TaxTMI 
TaxTMI 
2025 (2) TMI 1214
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....OK JINDAL : The Revenue are in appeals against the impugned order and the respondent has also filed Cross Objection in Customs Appeal No. 75467/2023. 2. The facts of the case are that the respondents were involved in export of a product declared as "Indian Refractory Mortar" by classifying the same under CTH 38160000, on which no export duty is payable. 2.1 There was an intelligence by the Directorate of Revenue Intelligence, Bangalore Zonal Unit, Bangalore, which indicated that the product exported by the respondent and declared as "Indian Refractory Mortar" classified under CTH 38160000 was actually Chrome Ore Concentrate, which should correctly and legitimately be classified under CTH 2610, which attract export duty @ 30% in terms of Schedule II of the Customs Tariff Act, 1975. In addition, it was also appeared that such a mechanism was devised by the respondents in terms of Export Policy. As per the Directorate General of Foreign Trade (DGFT)'s Export Policy-ITC (HS) 2018, the export of Chromium Ore & Concentrate of various grades as classified as "restricted" by the Export Policy in terms of the General Notes to Export Policy-Schedule 2-Export Policy restricted i....
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....pondents have modus operandi to declare the goods as "Indian Refractory Mortar" to avoid payment of export duty by classifying the same under CTH-38160000. 6. On the other hand, the ld.Counsel for the respondents, supported the impugned order and also argued on merit as well as he has taken a preliminary objection that the Committee of Chief Commissioners, who has review the order, has no power to review the order. 7. Heard both sides and considered the submissions. 8. We find that during the course of proceedings, samples were drawn and the test reports were obtained from CRCL. For better appreciation of the facts of the case, the test reports are being extracted herein below : 9. The test report indicates that the sample may be considered as "Chrome Ore Concentrate", which shows that the test reports are not conclusive. Further to classify the goods under Chapter 2610 on Chapter Note 2 of Chapter 26 is relevant, which is reproduced below : "Chapter Note 2 of Chapter 26 states : 2. For the purposes of headings 2601 to 2617, the term "ores" means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury....
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....3.2) The show cause notice, based on test reports from Customs house laboratory Chennai, technical specifications from the domestic suppliers whose goods were exported and statements Directors of export firms and domestic supplier under section 108 of Customs Act, insists that the correct classification is CTH 2610 as Chromium ores and concentrates. With the change in CTH, export duty @30% is leviable under second schedule of Customs Tariff Act 1975 and benefit of 3% MEIS reward rate under FTP para 3.04 read-with Public notice 61/2015-20 dt 07.03.2017 of DGFT, Ministry of Commerce, will not be available. 3.3) So the plain question that needs to be decided is whether the goods declared by party in the Shipping Bills are classifiable under CTH 3816 as refractory mortar or under CTH 2610 as 'chromium ores and concentrates'. 3.4) The classification of the goods is to be decided based on General Rules for Interpretation of first Schedule of Customs Tariff Act 1975 read with Harmonised System of Nomenclature (HSN) Explanatory Notes. 3.5) As per rule 1 of the General Rules for Interpretation, classification shall be determined according to the terms of h....
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....efractory Mortar [IRM]. Brownish black coloured moist coarse powder Chemical composition: 66.8% Cr2O3, 10.9% Fe2O3, 7.1% Al2O3, 8% MgO, 3.6% SiO2. Based on the test findings, HSN chapter general notes and literature available in the laboratory, samples may be considered as Chrome ore concentrate. The Test report Nos:71&72/DSM/06.10.2020 dated 07.12.2020, of Chemical Examiner Customs House Lab Chennai, for Final Product i.e. Chrome Concentrate/Chrome Mortar drawn from the premises of M/s Nilachakra Industrial Minerals under Mahazar dated 11.09.2020 (para 4.4.8 of the SCN) gives the following details for Indian Refractory Mortar [IRM]. Dark Brownish grey coarse powder along with a few off-white very small lumps Chemical composition: 72.9% Cr2O3, 10.1% Fe2O3, 4% Al2O3, 6.2% MgO, 1.1% SiO2. Based on the test findings, HSN chapter general notes and literature available in the laboratory, samples may be considered as Chrome ore concentrate. 3.8) So, from the evidence available, the product exported is in form of brownish powder and having a chemical composition of Cr2O3 minimum 59% and actual in range 66.8% to 73.7% ....
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....one to another. 4. where a product answers to a description in one or more of the headings in section VI by virtue of being described by name or function and also to heading 3827, then it is classifiable in a heading that references the product by name or function and not under heading 3827. [Heading 3827 covers Mixtures containing halogenated derivatives of methane, ethane or propane, not elsewhere specified or included]. (ii) Section notes 3, 5, 6 & 8 of section XV (covers chapter 72 to 83) states: 3. Throughout this Schedule, the expression "base metals" means: iron and steel, copper, nickel, aluminium, lead, zinc, tin, tungsten wolfram), molybdenum, tantalum, magnesium, cobalt, bismuth, cadmium, titanium, zirconium, antimony, manganese, beryllium, chromium, germanium, vanadium, gallium, hafnium, indium, niobium (columbium), rhenium and thallium. 5. Classification of alloys (other than ferro-alloys and master alloys as defined in Chapters 72 and 74): (a) an alloy of base metals is to be classified as an alloy of the metal which predominates by weight over each of the other metals; (b) an alloy composed of base metals....
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....e purposes of headings 26.01 to 26.17, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. Processes to which products of headings 26.01 to 26.17 may have been submitted include physical, physio-chemical or chemical operations, provided they are normal to the preparation of the ores for extraction of metals. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. 3.12) So, as per HSN explanatory note of heading 81.12 read with chapter note 2 of chapter 26, the chromite (chrome iron ore) going for extraction of chromium will be classified as chromium ore and concentrate. Further as per HSN explanatory note of chapter 26, the chemical composition of basic compound which furnishes the desired metal should not be altered by any operations. 3.18 The chemical composition of Chromite is FeCr2O4 (source....
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....uction to Refractory Aggregates → https://www.azom.com/article.aspx?ArticleID=1411). Spinels are used in refractories and are usually synthesized from trivalent and bivalent oxides. These oxides are mixed at equivalent mole ratios, forming materials of general formula XY204. The double oxide of magnesia and alumina (Mg Al2O4) is a common refractory spinel product. More examples of spinels are below: Aluminate Chromite Ferrite MgO.Al2O3 ZnO.Cr2O3 ZnO.Fe2O3 FeO.Al2O3 MgO.Cr2O3 MgO.Fe2O3 MnO.Al2O3 FeO.Cr2O3 FeO.Fe2O3 ZnO.Al2O3 MnO.Cr2O3 MnO.Fe2O3 NiO.Al2O3 NiO Cr2O3 NiO.Fe2O3 Spinel (Mg. Al2O3) as well as dichromite (MgO. Cr2O3) are employed in refractory castable formulations. Their melting points are 2135 °C and 2350 °C, respectively. At high temperature, spinel is more neutral than alumina but its corrosion resistance against standard slags is high. Against Fe2O3, Al3+ may be replaced by Fe3+ that causes corrosion. Further as per Chrome Compounds: Applications In Refractory Cements, Refractory Materials, (source: https://mineralmilling.com/chrome-compoundsrefractory-cements-refractory-mate....
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....the product "Indian Refractory Mortar" had the characteristics of Chrome Oro concentrates and asked them why export duty of 30% should not be demanded by them during some enquiry initiated in 2016, A letter dt 12.08.2016 was issued to M/s Metfab Export house to finalize the provisional assessment based on test report. However, this evidence is non-conclusive as to what happened at the time of final assessment. Second evidence is the practice that once the goods have been cleared for export from India, the original Bill of Lading is surrendered and a second set of Bill of Lading (Switch bill of lading) is got issued by the carrier (or its agent) to substitute the original bills of lading issued at the time of shipment; in the Switch Bill of Lading M/s PCF Associates, UAE are mentioned as the suppliers of the product and in the majority of situations, M/s ITACA SA, Spain is indicated as the buyer. This evidence establishes the use of the export product where it is consumed as Chrome flour under CTH 2610 at M/s ITACA SA. There is no evidence to suggest that substituting importer from M/s PCF Associates UAE to M/s ITACA Spain is impacting the product utilization. It appears li....
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....bove. The fact is that M/s Orissa Chrome is a producer of Chrome concentrate under CTH 2010 and is so registered with GST is clear above. So there is no evidence that chrome concentrate is supplied in guise of refractory mortar. Sixth evidence in para 4.4.4.4 of the netice that Peem ADC-4 or M/B Orissa Chrome be the year 2018-19 has been filed by the said Company on the MCA website pursuant to Section 137 of the Companies Act, 2013 and sub-vale (2) of Kale 12 of Companies Accounts) Rules, 2014 and it gives description of pestects as chrome ores and concentrates. And this is their complete turnover. Nowever, the financial document is related to Orissa Chrome and there is a gap between For ADC-4 and OST registration for supply. The evidence has to be based on the actual product exported. The sum ACC-4 does not establish the exported product is chrome ore and concentrate. Seventh evidence is revenue lab report observation, "Based on the test findings, HSW Chapter general soles and berature available in the laboratory, samples may be considered as Chrome ore concentrate.". However, this is an observation. Lab report can give the chemical composition; however, the clas....
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....ternational as per bank documents in RUD-24. So, the exporter has submitted forged documents with Customs. However, this evidence is not relevant as classification is based on the Channai lab report wherein chemical composition is established. 3.19) So, with the heading decided as 3816 under rule 1 of general rules of interpretation. As the heading is decided, we skip rules 2 to 5 and go to rule 6 of the general rules for the interpretation of the first schedule of Customs Tariff to determine the sub-heading There is only one sub heading CTH 381600, and so the classification is finalised as CTH 351600 [CTH 38160000 at eight-digit level] 3.20) (a) In CC Vs Madhan Agro Industries (India) [2018 (361) ELT A 116 (5C)] Hon'ble Apex Court has observed that classification can't be resolved on the basis of perception of consumer or customer but on the basis of headings and subheadings and on an interpretation of provision of relevant chapter notes. (b) Similarly, in LML Ltd Vs CC [2010 (258) ELT 321 (SC)] Hon'ble Apex Court has observed that for resolving any dispute relating to tariff classification, a safe guide is internationally accepted nomenclatu....
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....D-19 pandemic. Hon'ble Court has observed in para 5 of its order that "....it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings", So, in present case, the limitation period of 12 months under section 28(9) of Customs Act shall be effective from 01.03.2022. Further, period till 06/06/2022 is excluded under section 28(9A) on account of Board's instruction no. 04/2021-Cus date 17.03.2021 (the party was intimated on 26.11.2021 vide DIN 202104DDJ4000000FD89 regarding transferring case to call book) read with Board letter F No 450/72/2021-Cus IV(Part II) dt 06.06.2022." 13. We do not find any infirmity in the impugned order. Therefore, we hold that the goods in question cannot be classified under CTH 2610, therefore, no export duty is payable by the respondent. 14. In that circumstances, on merit, we do not find any infirmity in the impugned order. Accordingly, the same is upheld. 15. We further take note of the fact that when no demand of duty is sustainable against the respondents, therefor....
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....iers of the product to M/s Alliance International and M/s Falcon Exports. It has been termed as 'Indian Refractory Mortar' by M/s Nilachakra the domestic supplier as well as by the exporters- M/s Falcon Exports and M/s Alliance International. From the test report it clearly appears that both the sample of Raw Material i.e. Chrome Ore as well as the sample of Final Product i.e. Chrome Concentrate/Chrome Mortar collected from the premises of M/s Nilachakra Page 51 of 160 151 À 163 DRI/BZU/S-IV/ENQ-08(INT-NIL)/2020 arc Chrome Ore Concentrate with percentage of Cr203 in the range of 71% to 73% along with small amounts of oxides of Iron, Aluminium, Magnesium, Silica etc. (ii) The Test report Nos: 73 to 75/DSM/06.10.2020 dated 07.12.2020 at SI. No. (ii) above corresponds to the samples of Raw Material(TO), Processed Chrome (CC). Refractor: Mortar(IRM) drawn under Mahazar dated 11.09.2020 from the premises of M/s Orissa Chrome Export and Mining Ltd. COM/Telephone 044.23244164 044-25254305 07.12.2020 Lab,Nos: 73 to 75/ DSM/ 06.10.2020 To The Deputy THEevening Intelligence. Directorate of Revening Inte Bangalore Zonal Unit. No. R(P), I" Singe_J" Block....