Tariff classification of electrolytic manganese dioxide turned on Chapter Note 1, placing the imported product under inorganic chemical heading.

Electrolytic manganese dioxide imported for dry batteries was held not to fall within Heading 25.01/32(3) as battery grade manganese dioxide because Chapter Note 1 to Chapter 25 limits that chapter to crude goods or goods subjected only to the specified processes. The material had undergone electrolysis and further manufacturing steps such as grinding, dissolution, leaching, washing, crushing, neutralising, drying and pulverising, which took it outside Chapter 25. It was therefore treated as a manufactured inorganic chemical compound classifiable under Heading 28.01/58(1), attracting countervailing duty under Item 68 of the Central Excise Tariff.

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Issues: Whether electrolytic manganese dioxide imported for dry batteries was classifiable under Heading 25.01/32(3) of the First Schedule to the Customs Tariff Act, 1975 as battery grade manganese dioxide, or under Heading 28.01/58(1) of the First Schedule to the Customs Tariff Act, 1975 with countervailing duty under Item 68 of the Central Excise Tariff.

Analysis: Heading 25.01/32(3) specifically mentions battery grade manganese dioxide, but the tariff entry has to be read with Chapter Note 1 to Chapter 25, which limits the chapter to goods in crude state or goods subjected only to the processes specified in that note. The imported material was electrolytic manganese dioxide produced through electrolysis and other manufacturing processes such as grinding, dissolution, leaching, washing, crushing, neutralising, drying and pulverising. Electrolysis is not one of the permissible processes under Chapter Note 1. The product was therefore not natural manganese dioxide nor a mineral substance remaining within Chapter 25, but a manufactured chemical compound falling within Heading 28.01/58(1) as a chemical element or inorganic chemical compound not elsewhere specified.

Conclusion: The imported goods were not classifiable under Heading 25.01/32(3); they were correctly classifiable under Heading 28.01/58(1) with countervailing duty under Item 68 of the Central Excise Tariff, and the Revenue's appeals succeeded.

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