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Case Law Details

Case Name : In re KPX chemical India Pvt. Ltd. (CAAR Mumbai)
Appeal Number : Riding Nos. CAAR/ARC/88/2024
Date of Judgement/Order : 04/06/2024
Related Assessment Year :

In re KPX chemical India Pvt. Ltd. (CAAR Mumbai)

M/S KPX chemical India Pvt. Ltd., (having !EC No. AAGCK6025L and hereinafter referred to as ‘the applicant’, in short) filed an application (CAAR-1) for advance ruling before the Customs Authority for Advance Rulings, Mumbai (CAAR in short). The said application was received in the secretariat of the CAAR. Mumbai on 16.11.2023 along with its enclosures in terms of Section 2.811 (I) of the Customs Att., 1962 (hereinafter referred to as the ‘Act’ also). The applicant is seeking advance ruling on the classification of “KONIX Ki; – 810, KON1X FA – 505 and KONIX KE – 880S” under the Customs Tariff Act, 1975 for imports through the port of Chennai. ‘

2. Applicant has stated as follows in their statement of relevant facts having a bearing on the questions (s) raised enclosed with the CAAR-1 application:

2.1 At the time of clearance of the chemical product’s, the Applicant uses the nomenclature, Polypropylene Glycol inthe import clearance documents such as bill of entries. Further, Master safety Data Sheet (“also called .MSDS”) with respect to each chemical products imported by the Applicant which contain the information about the chemical products such as the properties of the chemicals, the chemical composition, the physical specification, health, and environmental health hazards; protective measures, and safety precautions for handling, storing, and transporting the chemical are submitted by the applicant.

Upon perusal of MSDS data following information can be inferred with respect to the chemical composition/ingredients of the chemical products imported by the Applicant and the same are inter alia as follow-

perusal of MSDS data following information

2.2 That for the purpose of classification of the KONIX KE-810, KONIX. FA 505 & KONIX ,KE 880S. it is imperative to dwell into the detail of the chemicals which are used in the manufacturing process along with the chemical structure, chemical formulae, and other important physical and chemical properties of the said chemical products and the same arc explained in extenso in the foregoing paras:

Manufacturing process and chemical formulae of KONIX KE-810

It is submitted that KONIX KE-810 is manufactured using the monomers Glycerin, Propylene Oxide (“PO”) and Ethylene Oxide (“EO”). It is submitted that Propylene Oxide and Ethylene Oxide along with Glycerin are polymerized to obtain KONIX KE- 810 product. It is pertinent to mention that Polymerization is process in which relatively small molecules, called monomers, combine chemically to produce a very large chainlike or network molecule, called a polymer. In addition to above, the chemical formulae for KONIX KE-810 is inter alia as follow

KONIX KE-810 is manufactured

It is pertinent to mention that in addition to above-mentioned chemicals, other chemical are added at the time of polymerization to form KONIX KE-810.

Manufacturing process and chemical formulae of KONIX FA-505

It is submitted that KONIX FA-505 is also manufactured using the monomers Glycerin, Propylene Oxide and Ethylene Oxide. It is submitted that Propylene Oxide and Ethylene Oxide along with Glycerin arc added together and polymerized to achieve KONIX FA-505. In addition to above, chemical formulae for KONIX KE-505 is inter alia as follow which clearly depict presence of hydroxyl group i.e. 01-I at the end of chemical formula

chemical formula

It is pertinent to mention that in addition to above-mentioned chemicals, Magnesium Silicate arc added at the time of polymerization to form KONIX FA-505

Manufacturing process and chemical formulae of KONIX KE-880S KONIX KE-505 is manufactured using the monomers glycerin, ethylene oxide, propylene oxide, acrylonitrile and styrene monomer (“SAN particles”). These products are mixed and, polymerized together to achieve KONIX KE-880S which is imported by the Applicant for further supply to its customers. For ease of reference, the manufacturing process of KONIX K1′, 810, KON.IX FA s- 505 and KONIX KE – 880S is enclosed with the application. In addition to above, the chemical formulae for KONIX KE-880S is inter alia as follow which clearly depict presence of SAN particles –

SAN particles

It is submitted that the Company is importing the above-mentioned chemicals Le KONIX KE 810, KONIX FA 505 & KONIX KE 880S under the nomenclature ‘Polypropylene

Glycol another name plyoxypropylene Glycol). However, it is imperative to mention. that certain different chemicals are also added at the time of chemical reaction of the raw: material to obtain the final product which ultimately make the final product significantly different from. ‘Polypropylene Glycol’ and the same has been explained in extenso in Ow application„

3. In the statement of applicant’s interpretation of law and /or facts, as the case maybe, in respect of the questions raised, the applicant submitted as under:

3.1 Customs duty is charged on import of goods into India under the provisions of Customs Act, 1962 (`Customs Act’) and at the rate specified in the schedule to the Customs Tariff Act, 1975 (`Customs Tariff Act’) on the value as prescribed under the provisions of the Customs Act and Customs Valuation (Deter Monition of value of imported goods) Rules, 2007 (Customs Valuation Rules). For deciding the rate of duty,it is necessary to determine classification of imported goods. Classification is ordinarily determined in terms of headings in the. Customs tariff and relevant section and chapter notes of the Customs tariff.’ However, where classification cannot be determined accordingly. Rules of interpretation of Customs tariff (Interpretation Rules) arc to be referred to. Since the above chemicals arc in the nature of polymer which carry the properties of ‘plastic’ therefore the classification should he governed by Chapter 39 of Section 7 of the First Schedule to the Customs Tariff Act. Explanatory Note I of Chapter 39. describe the ‘plastic’ as:

“1. Throughout this Schedule, the expression “plastics” means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence 

Further, Note 6 of Chapter 39 reads as follows:

“6. In headings 39.01 to 39.14, the expression ‘Primary forms” applies only. to the following .

(a) Liquids and pastes. including dispersion. (emulsions and suspensions) and solutions

(a) (b)….. …….” 

3.2 Under Chapter 39, the most relevant Heading suitable for classification of the chemical products in question is Heading 3907 as the composition/ingredient of the chemical products i.e. “KONIX ICE-810 & KONIX FA-505” has the monomer of both ether and epoxide group, however it is pertinent to mention that none of them are present in more than 95% by weight and the same has been explained in foregoing paras. Further, heading 3907 specifically covers primary forms of plastics which could form the basis for the final products such as car seats, etc. For the ease of reference, heading 3907 has been reiterated hereunder-

Heading/Sub- Heading/Tariff Item Description of goods
3907 Polyacetals, other polyether’s and epoxide resins, in primary forms; polycarbonates, alkyd resins, polyallylesters and other polyesters, in primary forms
3907 21 00 Polyacetals
Other polyether’s :
3907 21 00 Bis (polyoxymethylene) methyl phosphonate
3907 29 Other :
3907 29 10 Poly(ether alcohols)
3907 29 90 Other
3907 30 Epoxide resins :
3907 30 10 Epoxy resins
3907 30 90 Other
3907 40 00 Polycarbonates
3907 50 00 Alkyd resins
Poly(ethylene terephthalate :
3907 61 Having a viscosity number of 78 !r?//g• or higher :
3907 61 10 PET flake (chip)
3907 61 90 Other primary form
3907 69 Other :
3907 69 30 PET flake (chip)
3907 69 90 Other primary form
3907 70 00 Poly (lactic acid)
other polyesters
3907 91 Unsaturated 
3907 91 10 Maleic resins
3907 91 20 Polyester or contract resins
3907 91 30 Fumaric resins
3907 91 40 Diallyl-phthalate resins
3907 91 50 Poly (butylene terephthalate)
3907 91 90 Other
3907 99 00 Other

From the above it can be deduced that • Heading 3907 mainly covers the following articles of chemicals (with a Single dash) for the purpose of Classification

i. Polyacetals

ii. Other Polyether’s

iii. Epoxide Resin

iv. Polycarbonates

v. Alkyd resins

vi. Polyethylene terephthalate)

vii. Poly(lactic acid)

viii. Other Polyesters

It is submitted that for the purpose of classification of the chemical products question under the above-mentioned categories of chemicals, the ‘product in question should bear’ the character of the above chemicals.

3.3 Properties of the above-mentioned chemical have been explained under the explanatory note of the Heading 3907. In this regard a comparative analysis of chemical properties of the above mentioned chemicals viz- a- viz chemical product in the present matter is tabulated below —

SI. No. Chemical Name Properties as per Explanatory Note to Heading 30907 Nature of KPX Chemical
1 Polyacetals Polymers obtained from an aldehyde, typically formaldehyde, characterized by the presence of acetal functions in the polymer chain. They are distinct from polyvinyl acetals of heading 39.05, where acetal functions are substituents on the polymer chain. This family of plastics includes acetal copolymers and is regarded as engineering plastics, being used for ring bearings, cams, automobile instrument housings, doorknobs, pump and air impellers, shoe heels, mechanical toys, plumbing fittings, etc. The said chemicals cannot be equated as Polyacetals owing to the reason that they are not obtained from aldehydes and neither acetal functions are present in them.
2 Other polyethers Polymers obtained from epoxides glycols or similar materials and characterized by the presence of ether-functions in the polymer chain. They are not to be confused with the polyvinyl ethers of heading 39.05, in which the ether-functions are substituents on the polymer chain. The most important members of this group are poly(oxyethylene) (polyethlyene glycol), polyoxypropylene and polyphenylene oxide (PPO) (more correctly named poly (dimethyiphenylene-oxide)).   These products have a variety of uses, PPO being used, like the polyacetals, as engineering plastics, polyoxypropylene as an intermediate for polyurethane foam. KONIX — 810 & KONIX FA – 505 may be treated as polyether as the same are obtained from epoxide groups and glycol. However, said chemicals may also be treated as chemically modified as other chemicals are added at the time of chemical reaction. KONIX — 880S is chemically modified polymer/chemically modified polyether, as different chemicals are added with epoxide and glycol to obtain the final product and therefore warrant classification under CM 3907 99 00.
3 Epoxide resins Polymers made, for example, by condensing epichlorohydrin (1-chloro-2,3-epoxypropane) with bisphenol A (4,4 ‘-isopropylidenediphenol), novolak (phenolic) resins or other polyhydroxy compounds or by epoxidising unsaturated polymers. Whatever the basic structure of the polymer, these resins are characterised by the presence of reactive epoxide groups which allow them to be readily cross-linked at the time of use, e.g. by the addition of an amino compound, an organic acid or anhydride, a boron trifluoride complex or an organic polymer. The said chemicals cannot be equated as Epoxide Resins as the same is not obtained by condensing epichlorohydrin. noyolak resins or other polyhydroxy compounds.
4 Polycarbonates Polymers obtained, for example, by condensing, bisphenol A with phosgene (carbonyl chloride) or dipheny1 carbonate -and characterised by the presence of carbonic ester-functions in the polymer chain. These have a number of industrial applications, particularly in moulded articles and as glazing. The said chemicals are not Obtained by condensing. bisphenol A with phosgene (carbonyl chloride) or diphenyl carbonate
5 Alkyd Resins Polycondensation products of polyfunctional alcohols, and polyfunctional acids or their anhydrides, one of which at least must be partly or wholly tri- or higher functional, modified with other substances such as fatty acids or animal or vegetable oils, monofunctional acids or alcohols, rosin. They do not include Oil-free alkyds. These resins are used mainly as coatings and in high-grade varnishes and are usually supplied in a viscous form or solution. The chemicals in question are not products of polyfunctional and polyfunctional acids or their anhydrides. Neither the product in question contains fatty acids or animal or vegetable oils, monofunctional acids, or alcohols, rosin.
6 Poly(ethyleneterpthadate) The said polymer is not formed by the esterification of terephthalic acid with ethylene glycol or obtained from the reaction of dimethyl terephthalate with ethylene glycol. Apart from its very important use in textiles, it finds application, for example, in packaging films, recording tapes, soft-drink bottles. Poly(ethylene terephthalate) having a viscosity number of 78 ml/g or higher is generally used for the production of bottles. The said polymer is not formed by the esterification of terephthalic acid with ethylene glycol or obtained from the reaction of dimethyl terephthalate with ethylene glycol.
7 Poly(lactic acid) Also known as polylactide. It is usually produced from lactic acid obtained synthetically or by fermentation. This method uses raw materials consisting predominantly of hexoses or compounds that can be easily split into hexoses, e.g., sugars, molasses, sugar beet juice, sulfite liquors, whey, or starches. The lactic acid is converted to a cyclic lactide dimer, the ring structure of which is opened during the final polymerization step. Its applications include textile fibers, packaging materials, and materials for medical use. The said polymers are not produced from lactic acid obtained synthetically or by fermentation. This method uses raw materials consisting predominantly of hexoses or compounds that can be easily split into hexoses.
8 Other polyesters These may be unsaturated or saturated. Unsaturated polyesters include polyallyl esters and other polyesters (including oil-free alkyds) based on an unsaturated acid, for example, maleic or fumaric acid. These products, which are usually in the form of liquid prepolymers, are mainly used for producing glass fiber reinforced laminates and cast transparent thermosetting products. Saturated polyesters include polymers based on terephthalic acid, for example, poly(butylene terephthalate), and saturated oil-free alkyd resins. They are largely used for textile fibers and films. The said polymers are not unsaturated polyesters as they do not contain polyesters include polyallyl esters and other polyesters (including oil-free alkyds) based on an unsaturated acid.

It is further also not saturated polyesters as they do not include polymers based on terephthalic acid.

3.4 The chemical products in question in the present matter i.e. “KONIX KE-810 & KONIX FA 505” is being imported by the Applicant in liquid form and supplied thereafter to their customers who then finally use the chemical product to manufacture the polyurethane which is further used to manufacture car scats, car head/arm rest, crash pads along with home furniture such as viscoelastic pillow and mattress etc. “KONIX IKE-8 I 0 & KONIX FA-505” is primarily obtained from the monomers of the Epoxide Group i.e. Propylene Oxide and Ethylene Oxide which are added together with Glycol and polymerized to obtain the chemicals i.e. KONIX KE-810 & KONIX FA-505 which is being imported by the Applicant. Further, at the time of polymerization of product, other chemical such as ‘other’ and ‘magnesium silicate’ respectively are also added. To further substantiate that the “KONIX KE-810 & KONIX FA-505” are manufactured using the monomers of epoxide group and glycol, detail about the composition of monomers basis the Bill of Material for each product is reproduced below-

Bill of Material for each product is reproduced below

From the above it can be seen that the primary constituent of KONIX KE-810 and KONIX FA-505 is epoxide group i.e. Propylene Oxide and Ethylene Oxide i.e. 84% and 14% respectively and 2% glycerol is also added at the time of polymerization to obtain the final product which is being imported by the Applicant. At this juncture, it is pertinent to mention that Explanatory Note to Heading 3907 provides that polymers which are obtained from epoxide, glycol and bear the characteristics of ether is a polyether and the same merits classification under CTI-1 3907 2990. For the ease of reference. relevant portion from the explanatory note to heading 3907 is reproduced below

“(2). Other polyethers. Polymers obtained from epoxides., glycols or similar materials and characterised by the presence of ether-functions in the polymer chain”.

It further states that “The most important members of this group are. poly(6xyethylene) (polyethylene glycol), .polyoxypropylen e and polyphenylene oxide (PPO) (more correctly named poly(dimethylphenylene oxide)). These ‘products have a variety ()fuses, PPO being used, like the polyacetals, as engineering plastics, polyoxypropylene as an intermediate for polyurethane foam.”.

From the above explanation of polyether, it can be deduced that since prima facie, KONIX KE-810 & KONIX FA-505, are primarily obtained from the monomers of epoxide group i.e. propylene oxide, ethylene oxide, glycols and ether function are also present, therefore by the virtue of explanatory note to heading 3907 and chemical composition, the chemical products i.e. KONIX KE-810 & KONIX FA-505 should merit classification as polyether only and specifically under CTII 3907 2990 i.e. “other” which covers all types of polyether.

3.5 Without prejudice with the above made submission, the Applicant submits that though the “KONIX KE-810 & KONIX FA-505” which is imported under the nomenclature ‘Polypropylene Gylcol’ is in the nature of polyether, however, it is pertinent to highlight there exist iota of doubt that the said chemicals may also be treated as chemically modified polymer. This is owing to reason that there are other chemicals which are added at the time of polymerization which led to change the appendages of the main polymer (i.e. polyether) due to which said chemicals became chemically modified polymers. In this regard, it is imperative to place reliance upon the manufacturing process from which it. is.. clear that while, manufacturing “KONIX KE-81.0 & KONIX FA-505”, certain different chemicals are also added to it at the time of polymerization. Such addition of chemical led to change the appendages to the main polymer i.e. Polypropylene Glycol as they partake the nature of chemically modified polymer. For ease of reference, detail about the different chemicals which ­are added during the process of polymerization of the above monomers i.e. propylene oxide; ethylene oxide and glycerol, are tabulated below-

ethylene oxide and glycerol, are tabulated below

From the above,- it can be deduced that in KONIX KE-810 and KONIX FA-505, NCA Silicon and Magnesium Silicate.arc added in addition to the raw material which led to change the appendages of the main polymer to form chemically modified polymer. At this juncture. it would be pertinent to highlight that Explanatory Note to Chapter 39 categorically provides the meaning of ‘chemically modified polymer’ to mean “polymers, that is those in which only appendages to the main polymer chain have been changed by chemical reaction”. Upon perusal of the Subheading Note 1 of the Explanatory Note which provide the rules for classifying the polymers including the chemically modified polymer in cases where there is sub-heading named “Other” exists, it can be deduced that if “other” exist under the heading, then the product must be classified in the manner prescribed below-

i. the monomer unit contribute more than 95% or more by weight, then in the specific entry of a polymer by prefix “poly”. For example, in case of polyamide, amide monomer should be more than 95% or more by weight.

ii. The copolymer used under sub-heading 3901.30, 3901.40, 3903.20, 3903.30 and 3904.30 has to be classified under that sub-heading only provided the comonomer unit contribute 95% or more by weight of the total polymer content.

iii. Chemically modified polymers are to be classified in the subheading named “Other”, provided that the chemically modified polymers are not more specifically .covered by another subheading.

For the entry (i), it is submitted that monomers of epoxide group i.e. ethylene oxide or propylene oxide used in the manufacturing of KONIX KE — 810 & KONIX FA – 505 does not constitute more that 95% by weight in none of the product as is evident from the table above. Since none of the monomer unit in the above-mentioned products exceed more than 95% by weight, therefore, the same cannot merit classification under the specific entry of ‘Other Polyether’. Further, entry no. (ii) specifically covers the sub-heading as mentioned therein which deals with the specific polymer which is completely different. For example, said polymers arc Polymer of ethylene, Polymer or styrene and polymer of vinyl chloride or of other halogenated olefins which is completely different from the product in consideration in the present application. Further, the Applicant has reiterated the fact that the chemical products in question are chemically modified polymer owing to the reason that there are other chemicals which are added during the process of polymerization which is necessary for the purpose of improving the resistance of the polypropylene. Further, the applicant submits that entry no. (iii) categorically provides .that chemically modified polymer is to be classified in sub-heading named “.Other” if the product not specifically covered by the entry mentioned earlier in the sub-headings. Since in the present matter, there is no specific entry for the chemically modified polymer, therefore, the same may also merit classification as “other” to 1-leading 3907 i.e.:3907 9900 by applying above rule (iii) of the above mentioned rule for classification.

3.6 From the above made submission, the Applicant contend that KONIX KE — 810 and KONIX FA — 505 merit classification under both CTH 3907 2990 i.e., ‘other’ of the Polyether as well as CTH 3907 9900 i.e., ‘other’ to heading 3907 as the same may also be treated as `chemically modified polymer’ therefore, it is requested by the applicant to CAAR, Mumbai for clarifying the correct classification for the said products.

3.7 The Applicant submitted that though KONIX KE — 880S which is imported under’ the nomenclature ‘Polypropylene Gylcol’ is in the nature of polyether, however, it is pertinent to  highlight that the appendages of the said polymer (i.e. polpether) have been changed at  the time of polymerization due to addition of different chemicals during the chemical  reaction due to which said chemicals became chemically modified polymers.  To bolster the submissions, it would be pertinent to dwell into the manufacturing process along with the information available with respect to the chemical/monomer composition .used at the time of manufacturing the chemical products (which arc substantiated in the Bill .of Material for each product).

For ease of reference, detail about composition of monomers basis the bill of material is as mentioned below — .

detail about composition of monomers basis the bill of material

At this juncture, it is imperative to place reliance upon the manufacturing process wherein it is clearly mentioned that while manufacturing “KONIX KE — 880S”, certain different chemicals are also added to it at the time of polymerization. Copy of manufacturing process for the above-mentioned chemical is enclosed by the applicant. Such addition of chemical at the time of chemical reaction led to change the appendages to the main polymer i.e., Polypropylene Glycol as they partake the nature of chemically modified polymer. For ease of reference, detail about the different chemical which are added in during the process of polymerization of the above monomers i.e., propylene oxide, ethylene oxide and glycerol, are tabulated below —

From the above, it can be deduced that in KONIX KE 880S• hitherto there are other monomers added such as SM and ACM which makes the polymer a chemically modified polynier / chemically modified polyether. Said polymer is *used to manufacture the polyurethane product having hard foams like head rest/arm rest/crash pads/dash pads etc. in cars. Reliance is further placed on the article published by ‘Department of Chemistry, JILIN University, China’ wherein reason for modification of polypropylene has been explained. According to said article, ‘polypropylene’ are ‘modified to improve its resistance to shock at low temperature, resistance to heat and especially its miscibility with other polymers. Unmodified polypropylene is practically immiscible with any other polymer and shows incompatibility even between different samples of the same polyolefin due to different molecular weight or branching.” Explanatory Note to Chapter 39 categorically provides the meaning of ‘chemically modified polymer’ to mean “polymers, that is those in which only appendages to the main polymer chain have been changed by chemical reaction”. Further, Subheading Note I of the Explanatory Note provide the rule for classifying the polymers including the chemically modified polymer in cases where there is sub-headin2, named “Other” exists in the same series of heading, The same is extracted hereunder for the ease of reference-

“Within any one heading of this Chapter, polymers (including copolymers and chemically modified polymers are to be classified according to the following provisions:

(a) Where there is a subheading named “Other” in the same series :

(1) The designation in a subheading of a polymer by the prefix “poly” (fin- example, polyethylene and polyamide-6,6) means that the constituent monomer unit or monomer units of the named polymer taken together must contribute 95 % or more by weight of the total polymer content.

(2) The copolymers named in subheadings 3901.30, 3901.40, 3903.20, 3903.30 and 3904.30 are to be classified in those subheadings, provided that the comonomer units of the named copolymers contribute 95 % or more by weight of the total polymer content.

(3) chemically modified polymers are 10 be classified in the subheading named “Other”, provided that the chemically modified polymers are not more specifically covered by another subheading.

(4) Polymers not meeting (1), (2) or (3) above, are to be classified in the subheading, among the remaining subheadings in the series, covering polymers of that monomer unit which predominates by weight over every other single comonomer unit. For this purpose, constituent monomer units of polymers falling in the same subheading shall be taken . Only the constituent comonomer units .of the polymers in the series of subheadings under consideration are .to be compared.”

From the above, it can be deduced that if “other” exist under the heading, then the product must be classified in the manner prescribed below —

i. Where the monomer unit contribute more than 95% or more by weight, then in the specific entry of a polymer by prefix “poly”. For example, in ease of polyamide, amide monomer should be more than 95% or more by weight.

ii. The copolymer used under sub-heading..30, .3901.40. 3903:20, 3903.30 and 3904.30 has ..to be classified under that sub-heading only provided the comonomer unit contribute 95 % or more by weight of the total polymer content.

iii. Chemically modified polymers are to be classified in the subheading named “Other”, provided. that the chemically modified polymers are not more specifically covered by another subheading.

For the entry. (i), it is submitted that monomers of. epoxide group i.e. ethylene oxide or propylene oxide or any other monomers. used in, the present matter for manufacturing of products does not constitute more than 95% by weight in none of the product as is evident from the table above. Since none of the monomer unit in the above-mentioned products exceed more than 95% by weight, therefore, the same cannot merit classification under the specific-entry of ‘Other Polyether’. Further, entry no. (ii) specifically covers the sub-heading as mentioned therein which deals with the specific polymer which is completely different. For example; said polymers are Polymer of ethylene, Polymer of styrene and polymer of vinyl chloride or of other halogenated olefins which i.s completely different from the product in consideration in ,the present application. Further, the Applicant reiterated the fact that the chemical product in question arc chemically modified polymer owing to the reason that there are other chemicals which arc added during the process of chemical reaction i.e. polymerization which is necessary for the purpose of improving the resistance of the polypropylene. In this regard, it is pertinent to highlight that entry ho. (iii) categorically provides that chemically modified polymer is to be classified in sub-heading named “Other” if the product in not specifically Covered by the entry mentioned earlier in the sub-headings. Since in the present matter, there is no specific entry for the chemically modified polymer, therefore, the same shall merit classification as “other” to I-leading 3907 i.e. 3907 9900 by applying above rule (iii) of the classification.

3.8 It is further a well settled principle that when the chemical products are classified, the same has to be done basis the technical aspect rather than basis the nomenclature. In this regard, the Applicant has placed reliance in the matter of Akbar Badruddin Jiwani Versus CollectOr of Customs, 1990 (47) ELI 161, wherein the 1-lon’ble Supreme Court of India categorically held that

“It is, of course, well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such it trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words .used in the Tariff Entry and any other Entry in the Tariff Schedule.

The reference to the requirement of gravity of 2.5% or more is also a purely technical criteria or requirement which shows that the principle of trade nomenclature or commercial understanding is not applicable to that Tariff1tem. Moreover, the said Harmonised System of Nomenclature (1ISN) contains a specific note regarding serpentine rocks to the effect *that the same case sometimes called marble, but the same is excluded from Chapter ‘Heading 25.15. Phis again clearly shows that according io IISN, Chapter Heading 25.15 has to be construed according to its technical meaning. Technically;. serpentine does not fall under Heading 25.15 and the same is accordingly excluded therefrom by the HSN. If commercial meaning is to be applied then serpentine would have to be classified under Item 25.15 in as much as it is sometimes called ‘marble in the trade. The MN ‘Explanatory Notes, therefore, establish that Chapter Heading 25.15 must be construed by its technical sense and not by applying a commercial nomenclature test.”

From the above, it can be concluded that in case of product having scientific and technical meaning, the commercial nomenclalture cannot be basis for classification and the same has to be done basis the technical sense. It is further submitted that chemical products in question are not specifically covered under any other specific entry, there it has to merit classification under residuary entry. It is further a well settled principle that “4 residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former.” Reliance in this regard is placed in the matter of Commissioner of Central Excise Versus Wockhardt Life Sciences Ltd. 2012 (277) E.L.T. 299 (S.C.) passed by the Flon’ble Supreme Court of India.

3.9 From the above made submission, the Applicant contend that in KONIX IKE: 880S hitherto there are other monomers added such .as SM and ACM which makes the product chemically modified polymer. In addition, while polymerization ABN is added which load to change the appendages of the main polymer to form chemically modified polymer and therefore it merits classification under CTI1 3907 99 00.

4. In response to the subject application, the Jurisdictional Commissioner of Customs, Chennai-II (Import) submitted the following comments:

In respect of KONIX KE-810 and KONIX FA-505, additional Chemicals including NCA Silicon and Magnesium Silicate seem to have been supplementarily introduced during the polyMerization process. Owing to this modification, the said products warrant classification under CTI-1 3907 99 00 as chemically altered polyether. Regarding KONIX KE-880S, monomers specifically styrene, acrylonitrile and Azobisisobutyronitrile (A113N) appear to have been utilized during polymerization procedures which have impacted the primary polymer properties. Thereby, KONIX. KE-880S warrants classification under CTI1 3907 99 00, as a chemically modified polyMer.

5. A personal hearing in the matter was conducted on 20.03.2024 in office of the CAAR, Mumbai. During the personal hearing the authorized representatives of M/s. KPX chemical India Pvt. Ltd., Shri Yogesh Gupta and Ms. Shambhavi Sinha, both Advocates reiterated their earlier written submissions made in the application to CAAR, Mumbai. They contended that the subject goods i.e. ‘KONIX KE 810 & KONIX FA 505′ merit classification under CTI 3907 2900 or 3907 9900 and `KONIX KE — 880S’ merits classification under CT! 3907 9900. They submitted that .they are in agreement with the concerned jurisdictional Commissionerate’s comments. ‘Nobody appeared from the concerned jurisdictional Commissionerate i.e. Chennai-II (Import) (hereinafter also referred to.as the ‘the department’) either in person or through online video conferencing.

6. I have taken. into consideration all the materials placed on record in respect of the subject goods including the submissions. Made by the applicant during the course of personal hearing. I have also gone through the response received from the department. 1 therefore proceed to decide the present application regarding classification of `KONIX K1 — 810′; KONIX FA — 505′ and `KONIX KE — 880S’- on the basis of the information on record as well as the existing legal ‘framework having bearing on the classification of the subject goods under the first schedule of: the, Customs Tariff Act, 1975.

7. On going through the various open-sources of information about organic chemistry, it is observed that-

7.1 Other names of propylene oxide are Epoxypropane; Propylene epoxide; 1,2-Propylene oxide; Methyl oxirane; 1,2-Epbxypropane; Propene oxide; Methyl ethylene oxide. Preferred IUPAC  name of ethylene oxide is Oxirane. Glycerol is also called as glycerin or glycerin, which is a simple trial compound and preferred IUPAC name Of glycerin is Propane-1,2,3-triol and other name of it is also 1,2,3-Proparietriol. In view of the above, the applicant is right in its contention that products `KONIX KE — 810′, `KONIX FA — 505’ and `KON IX ‘KE —880S’ are. composed of Methyl oxirane polymer with oxirane, ether with 1,2,3-propanetria.

7.2 In organic chemistry, ethers are a class of compounds that contain an ether group an oxygen atom bonded to two organyl groups (e.g., alkyl or aryl). They have the general

They have the general formula

7.4 Both Propylene oxide and ethylene oxide arc epoxides with closed three-member ring of C-0-C, therefore, it becomes necessary to analyze that how the products in question which arc a composition of propylene oxide and ethylene oxide with some other monomers, can be classified as `polyether’s’. After delving into some reputed and standard web portals of organic chemistry, it is observed that Propylene oxide and ethylene oxide are both epoxides, which are three-membered cyclic ethers with high reactivity due to the ring strain. They can undergo ring-opening polymerization to form polyether’s. The process involves initiation by – a nucleophile, propagation through successive ring-opening of the epoxide monomers, and termination to cap the polymer chain. Ethylene oxide forms polyethylene glycol or polyethylene oxide, while propylene oxide forms polypropylene glycol or polypropylene oxide. The presence of’ the methyl group in propylene oxide affects the properties and applications of the resulting polyether.

7.5 In view of the above. the products in question i.e. KONIX KF, – 810′. ‘KONIX FA – 505’ and ‘KONIX KY,- 880S’ are structurally a polyether.

8. Heading 3907 covers Polyacetals, other polyether’s and epoxide resins, in primary firms; polycarbonates, alkyd resins, polyallylesters and other polyesters, in primary forms’. The products in question can safely be classified under heading 3907, although, with a condition that these products must be in primary forms. Further, to find out that what does actually the phrase ‘primary forms’ means, note 6 to chapter 39 is referred and the same is reproduced as follows for ready reference-

In headings 39.01 to 39.14, the expression “primary forms” applies only to the following forms:

(a) Liquids and pastes, including dispersions (emulsions and suspensions) and solutions.,

(b) Blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and sim i lar bulk forms.”

……….. Emphasis Supplied

From the above, it can be seen that Liquid form is also considered as primary form to classify the goods in the heading 3907. From the safety data sheet of the subject products, provided by ‘the applicant, it is observed that in the description of ‘physical and. chemical properties’ of the subject product ‘Appearance’ of the subject goods is specifically described as ‘Liquid (Viscous liquid)’. therefore, it can safely be considered that the products in question satisfy the condition of’ ‘ primary forms’ to get classified under heading 3907.

9. Now, before further classifying the subject products at subheading level, conditions envisaged under chapter notes, subheading notes and explanatory notes related thereto must be looked into.

9.1 Explanatory notes to sub-heading note 1 of chapter 39 explains that- “this note governs the classification of polymers (including copolymers), chemically modified polymers and polymer blends at subheading level. Before these products can be classified at subheading level however, they Must first be classified in the proper heading under the provisions of Notes 4 and 5 to this chapter (see the General Explanatory Note to this Chapter).

According to Subheading Note 1, polymers (including copolymers) and chemically modified polymers are to be classified in accordance with the provisions of subparagraph (a) of the Note or subparagraph (b) of the note, depending upon whether or not there is’ a subheading named “Other” in the same series of subheadings.

A subheading named “Other” does not include subheadings such as “Other polyesters.” and “Of other plastics”.

The expression “in the same series” applies to subheadings of the same level, namely  one-dash subheadings (Level 1)  or two-dash subheadings (level 2) (see the Explanatory Note to General Interpretative Rule 6)

It should be noted that some headings (e.g., heading 39 .07) contain both of, series of subheadings.

Explanatory notes to General interpretative Rule 6 inter-aria explants that “Rules 1 to 5  govern, mutatis mutandis, classification at subheading levels within the same heading. The scope of a two-dash  subheading. Shall not extend beyond that of the one-dash subheading to which the two-dash subheading belongs; and the scope of a one-dash. subheading shall not extend beyond that’ of the ‘heading to which the one-dash subheading belongs.

9.2 Subheading Note 1 to chapter 39 with subparagraph (a) and subparagraph (b), are reproduced with emphasis as under:

1. Within any one heading of this chapter, polymers. (including copolymers) and chemically modified polymers are to be classified according to the following provisions:

(a) where there is a subheading named “Other” in the same series:

(1) —–

(2) —-

(3) —–

(4) —–

(b) Where there is no subheading named .”Other” in the same series:

(1) polymers arc to be classified in the sub–heading covering polymers of that .monomer unit which predominates by weight over every other single comonomer unit. For this purpose, constituent monomer units of polymers falling in the same sub­heading shall be taken together. Only the constituent comonomer units of the polymers in the series under consideration arc to be compared;

(2) chemically modified polymers are to be classified in the sib-heading appropriate to the unmodified polymer.

It is quite evident from the above reproduced subparagraphs of the Subheading Note 1 to chapter 39 that classification at sub-heading level in this chapter in any heading depends on the condition that. whether there is a subheading named “Other” in the same sdrics is available or otherwise. Therefore, before further classifying the products in question at subheading level in the heading 3907, it must be checked whether there is a subheading name “Other” in the same series is available or otherwise.

9.3 Further, to classify the subject products at sub-heading level it would be appropriate to reproduce here the scheme of arrangement of the articles or group of articles at 6 or 8 digit level-

“Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by “- “, the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by “- -“, the said article or group of articles shall be taken to be a sub-classification  of the immediately preceding description of the article or group of articles which has “-“. where the description of an article or group of articles is preceded by “—” or “—-“, the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “-” or “–“.Where the description of an article or group of articles is preceded by “—- “, ‘in addition to being a sup-classification of “-” or “–“, the said article-or group of articles may also be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has “—“.”

Further, the tariff heading 3907 is reproduced as under:

 

3907

POLYACETALS, OTHER POLYETHERS, EPDXIDE RESINS, IN PRIMARY FORMS; POLYCARBONATES, ALKYD RESINS, POLYALLYLESTERS AND OTHER
POLYESTERS, IN PRIMARY FORMS
3907 10 00 Polyacetals kg. 7.5%
Other polyethers:
3907 21 00 Bis(polyoxyethylene) methyl phosphonate kg. 7.5%
3907 29 Other:
3907 29 10 Poly(ether alcohols) kg. 7.5%
3907 29 90 Other kg. 7.5%
3907 30 Epoxide resins
3907 30 10 Epoxy resins kg. 7.5%
3907 30 90 Other kg. 7.5%
3907 40 (X) Polycarbonates kg. 7.5%
3907 50 00 Alkyd resins kv,. 7.5%
Poly (ethylene terephthalate)
3907 61 — Having a viscosity number of 78 ml/g or higher:
3907 61 1() — PET flake (chip) kg. 7.5%
3907 6190 — Other primary form kg. 7.5%
390769 Other:
3907 69 30 — PET flake (chip) kg. 7.5%
3907 69 90 Other primary form kg. 7.5%
3907 70 00 Poly (Lactic. Acid) kg. 7.5%
Other polyesters :
3907 91 Unsaturated :
3907 91 10 Maleic resins kg.. 7.50/,
3907 91 20 Polyester or contract. resins kg. 7.5%
3907 91 30 Fumeric resins kg. 7.50/u
3907 91 40 Diallylphthalate resins kg. 7.5%
3907 91 50 Poly (butyl= terephthalate) kg. 7.5%
3907 91 90 Other kg. 7.5%
3907 99 00 Other kg. 7.5%

9.4 It can be seen from the arrangement of the tariff under heading 3907, entries appearing at single dash `-` level are as follows: Polyacetals, Other polyether’s, Epoxide resins, Polycarbonates, Alkyd resins, Poly (ethylene terephthalate), Poly (Lactic Acid) and Other polyesters. .1 find that there is no such subheading named “Other” in .the same series at single dash `-‘ level in the heading 3907. It appears that the applicant and the department both have misunderstood the last CTI i.e. 3907 99 00 as a subheading “Other” in the same series at single dash level. Although, the scheme or arrangement dash in tariff (reproduced in Para 9.3 supra) states that: Where, however, the description of an article or group of articles is preceded by “–“, the said article  or, group of articles shall be  taken to he a sub-classification of the immediately preceding description of the article  or group of articles which has “-“.

From the arrangement of the tariff under heading 3907, it can be seen that for CT13907 99 00. immediately preceding description of the article or group of articles which has “-” is “Other polyesters”. The CTI 3907 99 00 which is described as “Other” and having double “–” is not a subheading in the same series at. single dash level, rather, it.is a tariff item of “Other polyesters”.

Further, Explanatory notes to sub-heading note 1 of chapter 39. specifically explains that: A . subheading named “Other” does . not include subheadings. such as “Other polyesters” and “Of other plastics”.

Furthermore. the department has not submitted any analysis or reasoning based on which they have reached to such conclusion. that the products in question merit classification under CTI 3907 99 00. The department has simply concurred the view of:the applicant and commented without any explanation.

9.5 In view of the above, it can safely be concluded that there is no subheading named “Other” in the same series at single dash level under the heading 3907. Therefore, submissions of the applicant which arc based on the presumption that there is a subheading named “Other” i.e. CTI 3907 99 00 in the same series is erroneous and the applicant’s contention, by virtue of the subparagraph (a) to Subheading Note 1 to chapter 39, to classify the. products in question under CTI 3907 99 00. is untenable.

10. Explanatory Notes to heading 3907 explains the scope of classification of “Other polyether’s”. This Notes inter alia explains that: “Polymers obtained from epoxides, glycols or similar materials and characterised by the presence of ether functions in the polymer chain. The most important members of this group are poly(oxyethylene) (polyethylene glycol),  polyoxypropylene and polyphenylene oxide (PPO) (more correctly named poly(dimethyiphenylene-oxide)). These products have a variety of uses, PPO .being used,. like the polyacetals, as engineering plastics, polyoxypropylene as an intermediate for polyurethane foam”.

It is observed from the various open-source information web portals of organic chemistry that Polyethylene Glycol are prepared by polymerisation of ethylene oxide; that Polyethylene glycol (PEG) is a polyether compound. PEG is also known as polyethylene oxide(PEO).or polyoxymethylene (POE), depending on its molecular weight..

11. Subparagraph (b) (I) of subheading note 1 to chapter 39 clearly states that: ‘polymers are to be classified in the sub-heading covering polymers of that monomer unit which predominates by weight over every other .single comonomer unit. For this purpose, constituent monomer units of polymers falling in the same sub-heading shall be taken together. Only the constituent comonomer units of the polymers in the series under consideration are to be compared’.

On going through the composition of the all the three products i.e. `KONIX        — 810′, `KONIX FA_ –505′ and `KONIX  KE    — 880S’. it is observed that both Propylene  Oxide (“PO”) and Ethylene Oxide (“EO”) constitute more than 50% of the total weigh of each product. In   `KONIX KE — 810′ & `KONIX FA —505′ both Propylene Oxide and Ethylene Oxide constitute 96% of the total weight of each of both the said products, while in KONIX KE — 880S’ these constitute 52% of total weight of the said product. In the products in question both Propylene Oxide and Ethylene Oxide predominates over every other single comonomer viz, Glycerol, Styrene,. Acrylorlitrile, DIAZO-, AZO- or AZOXY- compounds. Therefore, all the three products in question can be classified as “Other polyether’s”.

12. Further, subparagraph (b) (2) of subheading note 1 to chapter 39 clearly states that: “chemically modified polymers are to be classified in the sub-heading appropriate to the unmodified polymer”. In view of this note it can safely be deduced that chemical modification does not create a difference and while there is not a subheading named “Other” in the same series, then polymers whether they are chemically modified or not, will remain classified under the same sub-heading which is appropriate to the unmodified polymer. Therefore, the applicant’s contention that the products in question arc classifiable under CTI 3907 99 00, by virtue of the, chemical modifications which are claimed by the applicant to have been occurred, does not hold water.

13. In view of above, it can safely be concluded that there is a specific entry as “Other polyether’s” preceding with a single dash `-` and there is no entry named “Other” preceding with single dash `-` under the heading 3907, therefore the products in question which are polyether’s are classifiable under entry “Other polyether’s” under heading 3907. CTI 3907 2100 covers `Bis(polyoxymethylene) methyl phosphonate’, which is not under the question in the present application. Subheading 3907 29 is described as “Other” which is preceded by double dash    -`. Further, under this subheading there two CPIs i.e. 3907 29 10 described as “Poly(ether alcohols)’, which is preceded by triple dash `—‘ and 3907 29 90 described as “Other”, which is also preceded by triple dash `—1. So, as per rules of dash arrangement both the CM i.e. 3907 29 10 & 3907 29 90 (both having triple dash `—‘) are a sub-classification of articles or group of articles of subheading 3907 29 (immediately preceding and having double dash ‘- -‘). Further, 3907 29 and 3907 21 00 (both having triple dash `—’) are a sub ­classification of “Other polyether’s” (immediately preceding and having double dash `-`). Therefore, under the category “Other polyether’s” recourse has to be taken to residuary entry i.e. CTI 3907 29 90 to classify the products in question.

14. On the basis of foregoing discussions and findings, I rule that the products in question i.e. “KONIX KE — 810, KONIX FA — 505 and KONIX KE — 880S” merit classification under Custom Tariff Heading 3907, specifically under CTI 3907 29 90 of Chapter 39 of the First Schedule to the Customs Tariff Act, 1975.

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