TaxTMI 
TaxTMI 
2023 (10) TMI 1306
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....d in the manufacture of tyres and clearing tyres for domestic market and also export tyre to other countries following due process of law applicable for import, manufacture and clearance. 2.1 Applicant proposes to import approximate quantity of 72,000 Tonnes per annum compounded rubber from the suppliers in Thailand, Malaysia, Indonesia, Vietnam and through Chennai Port, Kattupalli Port, Ennore Port, Nhava Sheva Port, Cochin Port and Hazira Port and has sought the Ruling under Section-28(H) 2(a) of Customs Act, 1962 for the import of compounded rubber with Carbon Black or Silica or Styrene Butadiene Rubber (SBR) which is specifically covered under tariff heading 4005 10 00. It is submitted that there is no issue of import license for import of compound rubber with carbon black or silicon classified under CTH 4005 1000. It is also submitted that there is no issue relating to Import Policy Classification under Customs Tariff currently pending or already decided by the department or in the appellate forum. However, in order to obtain certainty in the customs rate of duty, the Applicant is seeking classification from Customs Authority for Advance Ruling on future import of ....
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..... The chapter consist of Chapter Notes, brief description of commodities arranged at four-digit, six-digit and eight-digit level. Every four-digit level is heading, six-digit is called sub heading, and eight-digit is called tariff item. India has developed eight-digit code. The process of arriving at a particular heading or sub heading either at four-digit, six-digit or eight level for a commodity in the tariff schedule is called classification. The title, sections, chapters and sub chapter are provided for ease of reference only. 2. General Interpretative Rules are a set of 6 rules for classification goods in the tariff schedule These rules have to be applied in sequential manner. • Rule 1 gives precedence to the section notes and chapter notes. • Rule 2(a) applies to goods imported in incomplete/finished, assembled/unassembled condition. • Rule 2(b) is applicable to mixture or composite goods. Goods which cannot be classified under 2(b) will be classified under Rule 3 by application of most specific description as per Rule 3(a); Rule 3(b) essential character, 3(c) heading that occurs last in numerical order. â€....
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.... heading covers "compounded rubber which is unvulcanised and is in primary forms or in plates, sheets or strips." As mentioned in said Chapter Heading "Unvulcanisation" is a crucial and differentiating part whether to classify the goods under HSN 4005 1000 or otherwise. d. Customs, Hazira Port has gone through the various consignments of rubber being imported in past one year and found NIL Bills of Entry classified under 4005 1000. Further, in terms of classification, the important factor which speaks about the goods is whether the goods are vulcanized or not. The applicant, vide their submission, has failed to describe exact quality of the goods, though they may be compounded with various additives and chemicals, they cannot be classified in 4005 1000, if the same are vulcanized. e. Vulcanization of rubber is a complex process, which involves treatment of raw/natural rubber with Sulphur and other chemicals to make it more durable. Sulphur is an integral part of compounding because it forms cross links with natural rubber making it more durable and elastic appropriate to manufacture tyres etc. Thus, rubber compounding can be done using various methods ....
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....ntioned in the rejoinder the applicant's representatives immediately acknowledged that the two of the three formulations mentioned in their rejoinder (reproduced below) do not contain either silica or carbon black to be able to classify under tariff entry 4005 1000 and hence the duty exemption benefit under serial number 503 of the notification 46/2011-Cus read with notification 189/2009 (N.T.)-Cus. is not applicable to these two products. I find that the present CAAR-1 application is seeking a ruling under section 28 H 2 (a) on classification under CTH 4005 1000 of the first schedule of the Customs Tariff Act, 1975, and Section 28 H 2 (b) on duty exemption benefit under serial no. 503 of Notification 46/2011 issued under section 25 (1) of the Customs Act, 1962 read with notification 189/2009 (N.T.) in respect of following compounded rubber formulations. Compounded rubber formulation 1 (with less than 5 parts of Carbon Black): Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 100 5 2 Carbon black 2.6 1.5 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 Compounded rubber formulation 2....
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....lying Notification benefit under Notification 41/2019 dated 31/12/2019 (46/2011) as amended. Here, on perusal of records, I find that the report has not mentioned unvulcanised status of the sample tested. Customs tariff heading 4005 reads as "Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip" and from the description itself it is clear that the tariff heading 4005 accommodates only unvulcanised compounded rubber. It is further stated by the applicant that though the applicant did not face any problem on import of a sample consignment of compound rubber through Chennai Customs, the applicant intends to import substantially large consignments of compound rubber through multiple ports in the above stated category so as to increase applicant's manufacturing activities. In order to safeguard the interest of applicant and to avoid dispute, ruling is sought from the Customs Authority for Advance Ruling under section 28(H) 2(a) and (b) of Act. The applicant further submits that they would fulfil the conditions prescribed under the said notification. The Certificate of Origin required for availing the benefit of the Notification would be obtained at the tim....
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....nner tubes (hot process), for the manufacture of adhesive patches, washers for certain airtight seals, rubber granules, etc., for moulding rubber soles. (5) Compounded rubber in the form of granules, ready for vulcanisation, and used as such for moulding purposes (e.g., in the shoe-making industry). The chapter note 3 to the chapter 40: Rubber and articles thereof reads as follows: "In headings 4001 to 4003 and 4005, the expression "primary forms" applies only to the following forms: (a) Liquids and pastes (including latex, whether or not pre-vulcanised, and other dispersions and solutions); (b) Blocks of irregular shape, lumps, bales, powders, granules, crumbs and similar bulk forms." Further, the chapter note 3 to the Chapter 40: Rubber and articles thereof reads as follows: "In headings 4001, 4002, 4003, 4005 and 4008, the expressions "plates", "sheets" and "strip" apply only to plates, sheets and strip and to blocks of regular geometric shape, uncut or simply cut to rectangular (including square) shape, whether or not having the character of articles and whether or not printed or ....
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....l Customs authorities' responsibility to check whether all conditions necessary for claiming the benefit of duty exemption under the AIFTA are met by the importer and these include correct chemical composition of the imported products for a given classification, fulfilment of conditions related to origin criteria etc. 5.7 However, based on the submissions of the applicant I take up the classification and duty exemption eligibility of three compounded rubber formulations submitted by the applicant and reproduced in the tables in para 5 above. A. Compounded rubber formulation 1: Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 100 5 2 Carbon black 2.6 1.5 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 It is observed that this formulation contains carbon black in 2.6 % with a tolerance of +/- 5%. Tariff entry 4005 1000 reads as Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica. Here applicant has claimed that the compounded rubber formulation mentioned in the table is unvulcanised. Hence I find that presence of ei....
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.... of an outcome of the chemical composition test conducted at the time of importation. 5.9 C . Compounded rubber formulation 3: Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 100 5 2 Clay 3 1.5 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 It is observed that this formulation does not contain either carbon black or silica. Tariff entry 4005 1000 reads as Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica. Hence I find that presence of either of carbon black or silica in unvulcanised compounded rubber of heading 4005 is required to classify this formulation under tariff entry 4005 1000. HSN Explanatory Notes to heading 4005 state that this heading includes Compounded rubbers not containing carbon black or silica. Further such compounded rubber may contain substances such as organic solvents, vulcanising agents, accelerators, plasticisers, extenders, thickeners and fillers (other than carbon black or silica). Some of them may contain red clay or protein. However, absence of both Carbon black as well as silica renders t....