Circular No. 929 / 19 /2010-CX, New Delhi the, June 29th 2010
Order under section 37 B of Central Excise Act, 1944.
Subject :- Classification of Polyester Staple Fibre manufactured out of PET scrap and waste bottles.
In exercise of powers conferred under section 37B of the Central Excise Act, 1944 Central Board of Excise & Customs considers it necessary, for the purposes of uniformity with respect to classification of “Polyester Staple Fibre” manufactured out of PET scrap and waste bottles, to issue the following instructions.
2. It has been brought to the notice of the Board that divergent practices are being adopted in respect of classification of the “Polyester Staple Fibre” manufactured out of PET scrap and waste bottles. Whereas in some jurisdictions the said product has been classified under the Chapter 39 as article of plastic, in other jurisdictions the same has been classified under Chapter Heading 55032000.
3. The matter has been examined. Polyester is “Long-chain polymers chemically composed of at least 85 percent by weight of an ester and a dihydric alcohol and a terephthalic acid.” Federal Trade Commission defines Polyester Fibre: A manufactured fibre in which the fibre forming substance is any long-chain synthetic polymer composed of at least 85% by weight of an ester of a substituted aromatic carboxylic acid, including but not restricted to substituted terephthalic units, p(-R-O-CO- C6H4-CO-O-)x and parasubstituted hydroxy-benzoate units, p(-R-O-CO-C6H4-O-)x.
4. Normally PSF is manufactured by using main inputs like PTA & MEG. The name “polyester” refers to the linkage of several monomers (esters) within the fiber. Esters are formed when alcohol reacts with a carboxylic acid. The monomer ester then is polymerized under suitable conditions to obtain polyester.
5. The most common polyester for polyester staple fibre purposes is poly (ethylene terephthalate), or simply PET. This is also the polymer used for many soft drink bottles and it is becoming increasingly common to recycle them after use by re-melting the PET and extruding it as fibre. To manufacture Polyester staple fibre, used PET bottles are taken as inputs. They are crushed and converted into PET flakes. These PET flakes are then charged to extruders where they are melted and molten polymer is passed through spinnerets to obtain TOW. The tow is drawn and then cut into different lengths to obtain PSF.Online GST Certification Course by TaxGuru & MSME- Click here to Join
6. As per Chapter Note 1 to Chapter 54,
1. Throughout this Schedule, the term “man-made fibres” means staple fibres and filaments of organic polymers produced by manufacturing processes, either:
(a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters polyolefins or polyurethanes, or by chemical modification of polymers produced by this process [for example, poly (vinyl alcohol) prepared by the hydrolysis of poly (vinyl acetate)]; or
(b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates.
The terms “synthetic” and “artificial”, used in relation to fibres, mean: synthetic: fibres as defined at (a); artificial: fibres as defined at (b). Strip and the like of heading 5404 or 5405 are not considered to be man-made fibres.
The terms “man-made”, “synthetic” and “artificial” shall have the same meanings when used in relation to “textile materials”.
7. Thus manmade fibre can be obtained either starting from monomers or from polymers itself. The process of manufacture is not determinative of the classification of the manufactured product. What is essential for determining the classification is the nature of the end product and the market understanding of the said end product. In the present case there appears to be no dispute with regard to the nature and commercial understanding of the product viz Polyester Staple Fibre.
8. As per technical literature uses of Polyester Fibre are as follows
9. From the above facts it is quite evident that the product under consideration is nothing but a textile material and hence will be classified as textile material under Section XI and not as article of plastic in Chapter 39.
10. Tribunal decision in case of GPL Polyfils Ltd [2005 (183) ELT 27 (T)] would be relevant to the particular facts as in the said case and hence cannot have binding precedents in other matters.
11. To ensure uniformity in the manner of classification of the Polyester Staple Fibre obtained from PET scrap and waste bottles it is clarified that this product is correctly classifiable under heading 55032000.
12.Based on the above clarification pending cases may be disposed of.
13. Receipt of this order may please be acknowledged.
14. Hindi version will follow.
Under Secretary to the Government of India