2026 (3) TMI 742 - AT - Central Excise

Tariff Classification: Burnt lime with sub 98% CaO is classifiable under Chapter 25, not Chapter 28, nullifying related demands.

Classification dispute over burnt lime with 85.9% calcium oxide: HSN explanatory notes require a high degree of purity (approx. 98% or more) for calcium ... Liability to central excise duty - burnt lime manufactured by the assessee - Classification of quicklime based on calcium oxide purity - classifiable under Chapter Heading 25 of the Central Excise Tariff (nil rate) Or Chapter Heading 28 (sub-heading 2825 90 90) - HSN Explanatory Note purity criterion as classification guide - Preference of specific tariff heading over residuary entry. Classification of quicklime based on calcium oxide purity - HSN Explanatory Note purity criterion as classification guide - HELD THAT:- It is also on record that the percentage of calcium oxide in the burnt lime is of 85.9% purity. The said issue where the calcium oxide is less than 98%, has been examined by this Tribunal in the case of M/s ITC Ltd. Vs. Principal Commissioner of Customs (Port), Kolkata reported in [2025 (7) TMI 648 - CESTAT KOLKATA]. The Tribunal determined that the determinative test is the purity of calcium oxide. Where the chemical analysis shows calcium oxide purity materially below 98% (the samples here showing 85.9%), the HSN Explanatory Note excludes such product from Chapter 28 which covers calcium oxide in the pure state. Applying the interpretative rules, the Tribunal preferred the specific heading for quicklime under Chapter 25 (CTH 2522) to the residuary entry in Chapter 28. The Tribunal relied on its earlier decisions addressing identical factual and legal matrix to conclude that the product cannot be classified under sub heading 2825 when purity is below the 98% threshold, and accordingly is classifiable under CTH 2522. [Paras 6, 8, 9] The burnt lime produced by the appellant, having calcium oxide purity below 98%, is classifiable under Heading 25.22 (CTH 2522) and not under Heading 28.25 (CTH 2825). Preference of specific tariff heading over residuary entry - HELD THAT:- Because the Tribunal concluded the product is classifiable under Chapter 25 and not Chapter 28, the confirmed demand of central excise duty, interest and penalty founded on classification under Chapter 28 could not be sustained. The Tribunal set aside the impugned order in view of the classification finding and allowed the appeal with consequential relief. [Paras 8, 9] The impugned demand, interest and penalty founded on classification under Chapter 28 are set aside; the appeal is allowed with consequential relief. Final Conclusion: The Tribunal allowed the appeal, holding that the burnt lime (CaO purity below 98%) is classifiable under Chapter 25 (CTH 2522) and not under Chapter 28 (CTH 2825); accordingly the impugned order confirming duty, interest and penalty was set aside with consequential relief. Issues: Whether burnt lime manufactured by the assessee is liable to central excise duty or is classifiable under Chapter Heading 25 of the Central Excise Tariff (nil rate) instead of Chapter Heading 28 (sub-heading 2825 90 90) and whether the demands, interest and penalty confirmed by the adjudicating authority are sustainable.Analysis: The product's chemical composition shows calcium oxide purity of 85.9%, which is below the 98% purity threshold set out in the HSN explanatory note for Chapter 28. The HSN explanatory note limits Chapter 28 to calcium oxide in a high degree of purity (approximately 98% or more) and excludes impure quicklime, which is treated under Chapter 25. The interpretative rule favoring a specific tariff heading over a residuary entry applies where the product falls within a specific heading unless purity or other criteria place it in the residuary entry. Tribunal precedents addressing similar purity levels and facts have classified quicklime with purity below 98% under Chapter 25 and not under Chapter 28. The Board's Circular No. 112/6/91-CX3 directs classification of burnt lime under Chapter Heading 2505 / Chapter 25 and is binding on departmental authorities absent contrary judicial decisions. The allegations of willful suppression for invoking extended limitation were examined in light of the consistent historical classification and disclosure; where classification is a question of interpretation and the Department itself had earlier treated the product under Chapter 25, the condition precedent for invoking extended limitation and penalties for willful suppression is not satisfied.Conclusion: Burnt lime with calcium oxide purity of 85.9% is classifiable under Chapter Heading 25 of the Central Excise Tariff and not under Chapter Heading 28 (sub-heading 2825 90 90); consequential demands of duty, interest and penalty confirmed by the adjudicating authority are unsustainable and set aside in favour of the assessee.Ratio Decidendi: Where HSN explanatory notes require a high degree of purity (approximately 98% or more) for classification under Chapter 28, a quicklime or burnt lime sample with calcium oxide purity below that threshold is to be classified under Chapter 25; specific tariff headings are to be preferred over residuary entries in tariff classification.