GOVERNMENT OF PAKISTAN
MODEL CUSTOMS COLLECTORATE APPRAISEMENTS (EAST)
CUSTOM HOUSE KARACHI
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No, C-23/2016/KAPE/PCT/2016 Dated: 25-05-2018
PUBLIC NOTICE NO.03/2018
Sub: TARIFF CLASSIFICATION OF PRE POLYMERS OF POLYURETHANESCONSISITNG OF POLYOL, ISOCYNATES CATALYST & HARDNERPRESENTED IN SET FORM FOR THE MANUFACTURING OF POLYURETIINE.
FACTS:
The classification committee has been informed of the following orders of honorable High court of Sindh dated 19.04.2018 in CP No.5236/2016:
“In view of this position these petitions are disposed of in terms that with respect, the order dated 22.06.2011 cannot now any longer be regarded as relevant. If the case comes within the scope of the ruling of the world customs organization as referred to above then the subject consigment must be treated as one whole and the applicable PCT heading under which it is to be accepted, processed subjected to duty, taxes etc and released is 3909.5000 learned counsel for the department submit that in light of the earlier order of 22.06.2011 the department had issued a public notice cannot now hold the field. The positions must now be revised in light of the above. Therefore permission is granted to the concern departmental authority to do the needful in this regard by withdrawing the public notice and issuing one that is consistent with the order made today”
In view of Sindh high court’s aforementioned order, a meeting of all the stake holders we called on 11-5-2018 to discuss the matter afresh.
2. Earlier in 2016, various session of the classification committee were held to determine classification of the subject items, Meetings were attended by representative from the trade, the chemical Examiner of custom Lab etc. The classification committee decided to the case vides public notice no. D-1148/2010, wherein; the court has held that these item do not fall under PCT heading 3909.5000 and are classifiable under there respective headings. The public notice No. 5/2016 maintained that “in the presence of said judgment of the honourable court, the matter is beyond the ambit of the classification committee and as such these items are to be classified under there respective heading as decided by the honourable Court, Keeping in view their chemical composition and tests reports as determined at the time of there import” being Dissatisfied with the decision of the classification committee, the importers challenge the decision of the classification committee before the honourable High court of Sindh the court decided the matter vide order dated 19-04-2018 as mentioned in para-I
3. After decision the high court dated 19-04-2018, the classification committee received representation from various shoe manufactures as well as MCC Appraisement west for Ascertaining / decide the classification of ‘Polyol, Isocyanates, Catalyst and hardener viz-a-viz Polyurethane, Presently, all these for chemicals are being classified under there respective HS codes in compliance of Public notice No.05/2016 However the importers are of the view that these four-chemicals are pre-polymers of Polyurethane and are to be classified under the heading of Polyurethane i.e 3909.5000. They have requested to issue a fresh Public Notice in the light of latest order of Sindh high court during the meeting of classification Committee. The importers informed that the matter has already been comprehensively dealt by MCC (Appraisement-West) in their counter affidavit as presented in Sindh high court in C.P No. D-5236/2016. The classification committee called the counter affidavit as in Sindh High court by MCC (Appraisement West) and discussed it during the meeting, the relevant portion of the counter affidavit as reproduced as under:
COUNTER AFFIDAVIT IN RESPECT OF CMA NO. 5596/18--C.P NO. 5236 2016
“The Customs department is of the view that the subject goods fulfill the conditions of relevant classification rules and apparently the Hon’ble High court while passing the order dated 22-06-2011 in CP No. D-1148/2010 was not assisted on the issue properly.”
ISSUE:
4. Whether the subject items ‘Polyester Polyol, Isocyanates, Catalyst & Hardeners are appropriately classifiable under their respective HS Codes i.e Polyol under PCT heading 397.9900, Isocyanates (Pre-polymer of PU) under PCT heading 3909.5000, polyurethanes has clamed by the importer and endorsed by MCC (Appraisement-West) or under any other relevant Heading of the first schedule to the customs Act, 1969 (Pakistan Custom Tariff).
PRODUCT ANALYSIS:
5. As per the literature provided by the importers, the chemicals i.e Polyol Isocyanates and Catalyst are precursors for the formulation of polyurethane. The set comprised of Polyol, Isocynate, Catalyst and Harder Polyol is a colorless turbid liquid and as per HEJ Lab report is based on Polyester. The second Chemical is Isocynate. It is Transparent Colorless liquid with blend odor. Its chemical nature as per HEJ test report is polyurethane pre-polymer. The third chemical is Catalyst. As per HEJ Lab report it is tertiary having fishlike odor as using is catalyst for the preparation of polyurethane of Polyurethane. These items are mixed together to produce the polyurethane. These are constituents of polyurethane and are imported set form for the consumption by the shoe industry for manufacturing of footwear sole.
6. During the meeting the importers informed the classification committee that Polyol Isocynate. Catalyst and Hardeners are mixed together in the required composition to make a mixture as pre manufacture approved Recipe. This Mixture is put in the foot sole manufacturing mould machine at a desired specific Temperature to make shoe sole. They also informed that composition proportion of the constituents may vary as per requirement of the hardness and softness of the sole.
LAW AND ANALYSIS
7. The classification Committee consulted section notes and explanatory notes as per section Note 1 to section VII of the Pakistan custom Tariff, Goods put up in sets consisting of two or more separate constituents, some or all which fall in this section and are intended to be mixed together to be mixed together to obtain a product section VI or VII are to be classified in the heading appropriate to that product provided that the constituents are:
a. Having regard to the manner and which they are put up, clearly identifiable as being intended to be used together without first being repacked;
b. Presented together; and
c. Identifiable weather by their nature or by the relative proportion in which they are present. As being complementary one to another.”
8. It has also been observed by the classification committee that Note-3 to section VI deals with the classification of goods put up in sets consisting of two more separate constituents and mixed together to obtain a finished product. Note-3 to section VI says:
“Goods put up in sets consisting of two or more separate constituents, some or all of which fall in this section and are intended to be mixed together to obtain a product of section VI or VII are to be classified in the heading appropriate to that product provided that the constitutes are:
(a) Having regard to the manner in which they are put up. Clearly identifiable As being as being intended to be used together without first being repacked;
(b) Presented together; and
(c) Identifiable whether by their nature or by the relative proportion in which they are present, as being complementary one to another.”
9. Explanatory Notes to HS code 39.09 describe Polyurethanes as under:
This class includes all polymers produced by the reaction of polyfunctional Isocyanates with polyhydroxy compounds. Such as, castor oil butane-1, 4- Polyether Polyol and polyesters Polyol, Polyurethanes exist in various forms of which the most important are the foams, compounds and fibers, these products are often traded as one part of multi-component system or set.
10. Above discussion confirms that subject items when imported in set form are appropriately classifiable in HS Code 3909.500. However. If these products are imported individually then they are classified under their respective heading.
HOLDING;
11. The classification committee, in view of the above deliration and in consultation with the relevant terms of heading, section notes and the related ENs arrived on conclusion that impugned products namely polyols, Isocyanates, Catalyst and hardener have been given special treatment I explanatory notes, thus, when imported (presented together) in a set form, in terms of section note-1 of section VII and three condition given therein read note 3 to section VI and in application of general rules of interpretation I are classifiable under 3909.5000, as under:
39.09 Amino resins, phenolic resins and polyurethanes, in primary forms
3909.5000 -Polyurethanes
12. This ruling is issued is issued in terms of chapter-II (Classification) of the CGO 12/2012 dated 15th June, 2002 and any appeal against this Ruing shall only lie with the federal board of revenue under rule 2 of Pakistan Rules to The General rules for interpretation.
13. The above ruling is based upon the documents / literature provided by the importer and the orders of the honourable High Court of Sindh dated 19.04.2018vide CP. No.5236/2016 and shall be treated as annulled if it is found at any subsequent stage that the same was obtain by providing incorrect, false. Misleading or incomplete information by The Applicants.
Signed by
(Mona Mehfooz)
Additional Collector IV
Chairperson Classification Committee
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