Customs, Excise and Gold Tribunal - Delhi
Sun Export Corporation And Ors. vs Collector Of Customs on 23 September, 1986
Equivalent citations: 1986(10)ECC278, 1987(10)ECR62(TRI.-DELHI), 1986(26)ELT1042(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. This is an appeal against order-in-appeal No. W08/82 dated 7.8.1982. The appeal in respect of six appeal Nos. CD/SB/1670/86-C to L675/86-C were filed beyond time. After hearing the two sides on the request for condonation of delay made by the appellant's counsel, the Bench condoned the delay, and proceeded with the hearing of the appeals. One party by name M/s. Intercraft Pvt. Limited is said not to have filed any appeal after Tribunal's order No. 117/86 dated 28.7.1986. Mr. Krishnamurthy states that his arguments would be in respect only of the six appeals.
2. The learned counsel for the appellants Mr. Krishnamurthy began his address by saying that there is nothing in the law to support assessment under item 15A(1)(ii) of the central excise tariff. The only correct item for assessment is sub-item 2 as "Articles of Plastic" because polyinyl alcohol is a modification of polyvinyl acetate and has been turned into an article i.e. a powder, which is used in textile industries, in sizing yarns, fabrics, and so on. The appellants have contested the assessment of PVA as a polyvinyl derivative. The learned counsel very vehemently declared that it is not a derivative because it is obtained by alcoholysis of hydrolysis. These processes are not polymerisation or co-polymerisation processes and therefore, it is not possible to fit PVA as a polyvinyl derivative with other polyvinyl derivatives. Derivatives that fit under item 15A(1)(ii) must be products of polymerisation or co-poly merisatioa 3 The learned counsel quoted the CONDENSED CHEMICAL DICTIONARY By G. HAWLEY 9th Edition, according to which PVA is produced by alcoholysis or hydrolysis of polyvinyl acetate which alone is a product of polymerisation. The process of manufacture of PVA involves replacement of the acetate groups with hydroxyl groups, and the alcolysis proceeds most rapidly in a methanol methyl' acetate mixture in the presence of catalytic amounts of alkali or mineral acids, a far different process from polymerisation or co-polymerisation. It is necessary, said the learned Counsel, that the goods to be fitted in the sub-item must be of the same nature as others, because item 15A at the time, had as its heading "The following artificial or synthetic resins, namely"; the presence of the word namely circumscribe the nature and kind of artificial plastic and resins to only those listed and named. Sub-item 15A(1)(ii) will therefore, cover only those derivatives which are produced by polymerisation and co-polymerisation. The presence of the words "such as" in the sub-item reinforces the select nature of articles and substances to be assessed in this subheading. Goods like polyacrylic and polymethacrylic derivatives are specifically mentioned after the words "other polyvinyl derivatives". Coumarone and indene resins which are derived by heating a mixture of coumarone and indene with sulphuric acid are accordingly covered also. Those products that do not result directly from the process of polymerisation and co-polymerisation but are intended to be covered by the sub-item are specifically mentioned; PVA is not so specified.
4. He quoted from the book "PRINCIPLE OF POLYMER SYSTEM By Ferdinand Rodrigez" which observes "Even Poly (vinyl alcohol) cannot be made directly, because the monomer is unknown (isomeric with acetaidehyde). Thus it is necessary to first polymerise vinyl acetate, then hydrolize the polymer to the polyalcohol. Finally, the alcohol is esterified by cinnamic acid (functionally of one in an esterification)". He next quoted from the same book, on Polymer Modification thus : "Whenever a polymer is formed in several stages, each subsequent stage is a kind of polymer modification. All cross-linking reactions (vulkanisations) of rubbers would fall in this category together with the moulding of network polymer like the phenol formaldehyde resins. However, the term "polymer modification" is used here to mean changes wrought by the polymer manufacturer in an operation separate from the final moulding. Modifications are feasible when a polymeric raw material is available, which can have its value enhanced substatially by the operation
5. Sometimes modification is the only good way to make a raw material. A case in point is the photos sensitive polymer poly(vynyl) cinnamate."
6. In the book "Polyvinyl Alcohols: Properties of application : By C.A. FINCH, it is written "The starting material for the production of polyvinyl alcohol is not the monomer, but a polymerised ester. The polymerizations by which such esters are prepared are well known to be exothermic".
7. The learned counsel produced letters from Dr. H.L. Jindal and Dr. J.K. Parasher of Delhi University who confirmed that polyvinyl alcohol is a product of modification.
8. One argument that the Learned counsel Mr. Krishnamurthy repeated a number of times was that polyvinyl acetate was not similar to any of the items listed in item 15(A)(1)(ii) and that it was not a product of polymerisation and co-polymerisation. On the principle of EJUSDEM GENERIS, it is not a polyvinyl derivative of the types mentioned in that sub-item and, therefore, does not fall with them since the scheme of the items lays stress on the process of manufacture. The learned counsel also pressed the fact that polyvinyl alcohol is an article made by hydrolysis of polyvinyl acetate, an item listed in 15A(1)(ii), and, therefore, by virtue of explanation below item 15A(1), it is an article of plastic qualifying for benefit of exemption from additional duty under notification No. 228/Cus dated 2.8.1976 as amended as an item that is not mentioned in the table of the notification.
9. There were other arguments advanced by the learned counsel such as that item 15A of the central excise tariff is not comparable in nature, or as he quoted, in pari materia, with chapter 39 of the Customs tariff that it must automatically mean that assessment under chapter 39 leads to assessment under item 15A of the central excise tariff.
10. The learned counsel also said that decisions have been taken by the tribunal in order No. 57 to 60/1984 and in order No. 83/84-C but he would distinguish them. He said that he would request a larger bench to hear this matter, since the decisions that have been taken of the Tribunal need to be rethought.
11. The learned SDR read orders No.57 to 60/84-C and order No. 83/84-C of the Tribunal and said the appeals deserved to be rejected.
12. The error of the learned Mr. Krishnamurthy's reasoning is in the fact that he sees the process by which polyvinyl alcohol is produced from polyvinyl acetate as a process of modification and that since it is a process of modification, PVA would not, be derivative of polyvinyl and, therefore, would be excluded from item 15A(1)(ii). By this the learned counsel claims that there has been no polymerisation or co-polymerisation which is the prerequisite for a product to fall in this sub-item. The conversion of polyvinyl acetate by the process of alcoholysis or hydrolysis which leads to a replacement of the acetate groups with hydroxyl groups results in modification. This, said the learned counsel establishes that polyvinyl alcohol is not a polyvinyl derivative.
13. Hawley's CONDENSED CHEMICAL DICTIONARY described modification as "a chemical reaction in which some or all of the substituent radicals of high polymers are replaced by other chemical entitles, resulting in a marked charge in one or more properties of the polymer without destroying its structural identity". The article also says that the reactions are usually not stoichiometric and their products have many properties foreign to the original cellulose i.e. water solubility, high viscosity, gel and film-forming ability.
14 At chapter 14 page 351 of PLASTICS MATERIALS by J.A. Brydson (Butterwiths), there is an exhaustive section on Poly (vinyl acetate) and its derivatives. The first thing we read is that because of its high cold flow, poly (vinyl acetate) is of little value in the form of moulding and extrusions. However, because of its good adhesion to a number of substrates, and to some extent because of its cold flow a large quantity is produced for use in emulsion paints, adhesives and various textile finishing operations. A minor proportion of the material, is also converted into poly (vinyl alcohol) and poly (vinyl acetal) which are of some interest to the plastics industry.
15. Below we reproduce the section article on Poly (Vinyl Alcohol) from the same book with the structure and process. The passages speak for themselves.
Vinyl alcohol does not exist in the free state and all attempts to prepare it have led instead to the production of its tautomer, acetal-dehyde.
CH2=CH CH2 CHO
|
OH
Poly (vinyl alcohol) is thus prepared by alcohoiysis of a poly (vinyl ester) and in practice poly (vinyl acetate) is used CH2 -- CH + CH30H -- CH3 -- CH | OH OOCH.CH3 +CH3 COOH3 The term hydrolysis is sometimes incorrectly used to describe this process. In fact water does not react readily to yield poly (vinyl alcohol) and may actually retard reaction where certain catalysts are used.
Either methanol or ethanol may be used to effect alcohoiysis but the former is often preferred because of its miscibility with poly (vinyl acetate) at room temperature and its ability to give products of better colour. Where methanol is employed, methyl acetate may be incorporated as a second solvent. It is also formed during reaction. The concentration of poly(vinyl acetate) in the alcohol is usually between 10 and 20%.
Either acid or base catalysis may be employed. Alkaline catalysts such as caustic soda or sodium methoxide give more rapid alcohoiysis. With alkaline catalysts, increasing catalyst concentration, usually, less than 1% in the case of sodium methoxide, will result in decreasing residual acetate content and this phenomenon is used as a method of controlling the degree of alcohoiysis. Variations in reaction time provide Only a secondary means of controlling the reaction. At 60°C the reaction may take less than an hour but at 20°C complete "hydrolysis' may take upto 8 hours.
The use of acid catalysts such as dry hydrochloric acid has been described in; the literature but are less suitable when incompletely 'hydrolysed' products are desired as it is difficult to obtain reproducible results. Commercially poly (vinyl alcohol) (e.g. Gelvatol, Elvanol, Mowiol and Rhodoviol) is available in a number of grades which differ in molecular weight and in the residual acetate content. Because alcohoiysis will cause scission of branched polymers at the points where branching has proceeded via the acetate group, Poly (vinyl alcohol) polymer will have a lower molecular weight than the poly (vinyl acetate) from which it is made.
16. The book records that poly vinyl alcohol has a variety of uses. Film cast from aqueous alcohol solution is an important release agent in the manufacture of reinformed plastics. The same book speaks of incompletely hydrolised grades which have been developed for water-soluble pakages for bath salts, bleaches, insecticides and disinfectants. Moulded and extruded products which combine oil resistance with toughness and flexibility have been produced. Poly vinyl acetate can also function as a non-ionic sufface active agent and is used in suspension polymerisation as a protective colloid. It also has application as binder, as adhesive paper coating textile sizing and at least in one country, the workers have been known to develop fibre from polyyinyl alcohol.
17. The behaviour of polyvinyl alcohol results from the presence of the hydroxyl groups attached to the main chain the this has a number of significant effects. The polymer is hydrophilic and will readily dissolve in cold water. The structure of polyvinyl alcohol is atactic like poly vinyl acetate, but the former exhibit crystallinity whereas the latter is amorphous. Polyvinyl alcohol has the same crystal, lattices as 'polyethelene, resulting from the fact that the hydroxylsis groups can fit into the lattice without disrupting it.
18. Haw leyls THE CONDENSED CHEMICAL DICTIONARY defines polyvinyl alcohol as a water soluble synthetic polymer made by alcoholysis of polyvinyl acetate. It is to be noted that the Dictionary refers, to it as a synthetic polymer. There seem to have been misunderstanding, in the mind of the learned counsel for M/s. Sun Exports that because polyvinyl alcohol results from modification of polyvinyl acetate, it is not a polyvinyl derivative.
19. We have seen how Hawley's Dictionary defines Modification. It is only a chemical reaction In which some radicals of high polymer are replaced by other chemical entities resulting in marked change in one or more properties of the polymer without destroying its Structural identities. The marked change that results when polyvinyl acetate is modified into polyvinyl alcohol is that the modified form becomes hydrophilic and accordingly cold-water soluble; to a large extent. This was not the case with polyvinyl acetate. The structural identity, however, is not changed as can be seen from the following :
(- CH2 - CH -) (-CH2 - CH -)n | | OH O | C=0 | CH3 Polyvinyl alcohol Polyvinyl acetate There is no doubt that polyvinyl alcohol is a derivative of polyvinyl acetate and there is no doubt furthermore that two have identical fundamental structure. As testified by Dr. Parashar of Delhi University, polyvinyl alcohol is a modified form of polyvinyl acetate; but this does not prove that is is not a derevative of the latter. According to Mr. Krishnamurthy the word derivative has a meaning of chemical process of definite steps and movement but this is not the case. In Chemistry it is used to designate the off-springs parting from the parent. Thus we can see that polyvinyl acetate has a number of derivatives such as polyvinyl cinnamate, etc.
20. The BTN lists the following polyvinyl derivatives :
Polyvinyl acetate, polyvinyl chloride, Polyvinyl acetals, ethers, alcohols, Ketones, amines.
21. The fact that the modification is not understood in plastic science in the way the learned counsel for M/s. Sun Export understands it, can be seen from the following in 'PLASTIC MATERIALS' by Brydson. I the section on the chemical properties of polyethylene it says :
As with the simple alkanes (paraffins) halogens combine with hydrocarbon by means of substitution mechanisms. When polyethylene is chlorinated in the presence of sulphur dioxide, sulphonyl chloride as well as chlorine groups may be incorporated into the polymer. This reaction is used to produce a useful elastomer.
The structure and identity remains polyethylene and the plastic -is stilll known as polyethylene, but it has acquired a new property by the modification, namely, elasticity. It is now elastomeric polyethylene.
22. In order to remove certain undesirable characters from plastic, manufacturers modity them in a number of ways. In the book quoted above, it writes that: for many applications polystyrene might be considered as too brittle a polymer. Because of this, polystyrene manufacturers have made a number of attempts to modify their products. The methods of approaching this problem include ;
1. Use of higher molecular weight polymers.
2. Use of plastisizers.
3. Incorporation of fillers such as glass fibre, wood flour etc.
4. Deliberate orientation of polymer molecules.
5. Co-polymerisation.
6. The uses of orubber additives.
Some of the books quoted on behalf of appellants also support this.
23. In PRINCIPLE OF POLYMER SYSTEM by Ferdinand Rodigvez on Polymer Modification we read :
Whenever a polymer is formed a several stages each subsequent stage is a kind of polymer modification. All cross-linking reactions (the Vulcanisation) (rubber) would fall in this category together with the moulding of network polymer like the phenol formaldehyde resins. However, the term 'polymer modification' is used here to mean changes wrought by the polymer manufacturer -in an operation separate from the final moulding. Modifications are -feasible when a polymeric raw material is available which can have its value enhanced substantially by the operation.
Modification results in several characteristics one of the most well-known having the product of thermosetting plastics materials, which on moulding retain their shape permanently. This is achieved by the process of cross-linking: in other words a derivative of the raw material.
24. In the book POLY-VINYL ALCOHOL : PROPERTIES AND APPLICATIONS are these sentences:
Today, there are three pincipal methods for the polymerisation of vinyl acetate: bulk or mass polymerisation, solution polymerisation and suspension or emulsion polymerisation, all of which have been employed for the production of poly-vinyl alcohol. Nowadays, the structure, synthesis and reaction machanisms of the compounds are well undertood.
Contrary to the arguments of the learned Mr. Krishnamurthy that polyvinyl alcohol is not a product of polymerisation, the book says clearly, that polyviriy alcohol is obtained by the three principal meinoas 01 DUIK polymerisation, solution polymerisation and suspension polymerisation, all of which, according to the book, have been employed for the production of polyvinyl alcohol His insistence on calling polyvinyl alcohol only a modification of polyvinyl acetate and his refusal to acknowledge that it is a product of polymerisation have been contradicted by the above passages. It must be recognised that there are various routes to produce a desired polymer. Because poly-vinyl alcohol is produced by alcolysis of polyvinyl acetate cannot mean that polyvinyl alcohol is not a production of polymerisation; indeed, polymerisation is nothing but a chemical reaction. The name polyvinyl alcohol itself signify a polymer and as we have seen, it is a polymer derived from modification of another polymer, polyvinyl acetate.'
25. in YOUR GUIDE TO PLASTICS by 3. Gordon Cook at page 138 are these lines :
The variation in properties of different vinyl plastics is largely a consequence of the differences in the side groups which result from the polymerisation of different monomer. It is possible to change and properties of a vinyl polymer by modifying the chemical structure of those side groups after the polymer has been made. This technique is used for making plastics which are, in fact, the polymers of nonexistent monomers. Polyvinyl acetate, for example, is converted by chemical modification into polyvinyl alcohol in this way. Polyvinyl alcohol is a polymer in the substantive vinyl alcohol which is to unstable to have an independent existence.
Polyvinyl alcohol is a polymer of the monomer vinyl alcohol although it had been arrived by circuitous routes, because the monomer vinyl alcohol is impossible to isolate and to utilise in its free state. By modifying the chemical structure after the polymer, polyvinyl acetate has been made, a poly vinyl alcohol is obtained. Polyvinyl alcohol is a derivative of polyvinyl acetate, itself derived from vinyl alcohol.
26. The learned counsel for M/s. Sun Export would divide item 15A(1) into virtually watertight sub-items like (i) and (ii), the first carrying additions and poly-additions, condensation groups and the second polymerisation and. co-polymerisation products. Such a division is unscientific as will be shown by the following words at page 720 of Vol. 18 of Kirk-Othmer Encyclopaedia of Chemical Technology, which lay out the mechanism and processes of polymerisation:
A polymerisation reaction is the conversion of a particular compound to a large chemical multiple of itself. There is some confusion resulting from the use of the term polymerization for reactions that form small cyclic compounds molecular weight containing two or more molecules of the same -low molecular weight material. It would be desirable if the term polymerization was confined to describing reactions in which linear or branched chains of substantial molecular weights are formed from specific low molecular weight materials. The term oligomerization should be applied to reactions yielding either cyclic compounds or very low molecular weight products. Classically, polymerization reactions that yield linear, high molecular weight products are classified into two main. groups on the basis of a comparison of the structure of the repeating unit of the polymer with the structure of the monomer from which the polymer is derived. The two general divisions are addition polymerization and condensation polymerization.
We can see that this authoritative work regards polymerization as nothing but addition and condensation, including poly addition and poly condensation. In this ligt, both sub-item (i) and (ii) really refer to the same kind of materials; these two sub-items merely list different plastics by name or nature or structure : they are not meant to be exclusive lists of processes; that is neither necessary nor practicable.
27. We are not convinced by the arguments that polyvinyl alcohol being a modification product from polyvinyl acetate is not a polyvinyl derivative. We rule that polyvinyl alcohol is a derivative of polyvinyl acetate and correctly assessable under item 15A(1)(ii). In view of this no further discussions are necessary in respect of the appellants alternative claim for assessment under item 68.
28. The request for a larger bench is rejected. Such a request was premature; it assumed that this bench is of the view that polyvinyl alcohol is not assessable under item 15A(1)(ii) GET wen it (this bench) had not even made up its mind.