Compounded rubber formulations classified under CTH 4005 with duty exemptions under notification 46/2011-Cus serials 503-504

AAR Mumbai ruled on classification of three compounded rubber formulations under Customs Tariff Act, 1975. Formulation 1 (with carbon black) classified under CTH 4005 1000, eligible for duty exemption under notification 46/2011-Cus serial 503. Formulations 2 (with SBR) and 3 (with clay) classified under CTH 4005 99 90, eligible for partial duty exemption under serial 504. All classifications subject to fulfillment of notification conditions and post-importation testing to verify unvulcanized state, particularly for formulations containing zinc oxide and stearic acid.

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Issues Involved:
1. Classification of compounded rubber under CTH 4005 1000.
2. Eligibility for duty exemption under Notification 46/2011-Cus and Notification 189/2009-Cus.

Issue 1: Classification of Compounded Rubber

The applicant, M/s MRF Ltd., sought advance rulings on the classification of compounded rubber under CTH 4005 1000. They proposed to import compounded rubber with Carbon Black or Silica or Styrene Butadiene Rubber (SBR) and claimed that these imports should be classified under tariff heading 4005 1000. The applicant provided three formulations for classification:
- Compounded rubber with less than 5 parts of Carbon Black.
- Compounded rubber without Carbon Black but with less than 5 parts of SBR.
- Compounded rubber without Carbon Black but with less than 5 parts of clay.

The Customs Commissionerate of Hazira Port emphasized that the classification under CTH 4005 1000 requires the rubber to be unvulcanised. The applicant failed to initially disclose whether the rubber was vulcanised or not. Upon further clarification, the applicant confirmed that the rubber formulations did not contain vulcanizing agents, ensuring they remained unvulcanised.

Issue 2: Duty Exemption Eligibility

The applicant also sought confirmation on the eligibility for duty exemption under Notification 46/2011-Cus (as amended) and Notification 189/2009-Cus. The Customs Authority for Advance Ruling (CAAR) noted that the duty exemption would be contingent upon the fulfilment of conditions specified in the notifications, including the origin criteria under the ASEAN-India Free Trade Agreement (AIFTA).

Rulings:

A. Compounded Rubber Formulation 1:
- Contains less than 5 parts of Carbon Black.
- Classified under CTH 4005 1000.
- Eligible for duty exemption under serial number 503 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus.

B. Compounded Rubber Formulation 2:
- Contains less than 5 parts of SBR and no Carbon Black.
- Classified under CTH 4005 99 90.
- Not eligible for duty exemption under serial number 503 but eligible under serial number 504 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus.

C. Compounded Rubber Formulation 3:
- Contains less than 5 parts of clay and no Carbon Black.
- Classified under CTH 4005 99 90.
- Not eligible for duty exemption under serial number 503 but eligible under serial number 504 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus.

The ruling emphasized the necessity of chemical composition testing upon importation to verify the unvulcanised state and the presence of non-vulcanizing agents, which is crucial for classification and duty exemption eligibility.

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