TaxTMI 
TaxTMI 
2022 (5) TMI 1707
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....erned Principal Commissioner of Customs, on the application for advance ruling, vide letter dated 05.10.2021. In this regard, office of the Principal Commissioner of Customs, ACC Import, New Delhi vide letter dated 17.11.2021 has forwarded comments on the application for advance ruling. The applicant while proposing import of scrap of precious metals (HSN Code 7112), which are remnants after manufacturing of precious metal products under India-Malaysia Comprehensive Economic Cooperation Agreement (CECA, in short) has sought advance ruling on the following questions: (i) Whether the waste and scrap of precious metal generated (as described in the application) in Malaysia and collected from there would qualify as goods originating in Malaysia, in terms of the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of the Republic of India and Malaysia) Rules, 2011 (Rules, 2011, in short)? and (ii) Whether the benefit of tariff exemption under serial number 1007 of Notification No. 65/2016-Customs dated 31.12.2016 would be available to such waste and scrap of precious metal collected in Malaysia and imported into....
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....ning, agriculture, construction, refining, incineration and sewage treatment operations; the company intends to import scrap of precious metal products (HSN 7112) from Malaysia, the precious metal products are made from strips of precious metals by the process of manufacturing, alloying, melting, refining, polishing, designing, designing, malleability striping and others, on completion of these processes, the precious metal products are sold, the remnant material is not usable as it cannot be restored to its original form and is disposed as waste and scrap; they will use the waste and scrap for melting and manufacturing jewellery; they are of the view that goods classified under CTH 7112 are eligible for preferential rate of duty (Notification No. 53/2011-Customs), if they meet the origin criteria in accordance with the Rules of Origin provided under the Notification No. 43/2011-Customs (N.T.); in their case, the waste and scrap of precious metals is a remnant during the process of manufacture of precious metal products and the same cannot perform the original purpose of the precious metal strip i.e. no articles of precious metal can be made from them by cutting, slicing, melting, ....
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....ypes of processing which shall include industrial, chemical, mining, refining and sewage treatment operations. The applicant has also stated that the material proposed to be imported is squarely covered and the material, is scrap and waste resulting from manufacturing or processing operations, is goods that no longer perform the original purpose, is fit only for disposal for the recovery of raw materials; the sum and substance of the above legal provisions is that the waste and scrap obtained during the manufacture of precious metal products in Malaysia and collected from there and exported to India would fall under rule 4 of the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of the Republic of India and Malaysia) Rules, 2011; consequently, they would be considered as 'wholly produced or obtained' in Malaysia; in view thereof, the said goods would be eligible for tariff preference under Notification 53/2011-Customs; there are other conditions governing the grant of tariff preferences under the notification no. 53/2011-Customs dated 01.07.2011 read with Customs Tariff (Determination of Origin of Goods under the ....
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....rd with claim in the application; as regards, non-fiscal compliance applicable to import of goods in question, it is stated that at present, ITC (HS) does not lay down conditions for import of goods falling under heading 7112. Having submitted the legal position, they made further submissions on what would be the implication of the position on the outcome of the application. The applicant has stated inter-alia that the ruling on the questions raised should be uninfluenced by other import compliance under the law; their company, as a prospective importer would be bound by such compliance and non-fiscal measures; advance rulings are not envisaged on such measures and the nature of a measure or the existence or otherwise, would not influence the rulings on the issues covered under section 28H of the Customs Act, 1962; at the time of import they will conduct due diligence and comply with ITC (HS) and other conditions applicable to import; as regards proportion of material left after extraction of coins, they have calculated the proportion of the material left after extraction of coins, the proportion would vary based on the size of the coins and dimensions of the strip; however, the pe....
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....the manufacture of chemicals'; this explanation fits the subject goods, as well as the wording of rule 4 of the Rules of Origin cited in the application; the subject goods are fit only for recovery of raw material and are not conducive for restoring or repairing; to reiterate an apparent point, the law makers who formulated the tariff entry would be aware of the nature of gold (or any other metals); yet, the tariff entry under 7112 covers 'waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal other than goods of heading 8549' (2022 tariff). (as per pre-2022 tariff, the entry was "Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal"); the explanatory notes to heading 7112 spell out that "This heading covers waste and scrap in metallic form fit only for the recovery of precious metal, or for use as a basis for the manufacture of chemicals. The heading also cover....
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.... the wording of the heading 7112 and the relevant HSN explanatory notes, the goods covered in the application are classifiable under customs tariff heading 7112; Customs Commissionerate, New Delhi has also not raised any objection on their application. 6. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, I admit the application. Thereafter, having heard the applicant, having gone through the details of the goods as described in the application, comments of the designated Principal Commissioner and after hearing the applicant at length during the personal hearing and having gone through further submissions of the applicant, I proceed to examine the questions on merit and give ruling on the questions raised in the application. 7. The applicant has sought ruling on two questions, viz. as to whether precious metal scrap generated and collected in Malaysia would qualify as originating in Malaysia in terms of Customs Tariff (Determination of Origin of Goods Under the Preferential Trade Agreement between the Governments of the Republic of India and Malaysia) Rules, 2011 and applicability of concessional rate of duty v....
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....uced by a manufacturing process: such as: material rejected during a textile manufacturing process and used usually for wiping away dirt and oil: cotton waste"; and "an unwanted by-product of a manufacturing process, chemical laboratory, or nuclear reactor." It considers scrap to be a category of waste, describing it as: "manufactured articles or parts rejected or discarded and useful only as material for reprocessing especially : waste and discarded metal." The same dictionary defines remnant as: (1)(a) a usually small part, member, or trace remaining, (b): a small surviving group -often used in plural; and (2) an unsold or unused end of piece goods." 7.3 I now look at the plausible entries for gold waste/scrap/remnant and the related guidance in respect of the same. Heading 7112 covers waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the metal, whereas gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form is covered by heading 7108. Chapter Note 4A provides that the expression "preci....
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....ld strips, which are prima facie classifiable under heading 7108, are subjected to obtain gold coins of different size, also prima facie classifiable under heading 7108, are such that the remaining gold material described by the applicant as remnant/scrap/waste change their essential character to the extent that they are no longer classifiable under heading 7108 but merit classification under heading 7112 as waste or scrap of gold. 8.1 The applicant has explained that different size of coins would be cut from the precious metal strips and they intend to import remaining strip as waste and scrap under Rules, 2011. While, not mentioned explicitly in the application, it is the contention of the applicant that goods proposed to be imported as waste or scrap of gold would fulfil the rules relating to country of origin even when the precious gold strip would not be of Malaysian origin. The applicant has opined that the goods which they intend to import are covered under clause (i) of rule 4(1) of Rules, 2011 as articles which cannot perform their original purpose and are not capable of being restored or repaired and are fit only for disposal or recovery of parts of raw material or for....