TaxTMI 
TaxTMI 
2024 (4) TMI 1252
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....75 for imports through the port of Nhava Sheva. 2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question raised enclosed with the CAAR-1 application : 2.1 The Applicant is primarily engaged in the business, of Trading Alumina Fiber Mat imported from Ibiden Japan and providing marketing support services to promote raw silicon carbide brick used for Diesel Particulate Filters (hereinafter 'DPF') and Fine Graphite Material (hereinafter 'FGM') to associated enterprises of Ibiden Japan. The Applicant is in the process of selling up additional branches in free Trade Warehousing Zones ('FTWZ') from where the Applicant proposes to undertake business to business trading activities of raw silicon carbide bricks. Accordingly, the Applicant would import raw silicon carbide bricks of various shapes used for DPF from their associated enterprises and sell to their customers in India. DPF is a mandated component for all diesel engine driven vehicle platform manufactured in India to achieve Bharat Stage emission standard 6 (BS-6) implemented from April 1, 2020. DPFs are used in diesel engine systems to reduce the emissions of Particulate Matter ....
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....mance evaluations. Packaging and Distribution : After passing the quality control tests, the DPFs are packaged and prepared for distribution to customers or automobile manufacturers for installation in diesel vehicles. 2.3 The Applicant intends to import non-oxide raw silicon carbide bricks in various shapes, including round and oval, based on the 'directions to buy' provided by an automotive Original Equipment Manufacturer (OEM). These silicon carbide bricks will subsequently be sold in their raw form to a coater responsible for applying the necessary coating. The coater will, in turn, supply the coated bricks to a canner for sealing within metal canisters. Finally, the completed Diesel Particulate Filters (DPFs) will be delivered to the OEM for integration into their automotive systems. 2.4 The applicant has further submitted the manufacturing process of raw silicon carbide substrate/brick preparation for a Diesel Particulate Filter (DPF) as follows : Material Selection : Common materials used for DPF substrates are Silicon Carbide (SiC) and cordierite. Silicon carbide is a high-strength ceramic material with excellent thermal and chemical resistance. It i....
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....one using a spray or wash coat process. The coater needs to ensure an even and controlled distribution of the coating material over the substrate's surface to optimize catalytic activity. Drying : After the coaling is applied, the DPF is typically subjected to a drying process to remove any solvents or liquids from the coating. This step may involve heating the DPF in an oven to evaporate the volatile components of the coating material, leaving the catalyst particles adhered to the substrate. Quality Control : The coater is responsible for ensuring that the coated DPFs meet quality standards. This includes checking for uniform coating thickness, examining the overall integrity of the coating, and inspecting for any defects that might compromise the DPF's performance. Documentation : The coater may also be responsible for keeping records of the coating process. This documentation can include details of the coating materials used, the batch or lot numbers, process parameters, and any quality control results. Cleaning and Maintenance : Coating equipment and tools need regular cleaning and maintenance to prevent contamination and ensure consisten....
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.... in the canning process need to be cleaned and maintained regularly to prevent contamination and ensure consistent sealing quality. Canners are often responsible for the maintenance of their equipment. Safety : Safety is paramount in any manufacturing process. Canners should follow safety protocols, including wearing appropriate protective gear and adhering to safety guidelines to prevent accidents, especially when working with welding or sealing equipment. The canning process is the final step in DPF manufacturing before the filters are ready for packaging and distribution. A well-executed canning process is critical to ensuring that the DPFs will perform effectively in reducing particulate matter emissions from diesel engines. It also contributes to the durability and reliability of the DPF in the demanding conditions of diesel engine exhaust systems. 2.7 Coating and canning would not be undertaken by the Applicant. The reason for usage of silicon carbide ceramic for DPF application is that it is high temperature resistant refractory material. Ceramics have been classified in terms of their silica content; silica or silicon dioxide. The content of silicon dioxide a....
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....r the removal of water or other volatile components, are not considered to be fired. Such articles are excluded from Chapter 69; and (c) Ceramic articles are obtained by firing inorganic, non-metallic materials which have been prepared and shaped previously at, in general, room temperature. Raw materials comprise, inter alia, clays, siliceous materials including fused silica, materials with a high melting point, such as oxides, carbides, nitrides, graphite or other carbon, and in some cases binders such as refractory clays or phosphates. Tariff Item Description 6902 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods, other than those of siliceous fossil meals or similar siliceous earths 6902 20 - Containing by weight more than 50% of alumina (Al2O3), of silica (SiO2) or of a mixture or compound of these products : 6902 20 40 --- Silicon Carbide bricks and shapes 3.4 The Applicant submits that the silicon carbide brick that would be imported is a non-oxide ceramic and all the properties under this HS code are satisfied. Thus, classification of the silicon carbide brick imported by the Applican....
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....perforated plates, for gas fillers. It should be noted, however, that filter blocks of paper pulp fall in heading 48.12 and that many other filtering elements (ceramics, textiles, felts, etc.) are classified according to their constituent material." 3. Thus, it emerges that elements of Filters are to be classified as per their constituent material. For instance, elements (of Filters) that are made up of paper would be classified in Heading 4812 or 4823; if made up of textile material for technical use then in Heading 5911; if made up of glass then in Heading 7019; etc. Filters by themselves would be classified under Heading 84.21." 3.7 The Applicant submits that silicon carbide bricks, available in various shapes, are elements used in diesel particulate filter applications. These bricks are composed of high-temperature-resistant, refractory materials, predominantly silicon carbide, with a silica content by weight exceeding 50%. Therefore, the appropriate classification for these products under the Customs Tariff Act, 1975, is 6902 20 40. The Applicant further emphasizes that silicon carbide bricks, being ceramic materials, do not fall under the classification of Chap....
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....uld be used solely or principally as filters for diesel vehicles. 3.10 Laxmi Khandsari v. State of Uttar Pradesh [1981 (3) SCR 92]; State of Haryana v. Jai Singh [(2003) 9 SCC 114]; Welfare Association ARP v. Ranjit P. Gohil - [(2003) 9 SCC 358] held that for classification to be reasonable, it should fulfil the two tests. One, it should not be arbitrary, artificial or evasive, and should be based on intelligible differentia, some real and substantial distinction, which distinguished persons or things grouped together in the class from others left out of it. Two, the differentia adopted as the basis of classification must have a rationale or reasonable nexus with the object sought to be achieved by the statute in question. 3.11 As per general rules for the interpretation of the First Schedule to Customs Tariff Act, 1975, when goods are classifiable under two or more headings, classification would be done under the heading which provides the most specific description than to headings providing a more general description. The relevant extract of the rule is reproduced as under : "3. When by application of rule 2(b) or for any other reason, goods are, prima facie, class....
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.... so by the Supreme Court in the case of Collector of Customs, Bombay v. Business Forms Ltd. Thr. O.J. .. 2002 (142) E.L.T. 18 (S.C.). 5.1 Heading 8421 inter alia covers filtering or purifying machinery and apparatus for liquids or gases. Further, sub-heading 8421 32 more specifically covers "Catalytic converters or particulate filters, whether or not combined, for purifying or filtering exhaust gases from internal combustion engines". General Explanatory Notes (1)(B) to Section XVI states that the section (i.e. XVI) does not, however, cover : xx xx xx (d) Certain ceramic goods of Chapter 69 (sec General Explanatory Notes to Chapters 84 and 85). Further, I have gone through the General Explanatory Notes to Chapters 84 and 85 and in General Explanatory Note (A) to Chapter 84 it is explained that Subject to the provisions of the General Explanatory Note to Section XVI, this Chapter covers all machinery and mechanical appliances, and parts thereof, not more specifically covered by Chapter 85, and not being : xx xx &nbs....
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....y goods, i.e., fired articles having the special property of resisting high temperatures as met in metallurgy, the glass industry, etc. (e.g., of the order of 1,500 and higher). According to the particular uses for which they are intended, refractory articles may also need to withstand rapid changes of temperature, be either good thermal insulators or conductors, have a low coefficient of thermal expansion, be porous or dense, resist the corrosive effects of products with which they come into contact, have a good mechanical strength and resistance to wear, etc. However, to fall in heading 69.02 or 69.03 as refractory goods, articles must not only be capable of resisting high temperatures, they must also be designed for high temperature work. Heading 69.03 would therefore include crucibles of sintered alumina, but textile machine thread guides of the same material would fall in heading 69.09 since they are designed for clearly non-refractory uses". In this explanatory note, further, it is also explained that the main types of refractory goods are inter alia 'refractories based upon silicon carbide'. From the information available on open source websites it is learnt t....
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....h silica is more than that of the fireclay refractory. These bricks are composed of high- temperature-resistant refractory materials, predominantly silicon carbide, with a silica content by weight exceeding 50%. Silicon carbide brick that would be imported is a non-oxide ceramic. The silicon carbide substrate imported by the Applicant would contain by weight more than 50% of silica (Si). The Applicant submits that silicon carbide bricks, available in various shapes, are elements that would be used in diesel particulate filter applications. As per Note 1 to Chapter 69 this chapter applies only to ceramic products which have been fired after shaping : (a) & (b) xx xx xx (c) Ceramic articles are obtained by firing inorganic, non-metallic materials which have been prepared and shaped previously at, in general, room temperature. Raw materials comprise, inter alia, clays, siliceous materials including fused silica, materials with a high melting point, such as oxides, carbides, nitrides, graphite or other carbon, and in some cases binders such as refractory clays or phospha....
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....ew that this explanatory note to Heading 6902 is a decisive factor in the case at hand. It is unambiguously explained in this explanatory note that Heading 6902 covers refractory bricks of all shapes and these should be classified under Heading 6902 even if they are clearly recognisable as being of the kind specially designed for the construction of machinery of Section XVI. The applicant has sought advance ruling as to the classification of "raw Silicon Carbide Brick for DPF application". In this question itself the applicant has declared its intention that the product in question i.e. 'silicon carbide bricks' are proposed to be imported for further use in DPF (i.e. Diesel Particulate Filter). Therefore, even, the design of the subject product and the fact that the subject product is proposed to be used in Diesel Particulate Filter which is a machinery of the Section XVI, the subject product i.e. raw Silicon Carbide Bricks cannot be classified in Heading 8421 and these are to be classified in Heading 6902. 7. The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation ('GRI') set out in the First....