TaxTMI 
TaxTMI 
2024 (2) TMI 1029
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....oms Duty (BCD), 5% Integrated Goods & Services Tax (IGST) and 10% Social Welfare Cess (SWS) claiming the exemption benefits under various notifications such as Notification No. 50/2017-Customs dated 30.06.2017 (Serial No. 120) for BCD; and Notification No. 01/2017-Integrated Tax dated 28.06.2017 of Schedule-I (Serial No. 131) for IGST. 2. Directorate of Revenue Intelligence, Mangalore Regional Unit, Mangalore (DRI-MRU) had gathered an intelligence that the appellants importer having manufacturing premises at Jagdish Nagar, Khopoli, Taluk Khalapur, District Raigad for the purpose of manufacturing steel products are importing high calcium quick lime from the suppliers abroad by mis-classifying the same under Customs Tariff Item (CTI) 2522 1000 instead of rightly classifying it under CTI 2825 9090 and short paying the customs duty. Accordingly, DRI-MRU vide their letter dated 27.07.2020 had sought for the details regarding import documents including test analysis certificates from the appellants. Upon completion of investigation and on the basis of Note 1 to Chapter 25 of the Customs Tariff Act, 1975, the DRI-MRU came to the conclusion that the imported high-quality 'quick lime/cal....
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....s which have been tested under ASTM standards. 3.3 Furthermore he submitted that the issue of classification in the above case is no longer res integra in view of the decision of the Tribunal in the case of Commissioner of Central Excise, Hyderabad-III Vs. M/s Bhadradri Minerals Pvt. Ltd. reported in 2015 (324) E.L.T. 395 (Tri.-Bang.) wherein was categorically held that CTH 2825 covers calcium oxide which is of purity 98% or more. He also submitted that the test report of the samples of imported goods indicate that level of Calcium Oxide in the subject goods is between 91% to 94% and thus, below 98%. In the present case, for classifying the goods under CTH 2825 the percentage of calcium oxide ought to be 98% or more. In the present case, it is not in dispute that percentage of available calcium oxide in the imported goods is less than 98%. Hence, he submitted that the goods were rightly classified under CTH 2522 of the Tariff Act. 3.4 Learned Consultant states that reliance placed by the department on the BIS standard IS: 1540-1 (1980) for quicklime which is used in chemical industry to hold that the subject goods are Grade 'A' quicklime and consequently are classifiable unde....
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....lanatory Notes to Note (1) of the Chapter 28, and (ii) HSN Explanatory Notes B(11) to the tariff entry 282590, the following conclusion could be arrived: (a) Heading 2522 covers impure calcium oxide containing very little or no clay. (b) Purified calcium oxide is covered under heading 2825 (c) Chapter 28 headings cover separate chemically defined compounds, whether or not containing impurities. (d) Separate chemically defined compounds containing impurities remain classified in Chapter 28. (e) Such impurities result from manufacturing process (including purification) like unconverted starting materials, impurities present in the starting materials etc. (f) Heading 2825 covers calcium oxide in pure state (i.e. containing practically no clay, iron oxide, manganese oxide etc.). (g) One of the methods of obtaining pure calcium oxide is by calcining precipitated calcium carbonate. (h) Heading 2825 also covers fused lime obtained by fusing ordinary quick lime in an electric furnace. This product has a high degree of purity (approximately 98% Calcium Oxide). 4.3 Learned AR also stated that in terms of the HSN Expla....
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....FOR THE INTERPRETATION OF IMPORT TARIFF (GIR) Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or su....
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.... they are of a kind normally used for packing such goods. However, this provisions does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub-headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub-headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. THE GENERAL EXPLANATORY NOTES (GEN) TO IMPORT TARIFF 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group....
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.... internationally traded goods, i.e., 'Harmonized Commodity Description and Coding System' (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub-heading. In the event of the goods cannot be classified solely on the basis of GIR 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the 'statutory definition', if any, provided in the Customs Tariff Act. In the absence of any statutory definition, or any guideline provided by HS explanatory notes, the trade parlance theory to be adopted for ascertaining as....
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....chedule to the Customs Tariff Act. Thus, it is clear that at the Chapter level i.e., Chapter 25 and Chapter 28, there is difference of views among the appellants and the department. Thus, the dispute in classification lies in the narrow compass of determining the appropriate chapter under which the imported goods is covered in terms of the legal basis as elaborated above in paragraphs 6 to 8 above, and thereafter to decide the respective Tariff Items in which the imported goods are falling there under. In order to closely examine the scope of contending Chapter, Headings, Sub-headings and Tariff Items thereof for determining correct classification of imported goods, relevant tariff entries in the First Schedule to the Customs Tariff Act are extracted as below: "Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 2522 Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825 2522 10 00 - Quicklime Kg. 10% - 2522 20 00 - Slaked lime Kg. 10% - 2522 20 30 -....
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....anic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements of isotopes which are products of chemical or allied industries falling under Section VI of the said Schedule. Further, it can be said that Chapter heading 2522, clearly provides that quicklime, slaked lime and hydraulic lime are classifiable under specific tariff items provided for therein; however, calcium oxide and hydroxide of Chapter heading 2825 are excluded from the scope of coverage under the heading 2522. Similarly, the description of the Chapter heading 2825 provide for coverage of the goods under its scope which are specifically mentioned as Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides. 10.2 We find that Heading 2522 covers within its scope and ambit, mainly of three specific goods such as the following: (i) first one i.e., "quicklime"; (ii) the second one, "slaked lime", and (iii) third one, "hydraulic lime". Hence, in simple words, it can be stated that all the goods covered under the above description at (i) to (iii) above would be rightly classifiable under chapter ....
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....n of quick lime under heading 2825 as it is a separate chemically defined compound and that it occurs last among other classification under heading 2522 is not legally sustainable. 10.5 Thus, we find that there is no case for application of Rule 3 of GIR in this case. In view of the above, we are of the prima facie view that the imported goods are appropriately classifiable under CTH 2522 10 00. 11. Revenue has also contended that the imported goods are rightly classifiable under tariff item 2825 90 90, as 'calcined' quick lime is excluded from the scope of coverage of goods under Chapter 25 in terms of its Chapter Note 1 and on the basis of HSN explanatory notes 1(a) to Chapter 28, B(11) of tariff entry 28.25, presence of impurities, BIS 1540-1 (1980), GIR 3(c), which have been discussed in detail in the impugned order dated 06.12.2022. 12.1 Therefore, in order to decide further within the two Chapter Headings 2522 or 2825, whether the imported goods fall under the first category as 'quicklime' or under the second category 'calcium oxide', one needs to look further into relative Section or Chapter notes. Further, as both the appellants and Revenue have relied upon the HS ....
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....3 (heading 2821); (c) medicaments and other products of Chapter 30; (d) perfumery, cosmetic or toilet preparations (Chapter 33); (e) setts, curbstones and flagstones (heading 6801); mosaic cubes or the like (heading 6802); roofing, facing or damp course slates (heading 6803); (f) precious or semi-precious stones (heading 7102 or 7103); (g) cultured crystals (other than optical elements) weighing not less than 2.5g each, of sodium chloride or of magnesium oxide, of heading 3824; optical elements of sodium chloride or of magnesium oxide (heading 9001); (h) billiard chalks (heading 9504); or (i) writing or drawing chalks and tailors' chalks (heading 9609). 3. Any products classifiable in heading 2517 and any other heading of this Chapter are to be classified in heading 2517. 4. Heading 2530 applies, inter alia, to: vermiculite, perlite and chlorites, unexpanded; earth colours, whether or not calcined or mixed together; natural micaceous iron oxides; meerschaum (whether or not in polished pieces); amber; agglomerated meerschaum and agglomerated amber, in plates, rods, sticks or similar forms, not worked af....
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....less the context require and specify so for inclusion in Chapter 25. 12.3 In order to understand the above aspect more clearly let us also look into the HSN explanatory notes for sub-heading 2522, the extract of which is given below: "Harmonized Commodity Description and Coding System Explanatory Notes 25.22 - Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 28.25. 2522.10 - Quicklime 2522.20 - Slaked lime 2522.30 - Hydraulic lime Quicklime (an impure calcium oxide) is obtained by calcining limestone containing very little or no clay. It combines very rapidly with water, giving off considerable heat and producing slaked lime (calcium hydroxide). Slaked lime is usually employed for soil improvement or in the sugar industry. Hydraulic lime is obtained by low temperature calcination of limestone containing sufficient clay (although usually less than 20%) to ensure that the product sets under water. Hydraulic lime differs from natural cement in that it still contains appreciable amounts of uncombined quicklime, which may be slaked with water. The heading excludes purif....
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....cerns the same assessee and the same material for a later period. The Tariff Headings and the Chapter Note in question being materially the same, the law laid down by the Supreme Court is finding on the Tribunal and the authorities. If, however, it is the stand of the department that the exclusion of roasted or calcined items, in terms of the subject Chapter Note, is only from Chapter 25 or, more particularly, Tariff Headings 25.01, 25.03 and 25.05 and not to make such products non-excisable, if, they fall in other Chapters or under other Headings, appropriate action may be considered by the Government. In fact, Tariff sub-heading 2505.60 which mentions quick lime, slaked lime and hydraulic lime refers to such goods other than calcium oxide and hydroxide of Heading No. 28.25 which would point to the latter two products falling under that heading which covers, inter alia, inorganic chemicals, that chapter itself falling in Section VI which covers products of the Chemical or Allied Industries. As against this, Chapter 25 under which, lime falls is in Section V which covers mineral products. Chapter Note 2 under Chapter 25 covers only material falling under 25.01, 25.03 and 25.05 whic....
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....g beryllium salts, synthetic precious or semi-precious stones and as a catalyst. (b) Hydroxide (Be(OH)2). White powder resembling alumina in appearance. (11) Calcium oxide, hydroxide and peroxide. This heading covers only the oxide (CaO) and the hydroxide (Ca(OH)2), in the pure state (i.e., containing practically no clay, iron oxide, manganese oxide, etc.), Such as the product obtained by calcining precipitated calcium carbonate. The heading also covers fused lime obtained by fusing ordinary quicklime in an electric furnace. This product has a high degree of purity (approximately 98% calcium oxide); it is crystalline and generally colourless. It is used, in particular, for refractory linings for furnaces, in the manufacture of crucibles and for addition to concrete, in small pieces, to increase its resistance to wear. Calcium peroxide (CaO2) is a white or yellowish powder, hydrated usually with 8 H2O), sparingly soluble in water. Used as a bactericide and as a detergent, in medicine and in the preparation of cosmetics. Quicklime (calcium oxide) and slaked lime (calcium hydroxide) are excluded (heading 25.22)." From perusal of....
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....70 93.84 3.36 1.48 1.24 0.30 0.23 0.21 1.52 14. 8012940 26.06.2020 92.60 94.72 3.27 1.44 1.00 0.30 0.17 0.19 1.32 15. 8364977 03.08.2020 92.40 94.37 3.06 1.35 1.21 0.30 0.38 0.20 1.34 16. 8522271 19.08.2020 92.10 94.36 3.59 1.58 1.04 0.28 0.40 0.19 1.32 17. 8938762 25.09.2020 92.30 94.54 3.50 1.54 1.00 0.22 0.28 0.19 1.52 18. 9428745 03.11.2020 92.70 94.54 3.22 1.42 1.05 0.34 0.26 0.19 1.36 19. 9550911 12.11.2020 92.60 94.70 3.27 1.44 0.96 0.28 0.17 0.18 1.42 20. 9602712 17.11.2020 92.50 94.61 3.31 1.46 0.97 0.29 0.19 0.19 1.44 21. 2066737 22.12.2020 92.60 94.52 3.06 1.35 0.98 0.29 0.38 0.19 1.42 22. 2077397 23.12.2020 92.80 94.77 3.18 1.40 0.93 0.31 0.38 0.19 1.17 23. 2428776 20.01.2021 92.30 94.41 3.27 1.44 1.06 0.30 0.38 0.20 1.43 24. 2449586 21.01.2021 92.50 94.51 3.20 1.41 0.9....
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....UB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY] GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) Notification No. 1/2017-Integrated Tax(Rate) New Delhi, the 28^th June, 2017 G.S.R. (E).-In exercise of the powers conferred by sub-section (1) of section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the rate of the integrated tax of- (i) 5 per cent. in respect of goods specified in Schedule I, (ii) 12 per cent. in respect of goods specified in Schedule II, (iii) 18 per cent. in respect of goods specified in Schedule III, (iv) 28 per cent. in respect of goods specified in Schedule IV, (v) 3 per cent. in respect of goods specified in Schedule V, and (vi) 0.25 per cent. in respect of goods specified in Schedule VI appended to this notification (hereinafter referred to as the said Schedules), that shall be levied on inter-State supplies of goods, the description of which is specified in the corresponding entry in column (3) of the said Schedules, falling under the tariff item, sub-he....
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....ade-C are provided depending upon their suitability to specific uses on the basis of chemical properties such as follows: Grade A - Bleaching powder, paper, textiles and varnish manufacture Grade B - Sugar and calcium carbide industry Grade C - suitable for soda ash, caustic soda by lime soda process, water treatment and tanning industry. Thus, we find that the IS:1540 is not applicable for the quicklime used in the manufacturing process of iron & steel industry as in the present case. 17. We also observe that the CBEC's Circular No. 18/91-CX.3 in F. No. 112/6/91-CX3 dated 10.07.1991 which was issued in the context of classification of 'burnt lime' under sub-heading 2505.60 not being directly related to the issue of impugned goods and the decision given by the Authority for Advance Ruling in Lhoist India supra, apply only in respect of the applicant who had sought it and the related jurisdictional Customs authorities for that applicant, we do not find it necessary to examine these aspects in the present case. 18. We also find that on similar issue of classification of quick lime the Co-ordinate Bench of the Tribunal in the case Jindal Stainless (....
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....e said chapter note provides as follows: "5.3 HSN Explanatory Note under Tariff Heading 28.25 also excludes Calcium Oxide which has a purity less than 98% from Chapter 28 in view of the fact that what is covered under 28.25 is Calcium Oxide of purity 98%. The relevant Chapter Note is reproduced below : "(11) Calcium Oxide, Hydroxide and Peroxide : This Heading covers only the oxide (CaO) and the hydroxide (CaOH), in the pure state (i.e. containing practically no clay, iron oxide, manganese oxide, etc.) such as the product obtained by calcining precipitated calcium carbonate; The Heading also covers fused lime obtained by fusing ordinary quicklime in an electric furnace. This product has a high degree of purity (approximately) 98% calcium oxide; it is crystalline and generally colourless. It is used, in particular, for refractory linings for furnaces, in the manufacture of crucibles and for addition to concrete, in small pieces, to increase in resistance to water. Calcium peroxide (CaO) is a white or yellowish powder, hydrated (usually with 8 H2O) sparingly soluble in water. Used as a bactericide and as a detergent, in medicine and in the preparat....