S.L. Peeran, Member (J)

1. The question that arises for consideration is that appeal is the classification of "DESMODUR T-80 (ISOCYNATES)" under heading 3909.50 of CTA or 2929.10 which has been imported by the appellant. The department has classified it under heading 3909.50 of CTA, while the appellants have sought for classification under 2929.10. Duty at 70% + 40% + 15% C.V.D. The Collector of Customs (Appeals), Bombay, rejected the appeal of the appellants unsubstantiated. The appellants have submitted that Section note 3 of Section VI of CTA 1975 has not been examined by the authorities below before rejecting their contentions. They have further submitted that item Desmodur T-80 being an organic chemical, isocynate, shall fall in Chapter 29 under Heading 2929.10 of CTA 1975.

2. When the appeal came up for hearing, the appellants' letter to decide the case on merit in the light of Trade Notice issued by the Central Board of Excise Customs, Circular No. 2/89-CX.3 issued under F.No. 93/22/88-CX.3 dated 4th January, 1989, was placed before us for consideration.

3. Heard Sh. A.S. Sunder Rajan, Ld. J.D.R. perused the grounds of appeal, and the Trade Notice referred to by the appellant.

4. After careful consideration of the material on record, we allowed the appeal as the Trade Notice referred to by the appellant covered the issue.

5. The Central Board of Excise Customs had taken up the question as to whether Polyols and Isocynates, when supplied together for the production of Polyurethane Foam, should be assessed to duty as polyurethane foam on the section note (2) of Section VI and Section note 1 of Section VII of the new CET or should be assessed individually on merits even when those are presented together at the time of sale. After consideration, the Board has observed that the subject goods even when supplied together for the production of Polyurethane foam would not be covered by note (2) of Section VI and note (1) of Section VII of the Schedule to the Central Excise Tariff Act, 1985. The Board also took a view that note (3) to Section VI and note (1) to Section VII of the Customs Tariff (exactly similar to note (2) of Section VI and note (1) to Section VII of the CET) do not appear to cover goods like Polyols and Isocynates. The Board has clarified that Polyols and Isocynates even when presented together at the time of sale, should be assessed to Central Excise duty individually on merits.

6. The Assistant Collector of Customs had held in the Order-in-Original that the imported goods are assessable according to the classification of the end product and hence be classified under 3909.50 and assessed duty accordingly.

7. The Collector of Customs (Appeals) in his Order-in-Appeal after examining the Section note (1) to Section VII held that the appellant had not substantiated their case.

8. The appellants have submitted that the Collector of Customs (Appeals) is not correct in stating that "All the conditions laid down in the mentioned Section - Note 1 are satisfied in this case".

9. It is the case of the appellant that the goods imported do not satisfy the conditions as they do not form the sets; they cannot be used as such without disturbing their present packing; and they are not in the requisite proportions to manufacture the end-product as they are in bulk. They have submitted that the imported goods do not form sets as contemplated in Section Note 3 to Section IV of CTA 1975 for classification and hence they have contended that each item of goods shall have to be classified under the appropriate heading of CTA 1975 on merits.

10. The Trade Notice ibid clarifies that Polyols and Isocynates should be assessed to duty individually on merits even if they are imported in the same Bill-of-Entry.

11. In view of the position, the contention of the appellant has to be upheld and the appeal has to be allowed. The appellants are entitled for assessment on merits as contended by them and would not to be covered by Section Note 3 to S