Adhesive: Net Weight <1 kg - Merit Classification under HS Code 35069999

In re Three Bond India Pvt. Ltd. (CAAR Delhi)

CAAR note that the applicant has stated that the goods in question for which advance ruling has been sought are in the nature of sealants and adhesives used in an automobile. CAAR also agree with the comments of the concerned Commissionerate that adhesives and sealants are different products, these cannot be treated as one; further, that these include, inter-alia: (9) Mastics based on plastics (e.g., polyesters, polyurethanes, silicones and epoxide resins) whether or not containing a high added proportion (up to 80%) of various fillers (e.g., clay, sand and other silicates, titanium dioxide, metallic powders); some of these mastics are used after the addition of hardeners; some mastics do not harden and remain tacky after application (e.g., acoustic sealants); import of adhesives to be classified under heading 3506 covers, ‘prepared glues and other prepared adhesives, not elsewhere specified or included, products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight 1 kg. Explanatory Notes for Tariff heading 3214 provides inter-alia that goods classifiable under heading 3214 should be preparations that are mainly used to stop, seal or caulk cracks and in certain cases, to bind or firmly join components together. CAAR also note that heading 3214 covers goods described as caulking compounds and other mastics which are of the nature of the goods in question.

In light of the foregoing facts, submissions, comments and discussions, reference is drawn to General Rules for Interpretation of Import Tariff (GRI, in short) and particularly to rule 1 of GRI and accordingly, it is felt that item, ‘sealant’ is of the same nature as items, caulking compounds and mastics falling under heading 3214. Thus, item, ‘Sealant’ proposed to be imported by the applicant is classifiable under heading 3214 and specifically under Sub-heading 32141000. Further, other item, ‘Adhesives’ proposed to be imported by the applicant are different from `sealants’; moreover, the authorized representative during the personal hearing has mentioned that goods imported by them are in packing of less than 1 kg. Accordingly, item, ‘Adhesive’ in a packing of net weight of less than 1 kg, proposed to be imported by the applicant merit classification under Sub-heading 35069999.

FULL TEXT OF ORDER OF CUSTOMS AUTHORITY FOR ADVANCE RULINGS, DELHI

M/s. Three Bond India Pvt. Ltd., Plot No. 43, Sector-3, IMT Manesar, Gurugram, Haryana-122050 having IEC No. 0597039500 and PAN-AAACT5989N (applicant, in short) filed an application dated 08.05.2023 before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short), seeking advance ruling under section 28-H of the Customs Act, 1962. The application was received in the 0/o CAAR on 01.06.2023 and it was accordingly registered under serial number 18/2023 dated 01.06.2023.

2. In the said application, it is stated that, the applicant is a subsidiary of M/s. Three Bond Co. Ltd., Japan, engaged in import of various products, such as, sealants, adhesives, potting agents, heat dissipation agents, electric conductive resins, etc. and thereafter engaged in trading of such goods. The applicant is also engaged in import from the parent company, other essential engineering products that meet a wide range of needs which support the automotive, electronic, medical, infrastructure, auto after market and in many other fields.

3. The applicant has further stated that, for the purpose of the present application, the goods referred are sealants/adhesives, used specifically in the automotive industry; the subject goods imported by the applicant are descriptively black or grey color paste containing silicious polymers and additives; a few products are also in nature of silicious based single component room temperature vulcanizable (RTV) used as sealants in an automobile; the goods can be generically termed as sealants or adhesives which are used for engine oil resistance and suitable for sealing of high-grade oils; the nature of these products is briefly as below:

4. The applicant has also stated that, the aforesaid products are in the nature of “sealants/adhesives used in an automobile” and these were classified under Sub­heading 35069190 as polymer based (silicone) additives as per Order-in-Original No. 04/2014 dated 21.10.2014 passed by the Additional Commissioner of Customs (Import), Nhava Sheva; the products entailed in the aforementioned table are in thp nature of “sealants/adhesives used in an automobile”; these products have been classified as per table below:

5. The applicant has also stated that, they are importing sealants/adhesives used in automobile industry by classifying such products under Sub-heading 3506, considering that sealants/adhesives are to be classified amongst adhesives as the main purpose of such products are for sealing inner fluids via application to the joint surfaces of various flanges, screws, etc.; in light of the above facts, an advance ruling has been sought under Section 28H of the Customs Act, 1962 to validate the classification of their imported goods under the Sub-heading 35069999 of the Customs Tariff Act.

6. As regards, classification of the subject goods, the applicant has stated that, Sub- heading 350691 covers “Adhesives based on polymers of headings 3901 to 3913 or on rubber”; considering that the subject goods are a mixture of various ingredients, these are best classifiable under Sub-heading 350699 as ‘Other’ and further under Sub­heading 35069999 — Other”; however, to validate this classification, following questions for advance ruling has been raised:

A) Whether the applicant is right to classify the imported sealants /adhesives under CTH 35069999?

B) If the quantity of each unit is over 01 kg, will there be a change in the CTH? If so, which other CTH?

C) If the subject goods are not classifiable under CTH 35069999, then what should be the appropriate classification for the sealants/adhesives used in automobiles imported by the applicant given the composition of the subject goods?

7. The concerned Commissionerate has inter-alia commented that, adhesives and sealants are different products, these cannot be treated as one; classification of sealant is under heading 3214 whereas the classification of adhesives is under heading 3506 wherein the quantity of each unit is not exceeding 1 kg; HSN Explanatory Notes under heading 3506 specifically exclude products of heading 3214; heading 3214 covers goods described as ‘Glazier’s putty, grafting putty, resin cements, caulking compounds and other mastics; painter filling; non-refractory surfacing preparations for facades, indoor walls, floors, ceilings or the like’; the sealants are polymers having a tight molecular structure that does not allow penetration and contain fast drying epoxies that form a sleek finish; sealants have a paste like consistency which allows filling of gaps between surfaces and has low shrinkage after application whereas adhesives are generally in liquid form which become solid after application and used to bind materials together; Explanatory Notes for Tariff heading 3214 provides inter-alia that goods classifiable under heading 3214 should be preparations that are mainly used to stop, seal or caulk cracks and in certain cases, to bind or firmly join components together; therefore, they are distinguished from glues and other adhesives; further, these include, inter-alia: (9) Mastics based on plastics (e.g., polyesters, polyurethanes, silicones and epoxide resins) whether or not containing a high added proportion (up to 80%) of various fillers (e.g., clay, sand and other silicates, titanium dioxide, metallic powders); some of these mastics are used after the addition of hardeners; some mastics do not harden and remain tacky after application (e.g., acoustic sealants); others harden by the evaporation of solvents, by solidification (hot-melt mastics), by curing after exposure to the atmosphere or by the reaction of different components mixed together (multi-component mastics); products of this nature are to be classified in this heading only if they are fully formulated for use as mastics; mastics may be used to seal certain joints in construction or home repair for sealing or repairing glass, metal or porcelain articles, as fillers or sealants for coachwork or, in the case of adhesive sealants to bond various surfaces together. It is further commented that the heading 3506 covers, ‘prepared glues and other prepared adhesives, not elsewhere specified or included, products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight 1 kg; this group covers the prepared glues, adhesives and other products suitable for use as glues or adhesives, provided they are put up for retail sale as glues or adhesives in packages, the content of which does not exceed 1Kg. The packages in which glues or adhesives are usually put up for retail sale include glass bottles or jars, metal boxes, collapsible metal tubes, cartons, paper bags etc.; sometimes the `packaging’ is merely a paper band wrapped round, for example, a slab of bone glue.

8. In respect of the application for advance ruling, personal hearing took place on 04.10.2023, wherein the authorized representative started by throwing light on the applicant company and goods imported by them. He brought the stock samples of a few items and shown the same and mentioned that goods imported by them are in packing of less than 1 kg. He referred to the earlier classification order by the Authority at Nhava Sheva port wherein it was ordered that goods merit classification under Sub-heading 35069190. He further, stated that they have now approached for a ruling for classification of the goods in question under Sub-heading 35069999. He also reiterated the submissions already made in the application for advance rulings.

9.1 In this regard, keeping in view the submission of the applicant that Order-in-Original No. 04/2014 dated 21.10.2014 has been passed by the Additional Commissioner of Customs (Import), Nhava Sheva, in respect of classification of the subject goods. The Proviso to Sub-section (2) of section 28-I does not permit the Authority to allow the application if the question raised in the application is same as in a matter decided already by the Appellate Tribunal or any Court. As the question of classification of the subject goods has only been decided by the Quasi-Judicial Authority and not the Appellate Tribunal or any Court, I intend to allow the application for issue of advance ruling on the question raised.

9.2 I note that the applicant has been engaged in import of the goods in question, whereas in terms of Sub-section (b) of section 28E of the Customs Act, 1962, “Advance Ruling” means a written decision on any questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. The present application has posed a question for advance ruling related to on-going activity however, I note that CAAR, New Delhi, had issued an Advance Ruling dated 05.10.2021 in the application for Advance Ruling filed by M/s. Spraytec India Ltd. wherein, while noting that the goods in question have been imported in the past, the Authority had also observed that the application for advance ruling relates to the on-going activity. However, a ruling by the Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by proviso to section 28-I (2) of the Customs Act, 1962. Thus, for certainty in the matter of classification of goods, I intend to issue ruling in the instant application recognizing the fact that the subject goods had earlier been imported by the applicant.

9.3 Having completed the procedure laid down in the CAAR Regulations and in view of the submissions made in the application for advance ruling, comments of the concerned Commissionerate, submissions made by the applicant during the personal hearing, I proceed to discuss and give ruling on the following questions raised in the instant application for advance rulings:

A) Whether the applicant is right to classify the imported sealants /adhesives under CTH 35069999?

B) If the quantity of each unit is over 01 kg, will there be a change in the CTH? If so, which other CTH?

C) If the subject goods are not classifiable under CTH 35069999, then what should be the appropriate classification for the sealants/adhesives used in automobiles imported by the applicant given the composition of the subject goods?

10. I note that the applicant has stated that the goods in question for which advance ruling has been sought are in the nature of sealants and adhesives used in an automobile. I also agree with the comments of the concerned Commissionerate that adhesives and sealants are different products, these cannot be treated as one; further, that these include, inter-alia: (9) Mastics based on plastics (e.g., polyesters, polyurethanes, silicones and epoxide resins) whether or not containing a high added proportion (up to 80%) of various fillers (e.g., clay, sand and other silicates, titanium dioxide, metallic powders); some of these mastics are used after the addition of hardeners; some mastics do not harden and remain tacky after application (e.g., acoustic sealants); import of adhesives to be classified under heading 3506 covers, ‘prepared glues and other prepared adhesives, not elsewhere specified or included, products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight 1 kg. Explanatory Notes for Tariff heading 3214 provides inter-alia that goods classifiable under heading 3214 should be preparations that are mainly used to stop, seal or caulk cracks and in certain cases, to bind or firmly join components together. I also note that heading 3214 covers goods described as caulking compounds and other mastics which are of the nature of the goods in question.

11. In light of the foregoing facts, submissions, comments and discussions, reference is drawn to General Rules for Interpretation of Import Tariff (GRI, in short) and particularly to rule 1 of GRI and accordingly, it is felt that item, ‘sealant’ is of the same nature as items, caulking compounds and mastics falling under heading 3214. Thus, item, ‘Sealant’ proposed to be imported by the applicant is classifiable under heading 3214 and specifically under Sub-heading 32141000. Further, other item, ‘Adhesives’ proposed to be imported by the applicant are different from `sealants’; moreover, the authorized representative during the personal hearing has mentioned that goods imported by them are in packing of less than 1 kg. Accordingly, item, ‘Adhesive’ in a packing of net weight of less than 1 kg, proposed to be imported by the applicant merit classification under Sub-heading 35069999.

12. I rule accordingly.