TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 952
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....;) is, inter alia, engaged in the manufacture and supply of tires, with focus on specialist sectors such as agriculture, industrial, off the road etc. 2.2 For manufacturing its' tires, the Applicant intends to import 'Compound Rubber Unvulcanised', (also referred to as the 'product'), which is a dry, raw natural rubber compounded with Carbon Black (N330) and Stearic Acid (rubber chemical). Applicant intends to import the product in the form of compound rubber blocks/sheets. 2.3 Applicant, at present, intends to import the product from traders, like RI International Pte Ltd., located in Singapore, who in-turn procures it from manufacturers, such as Seng Hin Rubber (Malaysia) SDN BHD and Syarika Tenaga (Gemas) SDN BHD, which are located in Malaysia. In future, Applicant intends to import similar product from other traders/manufacturers as well. 2.4 As per the manufacturers, during the course of manufacturing of the product, the dry raw natural rubber becomes plasticized, as also homogenized, resulting consistency in compound rubber quality. Both the Plasticity ('PO') as well as the Plasticity Retention Index ('PRI') of the product, are mor....
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.... silica'. 3.2 COMPETING ENTRY UNDER THE CUSTOMS TARIFF Before proceeding with the submission on merits, it would be pertinent to refer to the competing Heading under the Customs Tariff Act, 1975 under which the product is proposed to be classified, which is set out as below: Tariff Item Description of Goods 4005 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip 4005 1000 Compounded with carbon black or silica 3.3 As per the applicant the subject goods "Compound rubber unvulcanised" is classifiable under Heading 4005 of the Customs Tariff Act, 1975 as 'Compounded rubber, unvulcanised, in primary form or in plates, sheets or strip' and at specifically under Tariff Item ('TI') 4005 1000, as 'compounded with carbon black or silica'. 3.4 The Applicant further submitted that the Harmonized System of Nomenclature ('HSN') issued by the World Customs Organization provides for the classification of various products, on which the Indian Customs Tariff, 1975 is modelled. The HSN provides Explanatory Notes for each Chapter, explaining the scope of the various headings under which the products or comm....
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....for determining whether a substance is synthetic rubber or not. Once a substance has been determined to be synthetic rubber, products made therefrom are considered as vulcanised rubber products for the purpose of headings 40.07 to 40.17, whether they have been vulcanised with sulfur or with some other vulcanising agent. For the purpose of vulcanisation, in addition to vulcanising agents, certain other substances are also normally added, such as accelerators, activators, retarders, plasticisers, extenders, fillers, reinforcing agents or any of the additives mentioned in Note 5 (B) to this Chapter. Such vulcanisable mixtures are regarded as compounded rubber and are classified in heading 40.05 or 40.06 depending upon the form in which they are presented. Hard rubber, (for example, ebonite) is obtained by vulcanising rubber with a high proportion of sulfur to the point where it becomes practically inflexible and inelastic. Scope of the Chapter This Chapter covers rubber, as defined above, in the raw or semi-manufactured states, whether or not vulcanised or hard, and articles wholly of rubber or whose essential character derives from rubber, other th....
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.... provided that the rubber or mixture of rubbers retains its essential character as a raw material. Such substances include mineral oil, emulsifiers or anti-tack agents, small amounts (generally not exceeding 5 %) of breakdown products of emulsifiers and very small amounts (generally less than 2 %) of special purpose additives. ................................ This Chapter does not cover articles mentioned in Note 2 to this Chapter. Additional exclusions are referred to in the Explanatory Notes to certain headings of this Chapter. 40.05 - Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip. 4005.10 - Compounded with carbon black or silica 4005.20 - Solutions; dispersions other than those of subheading 4005.10 - Other: 4005.91 - - Plates, sheets and strip 4005.99 - - Other This heading covers compounded rubber which is unvulcanised and is in primary forms or in plates, sheets or strip. The term "rubber" has the same meaning as in Note 1 to this Chapter. The heading therefore covers natural rubber, balata, gutta-percha, guayule, chicle and similar natural gums, synthetic rubber, ....
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....Tariff Act, 1975: a) The product must consist of rubber or a mixture of rubber; b) The rubber must be compounded with Carbon Black. In addition, it can also be compounded with other ingredients such as vulcanizing agents, other substances such as dispersing agents, accelerators, notified activators, fillers etc. so long that the said compounding renders the mixture to be a vulcanisable mixture, but not vulcanized; c) The compounded rubber, however, must not be vulcanized i.e., there must not be cross linkage between the rubber and sulfur or the vulcanizing agent, whether or not using heat or pressure, or by radiation or high energy, so much so that the rubber passes from a mainly plastic state to a mainly elastic state; d) The product must either be in the 'primary form' or in the form of plates, sheets, strip and/or 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 otherwise surface worked, but not otherwise cut to shape or further worked. The Applicant has submitted that the subject goods i.e 'Compound Rubbe....
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....ng in respect of the following question: a. Whether the subject goods i.e. 'Compound Rubber Unvulcanised', are classifiable under under Heading 4005 and specifically under TI 4005 1000 of the First Schedule of the Customs Tariff Act, 1975, or otherwise. At the outset, I find that the issue raised in the question in the Form CAAR-1 is squarely covered under Section 28H(2) of the Customs Act, 1962 being a matter related to classification of goods under the provisions of this Act. 10. Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section Notes along with HSN explanatory Notes. As per Rule 1 of GRI, 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. 11. The applicant has submitted that the subject goods 'Compound Rubber Unvulcanised' in question, which it intends to import is a dry, raw natural rubber compounded with Carbon Black (N330) and Stearic Acid (rubber chemical) and the product in the form of compoun....
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.... 17. Ongoing through the Heading 4005, Notes to Chapter 40 and explanatory notes under Chapter 40 and Heading 4005. I find that Heading 4005 of the Customs Tariff Act, 1975 under TI 4005 1000, specifically covers rubber compounded with carbon black in primary form or in plates, sheet or strip, which is unvulcanized. The HSN Explanatory Notes further explains that the said Heading includes rubber compounded with carbon black along with other ingredients. Accordingly, I find that Heading is not restricted only to rubber compounded with carbon black alone, but is inclusive in nature, covering rubber compounded with other ingredients as well, in addition to carbon black. 17.1. I find that HSN Explanatory Notes under Chapter 40 explains that it is Chapter Note 5 to Chapter 40 of the Customs Tariff Act, 1975 which provides for the criteria to distinguish between rubber or mixtures of rubber in primary forms, plates, sheets or strip, which have not been compounded (Headings 4001 and 4002) from those which have been compounded (Heading 4005). Note 5 to Chapter 40 is reproduced as below: 5. (A) Headings 4001 and 4002 do not apply to any rubber or mixture of rubbers which has bee....
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....xplanatory Notes under Chapter 40 defines the expression 'vulcanized' to mean rubber which has been cross linked with sulfur or any other vulcanizing agent (such as sulfur chloride, certain oxides of polyvalent metals, selenium, tellurium, thiuram di- and tetra-sulfides, certain organic peroxides and certain synthetic polymers), whether or not using heat or pressure, or by high energy, radiation so that it passes from a mainly plastic state to a mainly elastic one. 18. In view of the facts and legal position, the view of the Applicant appears sound. Accordingly, It can safely be deduced that that following are the criterion which are required to be satisfied by a product to merit classification under Heading 4005 and TI 4005 1000 of the Customs Tariff Act, 1975: a) The product must consist of rubber or a mixture of rubber; b) The rubber could be compounded with Carbon Black. In addition, it can also be compounded with other ingredients such as vulcanizing agents, other substances such as dispersing agents, accelerators, notified activators, fillers etc. so long that the said compounding renders the mixture to be a vulcanisable mixture, but not vulcanize....