V.P. Gulati, Member

1. These are appeals against the order of the Collector of Central Excise (Appeals) who has upheld the lower authority's order that masterbatches are assessable under item l4(1)(ii) CET as against assessment under item 15-A(1)(ii) claimed by the appellants. The appellants main contention before the lower authority was that the PVC masterbatches were only a specie of PVC compound which includes concentrates with additives depending on the product which is intended to be ultimately produced and that PVC Masterbatches contain the same basic ingredients as PVC compounds. The Department however held that PVC masterbatches were used as colourant for the basic resin for mixture with the same in the desired proportion to provide clear and convenient method of achieving accurate colour shades. The use of the masterbatches has been held to be not as a resin, but as a colourant. The appellant while claiming the assessment under 15-A(1) also claimed the benefit under notification No. 167/79 available in respect of PVC compounds.

2. The learned counsel for the appellants has pleaded before us that the PVC masterbatches or PVC compounds having a number of ingredients like plasticizers and stabilizers in addition to the colour added to it. In support of his plea he read out from page 848 of the Encyclopaedia of PVC Vol. 2 by Leonard Nass 1977 Edition. The relevant portion is reproduced as under :

"Compounding PVC essentially involves adding to the base PVC resin the components that will allow it to be processed into a finished product with desired properties, at minimum cost. The "families" of materials that will be chosen will probably fall into one of the following classifications, each of which is discussed in detail elsewhere in these volumes :

(a) Plasticizers

(b) Stabilizers

(c) Lubricants

(d) Impact modifiers

(e) Processing aid resins

(f) Fillers

(g) Colorants

(h) Miscellaneous (antistatic agents, tackifiers, antiblocking agents, foaming agents, flame-retardants, fungicides, odorants)".

His plea is that the pigments are required to be added to the PVC compound to impart colour to the PVC resin and colouration of the PVC can only be done properly if the pigments are dispersed uniformly in it. According to him, pigments for coloration of PVC are as predispersed in a variety of vehicles and forms and one such form is in the PVC in high concentration. The PVC compound thus obtained is called masterbatch and can be mixed in the desired proportion with the PVC resin to get the desired colour effect. He cited the reference in the book about it at page 757 and the relevant portion is reproduced as under :

"It is frequently useful to 'masterbatch1 pigments by predispersing them as a concentrate in a portion of the binder, both to attain maximum dispersion and effectiveness and to permit more accurate portioning."

He has stated that masterbatches which are in the nature of PVC compound, cannot be considered as pigments as held by the Department. According to him, the term pigment as understood in the trade and in the technical parlance is not as held by the Department in the instant case. He drew our attention to the definition of term 'Pigment' as given in the "Condensed Chemical Dictionary : Tenth Edition : Revised by Gessner G. Hawley which is reproduced as under :

"Any substance, usually in the form of a dry powder, that imparts colour to another substance or mixture. Most pigments are insoluble in organic solvents and water; exceptions are the natural organic pigments, such as chlorophyll, (q.v.) which are generally organo-soluble. To qualify as a pigment, a material must have positive colorant value. This definition excludes whiting, barytes, clays, and tale (see fillers, extenders). Some pigments (zinc oxide, carbon black) are also reinforcing agents, but the two terms are not synonymous; in the parlance of the paint and rubber industries these distinctions are not always observed."

He also cited in support of his plea, the Trib