Judgment

GOSWAMI

( 1 ) IN these appeals by special leave the only question that is raised is whether the substance known as Pyratax-Vinyl Pyridine Latex (for short, V. P. Latex) is not rubber raw classifiable under item No. 39 of the Indian Tariff Act, 1934 (hereinafter referred to as I. C. T. ).

( 2 ) THE appellants are manufacturers of automotive tyres. V. P. Latex is required in the process of manufacturing of tyres. V. P. Latex is not manufactured in India and has to be imported from outside the country. The tyre industry uses V. P. Latex as one of the essential ingredients in the course of manufacture of automotive tyres.

( 3 ) THE appellant in Civil Appeal No. 1446 of 1972 imported sometime in April, 1969, 3 consignments of V. P. Latex. In appeal from the proceedings before the Assistant Collector of Customs for appraisement of the said consignments for the purpose of imposition of customs duty and/or countervailing duty, the Appellate Collector of Customs, Calcutta, upheld the appellants contention and classified V. P. Latex under item 39 of the I. C. T. as raw rubber. The classification made by the Appellate Collector was revised by the Central Government in a proceeding initiated, suo motu, under Section 131 (2) of the Customs Act, 1962. The Central Government held, by the impugned order, that the said V. P. Latex was "an aqueous dispersion of synthetic resin", and hence classifiable under item 87 of the I. C. T. prior to 1/03/1970, and thereafter under the new item No. 82 (3) I. C. T. The Central Government by the same order further held that the said goods were liable to countervailing duty under item No. 15a, C. E. T. both before and after 1/03/1970. It is apparent that if V. P. Latex were to be classified under item No. 87, higher duty will be leviable and that is the reason for the controversy in these appeals.

( 4 ) IN Civil Appeal No. 2746 of 1972, the appeal is directed against the order of 17/08/1972, of the Appellate Collector of Customs, Madras, dismissing a batch of 18 appeals of the Company. The Appellate Collector confirmed the order of the Assistant Collector of Customs Appraising, Madras, rejecting the appellants claim for refund of duty on the basis that V. P. Latex should be classified under item 39 I. C. T. and not under item 82 (3) of the I. C. T. The appellant did not go in revision before the Central Government as already similar claims had been rejected by the Central Government.

( 5 ) THERE are several interveners in the appeals and the entire tyre industry is interested in the matter.

( 6 ) PRIOR to the 1/03/1970, the First Schedule to the Indian Tariff Act, 1934, contained, inter alia, the following dutiable items:-

IN addition to the above, the following item was introduced in the Tariff Act by the Finance Act, 1970:-

( 7 ) UNDER Section 2a of the Tariff Act any article which is imported into India shall be liable to customs duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. Such customs duty in addition to the duty under the Tariff act is known as countervailing duty.

( 8 ) ITEM 15a of the First Schedule to the Central Excises and Salt Act, 1944 (briefly C. E. T.) reads as follows:-

"15a: ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIALS AND ARTICLES THEREOF-

(1) Artificial or synthetic resins and plastic materials in any form, whether solid, liquid or pasty, or as powder, granules or flakes, or in the form of moulding powders, the following, namely. . . "

( 9 ) AN additional item being item No. 16aa was introduced in the C. E. T. for the first time by the Finance Act, 1970, which reads as follows:-

"item No. 16aa: Synthetic rubber, including butadiene acrylonitrile rubber, styrene butadiene rubber and butyl rubber, synthetic rubber latex, including prevulcanised synthetic rubber latex. "

THE quantity of V. P. Latex consumed by the tyre industry in India as a whole is said to be about 1000 tonnes per year and the value thereof is Rs.