of entry No. D. 1969, dated 28th Feb., 1979. The Custom House does not seem to dispute that the copolymerisation product imported by the Electricity Board was a synthetic ion exchange resin. The question to be decided is whether this synthetic resin should be assessed under Chapter 38 or under Chapter 39 as an artificial resin.
7. Chapter 39 covers artificial resins and plastic materials, Cellulose Esters and Ethers and Articles thereof. But it has to be borne in mind that the resins classified under Chapter 39 are artificial resins which have amongst other things characteristics of plasticity, that is to say, they are capable of or of having been capable at some stage, of being formed under external influence into shapes which are retained on the removal of the external influence. Shaping processes used include moulding, casting, extruding, rolling and otherwise working and shaping, in the manner required. They are to be understood generally to mean artificial resin material from which articles are to be shaped and formed either by themselves or in admixture with other substances such as fillers, pigments, extenders etc., etc. They are not used nor meant to be used for their chemical characteristics, although from their very nature, they possess various chemical characteristics and can undergo a number of variations, modifications and reactions; but such modifications and variations have one end in view, and that is, to achieve a product suitable for a specific or particular purpose depending upon the use to which the finished article is to be put. The copolymerisation products before us are indeed resins but, as described in the test report, they are synthetic ion exchange resins.
8. Ion exchange is a well known process whereby the chemical or physical properties of substances are changed or modified or where certain characteristics are to be imparted to products treated by such ion exchange, These ion exchange resins are Cation and Anion resins, the first being positively charged ions and the second negatively charged. A solid phase contains bound groups that carry an ionic charge, either positive or negative, in conjunction with free ions of opposite charge that can be displaced, and in the process, under controlled conditions the resin can remove undesirable traces present in the substance to be treated. Thus when water is to be treated, suitable ion exchanges individually or in series can treat water to make it suitable for almost any purpose from simple washing operations requiring only hardness-free water, to critical chemical and electronic use requiring water with an electrical resistance. For example, in such treatment, sodium is exchanged for calcium and magnesium thereby effectively rendering the effluent water free from scale forming deposits and to prevent interference with the action of soap and other cleaners. The removal of scale-forming hardness is also beneficial in boiler plant operations and reduces the costs of operations and prevents scales and other deposits in the plant. The artificial resins we are concerned with here have been imparted qualities which a similar copolymer that would have been in the normal course assessable under Chapter 39 would not have, because such qualities are not required for a copolymeriser to be put to uses contemplated for such resins as are assessable under Chapter 39. The ability to exchange and remove ions that the resins under question possess is not a quality one would find in products contemplated by Chapter 39 and would indeed be redundant in those products.
9. It is possible to argue that item 38.01/19(9) i.e. "water treatment chemicals not elsewhere specified" can embrace only such chemicals and products which are not specified elsewhere. According to this argument, the copolymer here, a product which contains styrene of a small proportion of divinyl benzene, has been specified in Chapter 39 Customs Tariff as an artificial resin and, therefore, should be most appropriately assessed under this heading. There is no other item in the Customs Tariff which specifies water treatment chemicals. Since Chapter 38(9) embraces water treatment chemicals if not elsewhere specified, the copolymerisation under discussion should first qualify under the most specific heading which is Chapter 39. It is only after it is seen not to qualify under Chapter 39, that Chapter 38 will be attracted.
10. If that was the scheme then the appropriate wording of item 38.01(9) should have been "Chemicals, not elsewhere specified, used for water treatment". This would require that if a chemical has been specified elsewhere it should be assessed under such head even if it is used or has been produced specifically for water treatment. Chapter 39 is, for the purpose of this matter, a general heading which includes artificial and synthetic resins and articles made of such resins. A general heading must yield place to a more specific heading. For example, piece of saddlery even though made of leather must be assessed as a saddle and not as a leather for the simple reason that a saddle is a more specific article and commodity than the leather of which it is made. In our view, the copolymer resins in this case which have been imparted a special ability i.e. to cause exchange of ions, can no longer be regarded as merely artificial resins but as a class of products which have been given characteristics that make their use appropriate only in a particular respect and for a particular purpose, namely ion exchange, rather than as a general purpose resin. In view of the above we consider that the ion exchange copolymerisation products imported by the Tamil Nadu Electricity Board are correctly assessable under item 38.01(9) as water treatment chemicals and not as artificial resins assessable under Chapter 39. Correspondingly the assessment under Item 15A of Central Excise Tariff must be held to be inappropriate and that Item 68 is a more appropriate head.
11. We, accordingly, direct that the assessment should be made in accordance with this judgment and that all consequential refunds be given to the importer.
12. Appeal allowed.