2024 (4) TMI 1252 - AAR - Customs

Raw silicon carbide bricks for diesel particulate filters classified as ceramic refractory goods under CTI 6902 20 40

IN RE : IBIDEN SINGAPORE PTE LTD.

The AAR Mumbai ruled that raw silicon carbide bricks imported for DPF (Diesel Particulate Filter) application should be classified under CTI 6902 20 40 as ... Classification of imported Raw Silicon Carbide Bricks for DPF application - whether the raw silicon carbide bricks should be classified under the ceramic refractory goods heading or under machinery/apparatus headings related to filters? - HELD THAT:- CTI 6902 20 40 specifically covers the product in question i.e. ‘silicon carbide bricks’. The applicant has relied upon the Circular No. 24/2013-Customs, dated June 27, 2013 which provides a clarification on ‘Classification of Elements of Filters’. This circular has clarified that “elements of Filters are to be classified as per their constituent material. For instance, elements (of Filters) that are made up of paper would be classified in Heading 4812 or 4823; if made up of textile material for technical use then in Heading 5911; if made up of glass then in Heading 7019: etc. Fillers by themselves would be classified under Heading 84.21.” Conclusion - “Raw Silicon Carbide Bricks for DPF application” merit classification under Custom Tariff Heading 6902, more specifically under CTI 6902 20 40 of the First Schedule of the Customs Tariff Act, 1975. The core legal question considered by the Authority for Advance Rulings (Customs) was the proper classification under the Customs Tariff Act, 1975 of 'Raw Silicon Carbide Bricks for Diesel Particulate Filter (DPF) application' imported by the applicant. The classification issue arose because the product could potentially fall under multiple tariff headings, specifically Heading 6902 (refractory ceramic goods), Heading 8421 (filtering or purifying machinery and apparatus), or other chapters such as Chapter 38 (chemical products) or Chapter 87 (vehicles and parts). The applicant sought clarity on whether the raw silicon carbide bricks should be classified under the ceramic refractory goods heading or under machinery/apparatus headings related to filters.In addressing this classification issue, the Authority considered the following related questions:Whether the raw silicon carbide bricks constitute refractory ceramic constructional goods under Heading 6902, specifically subheading 6902 20 40 covering silicon carbide bricks and shapes.Whether the bricks could be classified under Heading 8421 as parts or elements of filtering or purifying machinery (i.e., particulate filters for exhaust gases), given their end use in DPFs.Whether the bricks fall under Chapter 38 as chemical products or catalysts, given their use in catalytic coating processes.Whether the bricks qualify as parts and accessories of vehicles under Chapter 87, considering their use in automotive diesel particulate filters.The applicability of the General Rules of Interpretation (GRI), relevant Chapter and Section Notes, and Circulars issued by Customs clarifying classification of filter elements.The Authority undertook an issue-wise detailed analysis as follows:1. Classification under Heading 6902 (Refractory Ceramic Goods)The relevant legal framework included the Customs Tariff Act, 1975, the Harmonized System Nomenclature (HSN) as published by the World Customs Organization (WCO), and the General Explanatory Notes to Chapter 69. The applicant submitted that Heading 6902 covers refractory bricks, blocks, tiles, and similar ceramic constructional goods, explicitly including silicon carbide bricks and shapes containing more than 50% silica by weight. The applicant detailed the manufacturing process, demonstrating that the bricks are ceramic products obtained by firing inorganic, non-metallic materials (silicon carbide mixed with binders and additives), shaped into honeycomb structures, and sintered at temperatures above 1500^0C, fulfilling the firing requirement under Chapter 69 Notes.The Authority examined the Chapter 69 Note 1, which states that the chapter applies only to ceramic products fired after shaping, and confirmed that the applicant's manufacturing process satisfied this condition. The General Explanatory Notes to Heading 6902 describe refractory goods as fired articles with special properties to resist high temperatures, used in metallurgy, chemical, ceramic, glass industries, etc., and specifically include silicon carbide-based refractories.Further, the Authority noted that Heading 6902 covers refractory bricks of all shapes, including those specially designed for construction of machinery under Section XVI. This was significant because the applicant's bricks were intended for use in DPFs, which are machinery under Section XVI. Despite this, the explanatory notes clarify that such refractory bricks remain classifiable under Heading 6902.The Authority applied Rule 3(a) of the General Rules of Interpretation, which mandates that when goods are classifiable under multiple headings, the heading providing the most specific description is preferred. Since CTI 6902 20 40 specifically describes silicon carbide bricks and shapes, the Authority found this heading to be the most specific and appropriate classification.2. Classification under Heading 8421 (Filtering or Purifying Machinery and Apparatus)Heading 8421 covers filtering or purifying machinery and apparatus for liquids or gases, including catalytic converters and particulate filters. However, the General Explanatory Notes to Section XVI and Chapter 84 explicitly exclude ceramic articles covered under Chapter 69 from classification under Chapter 84, even if they form parts of machinery. The Authority relied on these exclusions and the Circular No. 24/2013-Customs dated June 27, 2013, which clarifies that filter elements made of ceramics are classified according to their constituent material, not as machinery parts.Thus, even though the silicon carbide bricks are elements used in DPFs (which fall under Heading 8421), the bricks themselves are ceramic materials and must be classified under Chapter 69. The Authority emphasized that the raw bricks, before coating and canning, do not qualify as machinery or parts thereof.3. Classification under Chapter 38 (Miscellaneous Chemical Products)Chapter 38 includes catalytic preparations and reaction accelerators. The applicant submitted that since the silicon carbide bricks are imported in raw, uncoated form without any catalytic substances such as platinum or palladium, classification under Chapter 38 was not justified. The catalytic coating is applied later by a separate coater, and thus the bricks themselves are not chemical products or catalysts.4. Classification under Chapter 87 (Vehicles and Parts)Chapter 87 covers parts and accessories of vehicles. The applicant argued that raw silicon carbide bricks are not solely or principally used for DPFs in vehicles, as they have other industrial applications (heat exchangers, nuclear plants, thermal oxidisers). Therefore, they do not meet the criteria for classification as parts and accessories of vehicles under Section XVII. Only after coating and canning do the finished DPFs qualify as vehicle parts.5. Application of Precedents and Legal PrinciplesThe applicant relied on judicial precedents establishing that classification must be reasonable, non-arbitrary, and based on intelligible differentia with a rational nexus to the statute's object. The Authority applied these principles, finding the classification under Heading 6902 consistent with the product's nature, manufacturing process, and usage.6. Treatment of Competing ArgumentsThe Authority noted that the department did not appear or file any submissions or comments, thus no competing arguments were presented. The Authority nonetheless examined the classification under all potentially relevant headings and found the applicant's submissions and legal framework persuasive.7. Final ConclusionsThe Authority concluded that 'Raw Silicon Carbide Bricks for DPF application' are ceramic refractory products that have been fired after shaping, containing more than 50% silica by weight, and are specifically covered under CTI 6902 20 40. The bricks are not machinery or parts thereof under Heading 8421, nor chemical catalysts under Chapter 38, nor vehicle parts under Chapter 87. The classification under Heading 6902 20 40 is therefore correct and appropriate.The Authority ruled accordingly, confirming the classification of the imported raw silicon carbide bricks under Customs Tariff Item 6902 20 40.Significant holdings and core principles established:'Since machinery or appliances (for example, pumps) of ceramic material and ceramic parts of machinery or appliances of any material (Chapter 69) are excluded from Chapter 84, it follows that even if a machine or mechanical appliance is covered, because of its description or nature, by a heading of this Chapter it is not to be classified therein if it has the character of an article of ceramic materials or of glass.''Heading 6902 covers refractory bricks of all shapes and these should be classified under Heading 6902 even if they are clearly recognisable as being of the kind specially designed for the construction of plant or machinery of Section XVI.''Elements of filters are to be classified as per their constituent material. For instance, elements made up of ceramics are classified according to their constituent material under Chapter 69.''When goods are classifiable under two or more headings, classification shall be effected under the heading which provides the most specific description.''The product in question is a ceramic refractory good, fired after shaping, containing more than 50% silica, and specifically described as 'silicon carbide bricks and shapes' under CTI 6902 20 40. Therefore, classification under this heading is appropriate.'