Quick Lime, Hydrated Lime under Heading 2522 taxed at 5% GST, not 18%, under N/N. 1/2017-CT

The AAR held that the applicant's supplies of Quick Lime (90% purity) and Hydrated Lime (85%-95% purity) are classifiable under Heading 2522, as they are impure forms of calcium oxide and calcium hydroxide with impurities of 10%-15%, and not under Heading 2825. Applying the relevant GST notifications, including N/N. 1/2017-CT (Rate) as superseded by N/N. 9/2025-CT (Rate), the AAR ruled that the applicable GST rate on these products is 5%, and not 18%, resolving the classification and rate dispute in favour of the applicant.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Classification of Quick Lime (90% purity) and Hydrated Lime (85%-95% purity) under the appropriate Heading of the First Schedule to the Customs Tariff Act, 1975 for GST purposes.

1.2 Determination of the applicable rate of GST on Quick Lime (90% purity) and Hydrated Lime (85%-95% purity) under the relevant rate notifications issued under Section 9(1) of the CGST Act, 2017.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Quick Lime and Hydrated Lime

Legal framework

2.1 The Court referred to Section 9(1) of the CGST Act, 2017 and Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, which adopts the First Schedule to the Customs Tariff Act, 1975 for classification of goods, along with its Section and Chapter Notes and General Explanatory Notes.

2.2 Chapter 25 of the Customs Tariff Act covers "Salt; sulphur; earths and stone; plastering materials, lime and cement", and Heading 2522 covers "Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 28.25."

2.3 Chapter 28 covers "Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes", and Heading 2825 covers "other inorganic bases; other metal oxides, hydroxides and peroxides," including calcium oxide and calcium hydroxide in the pure state.

2.4 Notes and General Notes to Chapter 25 and Chapter 28, and the Explanatory Notes to Headings 2522 and 2825, were considered to determine when a product is treated as "quicklime / slaked lime" under Chapter 25 versus "calcium oxide / calcium hydroxide in the pure state" as separate chemically defined compounds under Chapter 28.

Interpretation and reasoning

2.5 The applicant's products were found to have the following composition: Quick Lime - 90% CaO, 8% CaCO3, 2% Silica; Hydrated Lime - 85-95% Ca(OH)2, 3-13% CaCO3, 2% Silica, implying 10-15% impurities.

2.6 Explanatory Notes to Heading 2522 describe "Quicklime (an impure calcium oxide)" obtained by calcining limestone and "slaked lime (calcium hydroxide)" obtained by combining quicklime with water, while expressly excluding purified calcium oxide and hydroxide of Heading 2825.

2.7 Explanatory Notes to Heading 2825 restrict its scope to calcium oxide and calcium hydroxide "in the pure state (i.e., containing practically no clay, iron oxide, manganese oxide, etc.)," typically around 98% purity with only negligible impurities, as separate chemically defined compounds.

2.8 General Notes to Chapter 28 clarify that the Chapter is limited to "separate chemically defined compounds" whose composition is defined by a constant stoichiometric ratio of elements, permitting only small, non-intentionally created deviations.

2.9 The Court found that the applicant's Hydrated Lime, containing 85-95% Ca(OH)2 with 10-15% impurities (CaCO3 and Silica), is not a "separate chemically defined compound" within the meaning of Chapter 28 and cannot be regarded as calcium hydroxide in the "pure state" contemplated by Heading 2825.

2.10 For the same reason, the applicant's Quick Lime with about 10% impurities was held to be "impure calcium oxide" corresponding to the description of "quicklime" under Heading 2522, and not "pure" calcium oxide under Heading 2825.

2.11 On the combined reading of the Chapter Notes, General Notes and Explanatory Notes, the Court held that goods with 10-15% impurities do not qualify for classification as purified calcium oxide or hydroxide under Heading 2825, but appropriately fall under Heading 2522 as quicklime and slaked (hydrated) lime.

Conclusions

2.12 Quick Lime with 90% CaO and approximately 10% impurities and Hydrated Lime with 85-95% Ca(OH)2 and 10-15% impurities are classifiable under Heading 2522 of the First Schedule to the Customs Tariff Act, 1975, and not under Heading 2825.

Issue 2: Applicable GST rate on Quick Lime and Hydrated Lime

Legal framework

2.13 Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, issued under Section 9(1) of the CGST Act, prescribes GST rates for goods classified as per the Customs Tariff Act. Schedule I to this notification specifies goods taxable at 2.5% Central Tax.

2.14 Serial No. 131 of Schedule I to the said notification specifies Heading 2522 for "Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825," attracting Central Tax at 2.5% (with an equivalent State Tax, totalling 5% GST).

2.15 The Court noted that Notification No. 1/2017-Central Tax (Rate) was superseded by Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025, but the applicable GST rate on Quick Lime and Hydrated Lime under Heading 2522 remained unchanged.

Interpretation and reasoning

2.16 Having concluded that the applicant's Quick Lime and Hydrated Lime fall under Heading 2522 and are not covered by Heading 2825, the Court applied Serial No. 131 of Schedule I, which expressly covers goods of Heading 2522.

2.17 As the applicant's products do not qualify as calcium oxide or hydroxide of Heading 2825, the exclusion in Serial No. 131 ("other than calcium oxide and hydroxide of heading 2825") does not apply, and the concessional rate under Heading 2522 is applicable.

Conclusions

2.18 Quick Lime (90% purity) and Hydrated Lime (85%-95% purity) supplied by the applicant, classifiable under Heading 2522, attract GST at the total rate of 5% (CGST 2.5% + SGST 2.5%).

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