TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 1029
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....ces 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/calcined lime' for industrial purpose, is a calc....
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.....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 under CTH 28.25 is erroneous. By referring to its scope, ....
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....planatory 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 Explanatory notes and Chapter Heading Notes, quicklime in crude state is classifiable in CTH 2522. Calcium Oxide is classifi....
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....rovided 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 substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the princi....
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.... 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 of articles which has "-". where the description of an article or group of articles is preceded by "---" or "----", 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 of articles which has "-" or "--". 2.....
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....des 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 to how the goods are known in the common trade parlance for the purpose of dealing between the parties. 8.2 In context with the case in hand, we note that the following are some of the important rules to be followed in the scheme of determining correct classification of imported goods: (i) classification of goods shall be determined according to the terms of t....
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.... 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 - Hydraulic lime Kg. 10% -" & "Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) "Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides 2825 10 - Hydrazine and hydroxylamine and their inorganic salts : 2825 10 10 --- Hydrazine anhydrous Kg. 10% - ....
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....s, 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 heading 2522. There is no dispute on the fact that the imported goods in the present case are 'quicklime' and thus by applying GIR 1 would be classifiable under tariff item 2522 10 00. Further, from the exclusion provided for calcium oxide and hydroxide of heading 2825, it transpires that the quicklime as a mineral product, when subjected to certain processes or treatment, whereby if these mineral products were converted into separate chemical elements or separate chemically defined compounds, such as calcium oxide in the present case, then those products would be more appropriately classified as chemical products under heading 2825, owing to the reason that the chemical properties of the goods have been changed from the mineral product to chemical product. Thus,....
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....hich 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 explanatory notes of the World Customs Organization (WCO), for classification of impugned goods and as these HSN explanatory notes describe in detail the scope and coverage of the goods under the Customs classification, which is in tandem with the classification of goods agreed in the international trade and is duly adopted by all member countries to WCO, and India being a member country, we need to look into these aspects too. It is also important to note that classification of goods for customs purposes as per the Harmonized System of Nomenclature (HSN) is an international obligation for India under an International Convention on the Harmonized Commodity Description and Coding System brought into effect from 01.01.1988 and among the various uses, one of it relevant to th....
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....lia, 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 after moulding; jet; strontianite (whether or not calcined), other than strontium oxide; broken pieces of pottery, brick or concrete." 12.2 In this regard, we find that Chapter Note 1 to Chapter 25 of Section V covering mineral products, provide for the general scope of goods that do not get covered under the said Chapter. Besides, Chapter Note 2 also lists out goods that are not covered under Chapter 25. Thus, we find that these Chapter Notes 1 and 2 to Chapter 25 generally guide classification of goods under this Chapter. As there is no specific mention of products of heading 2825 in Chapter Note 2 for excluding from the scope of chapter 25, it is clear that there is no overlapping of classification in respect of any goods of heading 2522. Further, as the description of sub-heading 2522 itself provide for excluding calcium oxide and hydroxide of Chapter heading 2825 from the scope o....
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.... 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 purified calcium oxide and calcium hydroxide (heading 28.25)." The above explanatory notes to sub-heading 2522 clearly provide that 'quicklime' and 'hydraulic lime' are obtained by calcining and low temperature calcination of limestone, respectively. In order to appreciate the above, let us understand the process of calcination as explained in the Britannica Encyclopedia which states that 'Calcination', means the heating of solids to a high temperature for the purpose of removing volatile substances, oxidizing a portion of mass, or rendering them friable. Calcination, therefore, is sometimes considered a process of purification. A typical example is the manufacture of lime from limestone. In this process the limestone is brought to a temperature high enough to expel the carbon dioxide, producing the lime in a highly friable or easily powdered condition. Calcination in special cases may be carried on in furnaces designed to exclude air, for which an inert gas may be substituted. 12.4 In o....
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....ainst 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 which have been subjected to mechanical or physical processes for eliminating impurities without changing the structure of the product but not products that have been roasted, calcined etc. Obviously the latter type of processes result in a chemical process changing the structure of the product. It is be noted that the Supreme Court did not disturb the findings of the Tribunal while dismissing the department's appeal as the Counsel for the Government could not enlighten the Court about the findings of the Collector (Appeals) which he adopted as the stand of the Government in the appeal. 27. For the aforesaid reasons; following the Supreme Court decision in respondent's own case, for the same goods, I concur with the findings of the Judicial Member ordering dismissal of the department's appeal. The papers may be referred to the Bench for passing the final order in accordance with the majority view." 14.1 In order to further examine the classification in terms of HS explanatory notes of the WCO, whic....
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.... of the detailed coverage of the goods under the scope of the above entries particularly those under in the sub-heading 282590, at first para of B(11) above, it is clear that the calcium oxide (CaO) in the pure state i.e., not containing clay, iron oxide, manganese oxide etc. alone would alone qualify for the chemical product covered under the scope of this sub-heading. 14.2 From the records of the case i.e., the test reports of samples of imported goods, which are relied upon in the adjudication proceedings at paragraph 5 of the SCN dated 26.07.2021 and paragraph 22.1(vi) of the impugned order dated 06.12.2022, the details of available Lime content as CaO% and total CaO%, along with other constituents were compared and are given in the table below for ease of reference: Percentage of the available Lime as (CaO) content and total Lime as (CaO) content along with few of the other impurities as per the manufacturer's test reports S. No. BE No. Date Available CaO % Total CaO % Un-burnt CaCO3 Co2 Other impurities SiO2 Al2O3 SO3 Iron Oxide MgO 1. 4281679 30.07.2019 92.40 94.52 3.34 1.47 0.97 0.29 0.29 0.19 1.30 2. 4675048 28.08.2019 92.44 94.34 3.27 1.....
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....72%; Co2 of range 1.34 to 1.58% along with few other impurities viz., SiO2 of range 0.93 to 1.24%; Al2O3 of range 0.28 to 0.34%; SO3 of range 0.17 to 0.80%; Iron Oxide of range 0.19 to 0.21% and MgO of range 1.17 to 1.44%. Thus, from the above chemical composition of the test results of imported goods, it can be concluded that it is mainly composed of calcium oxide (quick lime) along with traces of Iron, Aluminum& Silicious matter. On the percentage of chemical composition, the highest percentage of 'available CaO2/calcium oxide is 92.8%'. Further, the HSN explanatory notes in the second para of B(11) also specify that calcium oxide of high degree of purity i.e., app. 98% or more would alone gets covered under the scope of sub-heading 2825. As seen from the test reports, the content of calcium oxide or lime is much less than the requisite 98%. Thus, we are of the considered view that in terms of the HSN explanatory notes, both on account of presence of specified material making it 'not in pure state' and the composition of calcium oxide not upto the requisite percentage making it not a product of high degree, would not enable the imported goods to be classified under sub-heading 28....
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....made by the appellants. In fact the CBEC circular No. 9/96-Customs dated 13.02.1996, clarifies this aspect by specifically stating that the imported goods when covered specifically by the exemption entry by its description, then notwithstanding the fact that the goods are not covered by the Chapter/Heading No./Sub-heading Nos. mentioned in the notifications, on the basis of the law laid down by the Hon'ble Supreme Court in the case of Jain Engineering Vs. Collector of Customs - 1987 (32) E.L.T. 3 S.C. Further, it is not the case of Revenue that the impugned goods do not find fitment in heading 2522 of the First Schedule to Customs Tariff Act, 1975 or that the 'integrated tax' rate at serial no. 131 of Schedule-I is, by the corresponding description, unquestionably excluded from every tariff item comprising heading 2522 of the First Schedule to Customs Tariff Act, 1975. Nor is it the case of Revenue that the 'quicklime' at serial no. 131 of Schedule-I of the 'integrated tax' rate notification do not find placement in Chapter 25 of First Schedule to the Customs Tariff Act, 1975. 16. We further find from the standards prescribed by the Bureau of Indian Standards (BIS) in respect of I....
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....ining limestone containing very little or no clay. It combines very rapidly with water, giving off considerable heat and producing slaked lime (Calcium hydroxide) The heading excludes purified calcium oxide and calcium hydroxide (heading 28.25)." The HSN also prescribes as follows: "1. Except where their context ..... otherwise requires, ..... but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading." 4.2 It is seen that Revenue has relied on the decision of the Tribunal in the case of Nuchem Industries Pvt. Ltd. (supra) which was upheld by Hon'ble Apex Court. It is seen that the said decision has been given in the context of Central Excise duties. At the material time, Central Excise Tariff was not aligned to HSN. Learned Counsel for the appellant pointed out that the Central excise Tariff was align with HSN only with effect from 20.03.1990. He pointed out that this distinction has been specifically examined by Tribunal in the case of Bhadradri Minerals Pvt. Ltd. (supra) in para 5.1 and 5.2. In view of above, it is apparent that the said decision would render indifferent circumstances and, theref....
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....icant being convinced of the correct classification, would like to avert the risk of availing the benefit the strength of decisions rendered in a different context and then facing a backlash at a later stage." From the above it is apparent that the facts and circumstances were significantly different. 5. As a result of above observations, we find that the ratio of decisions of Tribunal in the case of M/s Bhadradri Minerals Pvt. Ltd. is applicable to the facts of the instant case. Therefore, the product is rightly classified under chapter 25. The appeal is consequently allowed." 19. Further, we also find that this Bench of the Tribunal had also decided the issue of classification of 'quicklime' under Customs Tariff Item 2522 10 00 and not as 'other' under the Customs Tariff Item 2825 90 90, in the case of Viraj Profiles Limited Vs. Commissioner of Customs (Preventive) in the Final Order No. A/87057-87058 of 2023 (Tri.-Mum.) dated 20.10.2023, as well as in the Final Order No. 10022/2024 dated 02.01.2024 (Tri.-Ahmd.) in the case of J.K. Paper Limited Vs. Commissioner of Customs, Ahmedabad. Inasmuch as, the identical facts are involved in the present case, the ratio of the above d....