2023 (3) TMI 1019 - AT - Customs

Goods with high nickel content classified as 'Nickel alloys' over steel in customs dispute

The Tribunal held that the imported goods, containing more than 60% nickel and meeting the conditions for nickel predominance under sub-heading note 1(b), ... Classification of imported goods - seamless tubes and pipes - to be classified from CTH 75051220 to CTH 72189910? - applicability for Sr. No. 384 of Notification No. 50/2017 dated 30.06.2017 - whether the requirement of sub heading 1 (b)(i), 1 (b) (ii) and 1 (b) (iii) have to be satisfied together or independently? HELD THAT:- Between sub heading note 1 (b) (i) and 1 (b) (ii) there is no mention of “and” or “or”. Between sub heading 1 (b) (ii) and 1 (b) (iii) there is specifically mention of word “or”. Interpreting the above text the revenue has come to the conclusion that to qualify as nickel alloy sub heading note 1 (b)(i) has to be mandatory satisfied along with the conditions specified in sub heading note of 1 (b) (ii) or condition specified in sub-heading note 1 (b)(iii) - it is apparent that whenever legislature intended that two conditions have to be simultaneously satisfied it has specifically mentioned word “and” between those condition and whenever any one of the two conditions or more conditions are to be satisfed, the legislature has specifically put the word “or” in between those conditions. It is also noticed that the sub-heading note 1 (b) (i) requires the content weight of cobalt to exceed 1.5%. The sub heading note 1 (b) (iii) requires the total content of nickel + cobalt to exceeds 1 %. If the subheading note 1 (b) (i) is held to be a necessary requirement then the sub heading note 1(b) (iii) becomes otiose in so far as if the alloy contains cobalt in excess of 1.5% then it will obviously satisfy the condition of Nickel + cobalt exceeding 1 % . In this background also it is seen that the sub heading note 1(b) (i), 1(b) (ii), 1(b) (iii) need not to be simultaneously satisfied for the purpose of classification of goods as nickel alloy. Nickel predominates in weight being 62.15 to 62.26 % in weight. It is seen that the iron content ranges from 4.56% to 4.59 %, therefore, sub heading note 1 (b) (ii) stands satisfied. Consequently, the goods qualify as nickel alloy in terms of Section note 5 of Section XV read with sub- heading note 1 (b)(ii) of chapter 75 - It is also not disputed by the Revenue that the said product is commercially also known as nickel alloy and not steel. This specific assertion has been made by appellant and the same has not been disputed by the Revenue. The goods qualify as nickel alloy under sub heading note 1 (b) (ii) - the impugned order classifying the goods as steel cannot be sustained and is therefore set aside - Appeal allowed. Issues Involved:1. Classification of imported goods under CTH 75051220 or CTH 72189910.2. Interpretation of Section XV Note 5 and Chapter 75 sub-heading notes.3. Determination of whether the goods are 'Nickel, not alloyed' or 'Nickel alloys.'Detailed Analysis:1. Classification of Imported Goods:The appellant, engaged in manufacturing seamless tubes and pipes, imported goods and sought classification under CTH 75051220, claiming benefits under Notification No. 50/2017. The initial assessment by the Deputy Commissioner classified the goods under CTH 72189910 as billets of stainless steel, citing that the cobalt content did not exceed 1.5%. This classification was challenged and remanded for re-examination. The Deputy Commissioner later approved classification under CTH 75051220, but the Commissioner (Appeals) reclassified it under CTH 72189910, leading to the present appeal.2. Interpretation of Section XV Note 5 and Chapter 75 Sub-Heading Notes:The appellant argued that the goods did not fall under 'Nickel, not alloyed' as per sub-heading note 1(a) of Chapter 75, which requires at least 99% nickel plus cobalt, with cobalt not exceeding 1.5% and other elements within specified limits. Instead, the goods should be classified under 'Nickel alloys' as per sub-heading note 1(b), which allows for nickel predominance by weight over other elements, with any of three conditions being satisfied (cobalt > 1.5%, one element exceeding specified limits, or total elements other than nickel plus cobalt > 1%).3. Determination of Whether the Goods are 'Nickel, not alloyed' or 'Nickel Alloys':The Tribunal noted that the imported goods contained more than 60% nickel, with iron content around 4.5%, thus fulfilling the requirement of nickel predominance. The key issue was whether conditions under sub-heading note 1(b) must be satisfied collectively or independently. The Tribunal found no 'and' between sub-heading notes 1(b)(i) and 1(b)(ii), indicating independent satisfaction was sufficient. The Tribunal emphasized that legislative intent, as seen in other chapters, uses 'and' or 'or' to specify whether conditions must be met together or separately.Conclusion:The Tribunal concluded that satisfying any one of the conditions under sub-heading note 1(b) was sufficient for classification as 'Nickel alloys.' Since the iron content exceeded the limit specified in sub-heading note 1(a), the goods met the criteria under 1(b)(ii). The Tribunal also noted that the product was commercially recognized as nickel alloy, not steel. Consequently, the goods were correctly classifiable under CTH 75051220 as nickel alloys, and the impugned order classifying the goods as steel was set aside. The appeal was allowed.Pronouncement:The judgment was pronounced in the open court on 01.03.2023.