TaxTMI 
TaxTMI 
2026 (8) TMI 1617
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....nt was availing benefit of concessional rate of Basic Customs Duty (BCD) in terms of Sr. No. 304 of Notification No.12/2012-Cus. dated 17.03.2012.The relevant entry of the said Notification reads as under: Sr. No. Chapter or Heading Description Standard Rate 304. 6902 or 6903 All goods 5% 2.1 According to the evidence on record, the subject Goods were obtained from Magnesite, which is a naturally occurring rock. The said Rock was mined and thereafter such shaped Magnesite was subjected to a two-stage process. The first stage involved firing of Magnesite (MgCO3 - carbonate of magnesium) at 1500-1800°C to obtain Magnesia (MgO - oxide of magnesium) i.e. dead burnt magnesite. In the second stage, Magnesia and Graphite were blended with resin as a binding material, which resulted into formation of a composite material called Magnesia Carbon (MgO-C). Magnesia Carbon was thereafter pressed in a pressing machine to achieve the desired shape of a brick, and the resultant bricks are fired at a temperature of around 180 -350°C to form Magnesia Carbon bricks i.e. the Subject Goods. The adoption of the aforesaid process comes clearly from the statements of sup....
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....ating Authority, vide Order-in-Original dated 21.03.2017, Ld. Adjudicating Authority confirmed the allegations levelled in the Show-cause notices. The reasons underlying the Impugned Order are as under: (i) The entry of the articles in Chapter 69 require therein a mandatory phenomenon of 'firing' or heating to a temperature not less than 800 ° C, which is not fulfilled in the present case; (ii) The term 'Firing' has not been defined in the Customs Tariff and hence recourse has to be taken to Explanatory Notes to Chapter 69 in WCO-HSN, which provides that articles heated to temperatures less than 800 °C for purposes such as curing of resins, accelerating hydration reaction or for removal of water are not considered to be fired for the purpose of Chapter Note 1; (iii) The statements of the experts/technical persons clearly indicate that the raw material for manufacture of Subject Goods is fused magnesite or dead burnt magnesite obtained from magnesite ore; (iv) Chapter Note 1 to Chapter 69 applies to the entire chapter. Although the extent of firing is not specified in Customs Tariff, the same is expressly provided for in the HSN. Undispute....
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....eme Court in the case of Camlin Ltd. vs. CCE, 2008 (9) TMI 1 - Supreme Court. This position has not been disputed in the Impugned Order 3.2 Further, he submits that even with respect to the goods in question, which are specifically by name covered by Tariff Item 69021040, the same cannot be technologically or commercially be fired at a temperature of 800°C or more, as has been explained by Mr. Sahu, Assistant Executive Director (R&D), OCL India Ltd. a supplier of the Appellant, to the effect that if the Magnesia is fired at temperatures more than 800° C, during the manufacturing itself, the carbon particles in the bricks start oxidizing, thereby reducing the strength of the brick. The said question is reproduced herein below: "Q. Please state as to why the Magnesia Carbon bricks are not fired to more than 800° C during manufacture?" A. If Magnesia Carbon bricks are fired to more than 800°C, during manufacturing itself, the carbon particles oxidise giving low strength to the bricks and the purpose of carbon incorporation for getting higher life during application is no more there." 3.3 He further submits that no material has been brought on re....
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....early not mentioned in the Tariff entries. He submits that even if Chapter Note 1 of Chapter 69 is applicable, there is no stipulation that firing has to take place at 800 C or more for all the ceramic products to be classified under Chapter 69. 3.6 It is further submitted that the Subject Goods imported by the Appellant have admittedly been fired. There is no stipulation in Note 1 to Chapter 69 of Customs Tariff in India to the effect that for the product to be classifiable under sub-chapter I, it has to be fired at temperature of 800 C or more. Therefore, even heating at temperatures ranging from 180-350 C would be considered as firing. 3.7 The fact that Subject Goods were fired at 250-350 C is evident from process write up furnished during investigation by one of the five suppliers viz., RHI India Pvt. Ltd., wherein the process of heating as firing at temperatures 250-350 C has been referred to as process of firing. The fact that Subject Goods were fired to 250-350 Chas also been admitted by the Adjudicating Authority in the Impugned Order. Therefore, there being no dispute the Subject Goods were fired at 250350°C, and thus the requirement, if at all present in Chapter....
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....ctions, or for the removal of water or other volatile components, are not considered to be fired for the purposes of Chapter Note 1. Such articles are excluded from Chapter 69. E. Finishing Therefore, where the 'ceramic product' is obtained from Rock, fired after shaping, i.e., covered by Part B of General Notes, which is the also case here inasmuch as the source material is Magnesite which is a naturally occurring rock, the stipulation regarding firing at 800°C or more would not be applicable. 3.10 In any case, it is evident from Para A of the General Notes to the HSN that while describing the process of firing, the same is undertaken on 'greenware', which is heated to a temperature of 800°C or more as per the nature of the product. There is nothing to suggest that the Subject Goods were 'green ware' and accordingly, the condition would not be applicable, even if the Subject Goods were assumed to be obtained by firing inorganic and non-metallic material. It is relevant to note here that the raw sources for obtaining Magnesia Carbon Bricksare, (i) sea/brines, which is subjected to chemical treatment, known as Wet Route; and (ii) solid minerals, which....
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...., articles of carbon fibre, not elsewhere classified or included. It clearly comes out from the said heading that the same applies to articles which are not elsewhere specified or included. In support of the above proposition, the Appellant relies upon the judgment in the case of Dunlop India Ltd. vs. Union of India reported in 1977 AIR 597 (SC)wherein it was held that a product should be classified under specific entry which covers it and should not be relegated to the orphanage, i.e. a specific entry should be preferred over a general entry. 3.15 With respect to the contention of the Ld. Special Counsel made in his written submissions, he submits that most of the member of the countries of WCO have accepted the classification of the subject goods under CTH 6815, besides being baseless and unsubstantiated, is wholly irrelevant to the determination of classification in the present case. 3.16 Further, he submits that mere fact that the other member countries of WCO may have adopted under CTH 6815 cannot be the basis for the Revenue to classify the goods imported by the Appellant also under the said CTH. It is submitted that the classification under the Customs Tariff must nece....
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.... the WCO's classification. 3.19 With respect to the submission of the Ld. Special Counsel in para 2(viii) that Monolithic refractories can indeed be pre-cast and pre-fired (PCPF) into specific shapes and the Monolithic in powder, paste or liquid form is classifiable under CTH 3816, while it is the PCPF which is classifiable under CTH 6903. It is submitted that, the two products are completely dissimilar. Had the proposition suggested by the Ld. Special Counsel been the correct factual position, nothing prevented the Adjudicating Authority to record a similar finding in the Impugned Order. Furthermore, nothing has been furnished on record by the Ld. Special Counsel to substantiate his claim that Monolithics are of two types, and it is PCPF monolithics which are classifiable in Chapter 69. Accordingly, he submits that impugned Order erred in confirming interest liability and ordering for confiscation of goods with an option to redeem on payment of Redemption Fine. 3.20 It is further submitted that since the demand itself is unsustainable, there arises no question of any interest liability. 3.21 Further, he submits that the impugned Order has also confirmed confiscation of go....
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.... imported goods. 4.1 He further submits that almost all the WCO countries in the world including India have already accepted the classification of these goods under 68.15 only (evidences have already been submitted at the time of hearing and also all the relevant international citations have been mentioned in the order in original). The classification of the imported goods in question is settled without any dispute anywhere in India and in most of the WCO countries. The present case by the appellants is only to dig the grave by raising a number of irrelevant points to confuse the issue and secure a favourable order by lucid story telling only. 4.2 Point wise reply to the Appellants submissions by the Special Counsel are as follows; The Appellants are trying to mislead the Bench by making a number of factually incorrect statements which are nothing but unsubstantiated Guess work.: (i) The issue is whether imported Goods :Magnesia Carbon Bricks heated around 250-350 degree will be classified under 69021040/69029090 OR under 68159990/68159100. This issue has nothing to do with the production process of Magnesium Oxide, (MgO) by burning of Magnesite,(MgCO3:Magne....
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....C for purposes such as curing of resins, accelerating hydration reactions, or for the removal of water or other volatile components, are not considered to be FIRED for the purposes of chapter note 1. Such articles are excluded from chapter 69" has been deliberately concealed and not revealed to this Bench. It is further submitted that appellants have submitted that this provision was introduced in chapter notes only w.e.f.2022 whereas this provision was there right from 2007 in the HSN and the introduction in chapter note was only by way of clarification as per finance bill. It is clarified that this exclusion clause was originally not there in the HSN in 1988 and was introduced much after 1988 but before the 2007 edition clearly indicating that whatever doubt or confusion might have arisen with regard to any Article which was not heated to 800 degrees, the same was clearly excluded from chapter 69. (iv) Confusion has further been created that the firing after shaping applies only to such ceramic products which are classifiable under CTH 6904 to 6914 by way of teaching English language to this Bench that as the Chapter note after full stop says" Heading 6904 to 6914 apply ....
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....r I are not required to be fired to 800 degree or more as per chapter note 1 because these are not ceramic goods as per HSN is an absurd assumption keeping in view the specific Exclusion provided to all goods which are NOT FIRED upto 800 degree. ALL assumptions of the appellants fail when one refers to the exclusion clause specifically mentioned in the HSN since 2007 and before, and introduced by way of clarification in the, main chapter heading in 69 chapter of Indian Tarriff w.e.f. 2022. (vii) Specific heading vs. Generic ( Residuary) heading is another frivolous dispute created by the Appellants which is clearly meaningless. As per the exclusion clause of HSN the Magnesia Carbon bricks Heated below 800 degree will be excluded from chapter 69. Further, chapter note 1applies to ceramic products fired after shaping. Hence to say that there is a specific heading for the imported goods in question is a blatantly incorrect statement deliberately made to confuse and misguide the BENCH. Yes, fired magnesia carbon bricks which are fired in a kiln above 800 degree shall be classifiable under69021040 as ceramic refractory. They are darker and ceramic bonded. Since the imported goo....
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....: (a) By firing inorganic, non-metallic materials which have been prepared and shaped previously at, in general, room temperature. Raw materials comprise, inter alia clays,silicious materials, 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; (b) From Rock (e.g. Steatite), fired after shaping. They have speculated that HSN chapter note 1 would show that it applies to only ceramic products under sub-chapter II categorized as Other Ceramic Products. Sub chapter 1 does not cover any ceramic materials. This point has already been explained on the basis of 2 points: 1. Sub chapter 2 of Other ceramic materials clearly means that the sub chapter 1 also contain ceramic materials and 6901,6902 and 6903 all contain the word ceramic. 2. Evidently, Refractory goods have also been treated as Ceramic Goods as per the scheme of things under HSN wherein broad heading of Ceramic Products consists of both Refractory Ceramic goods as well as Other Ceramic Goods. (x) While arguing the case the Appellants made an extremely vague submission that t....
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....ion. A particular classification adopted by the importers/exporters in other jurisdictions does not ipso facto binding upon the Appellant. From the Tariff descriptions extracted above, it can be seen that Tariff Item 69021040 specifically covers the Subject Goods viz. Magnesia Carbon Bricks and shapes, imported by the appellant. Tariff Item 68159100, which is being advocated by the Revenue for classification of the Subject Goods, covers articles of stone or of other mineral substances, including fibre, articles of carbon fibre, not elsewhere classified or included. It clearly comes out from the said description that the said heading 6815 applies to articles which are not elsewhere specified or included. It is a settled law that a specific entry in the tariff would be preferred over a general heading. This view has been held by the Hon'ble Apex Court in the case of Dunlop India Ltd. vs. Union of India reported in 1983 (13) E.L.T. 1566 (S.C) wherein it was held that a product should be classified under specific entry which covers it and should not be relegated to the orphanage, i.e. a specific entry should be preferred over a general entry. The relevant para 37 of the said decision i....
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.... firing i.e. 800 ° C, the Ld. Adjudicating authority has confirmed the impugned demands in the SCNs. 6.5. In this regard, we find that the Note 1 of the Chapter 69 has been amended w.e.f from 01.01.2022. As the present issue pertains to the period prior to 01.01.2022, it is relevant to compare both the Chapter Notes that existed prior to 01.01.2022 and after 01.01.2022. For ready reference, both the Chapter Notes are extracted below" Chapter Note 1 to Chapter 69 CUSTOMS - Prior to 2022 CHAPTER 69 Ceramic products Notes 1. This Chapter applies only to ceramic products which have been fired after shaping. Headings 6904 to 6914 apply only to such products other than those classifiable in headings 6901 to 6903. *************** Chapter Note 1 to Chapter 69 CUSTOMS - Post 2022 CHAPTER 69 Ceramic products Notes: 1. This Chapter applies only to ceramic products which have been fired after shaping: (a) Headings 6904 to 6914 apply only to such products other than those classifiable in headings 6901 to 6903; (b) articles heated to temperatures less than 800°C for pur....
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....the HSN and the said Tariff are not aligned, reliance cannot be placed upon HSN for the purpose of classification of goods under the said Tariff. One of the factors on which the Tribunal based its conclusion is the entries in the HSN. The said conclusion in the Order of the Tribunal is, therefore, vitiated and, accordingly, set aside. We agree with the findings recorded by the Commissioner (Appeals). 6.7. The Ld. Special Counsel submitted that the exclusion clause has been specifically mentioned in the HSN since 2007 and before, and introduced by way of clarification in the main chapter heading in 69 chapter of Indian Tariff w.e.f. 01.01.2022 and hence it is applicable retrospectively. We do not subscribe to the view expressed by the Ld. Special Counsel. The eight-digit classification under the Customs Tariff in India was introduced with effect from 01.02.2003 vide the Customs Tariff (Amendment) Act, 2003. The legislative intent behind the introduction of the eight-digit classification is evident from the speech delivered by Shri Gingee Ramachandran, the then Minister of State in the Ministry of Finance and Company Affairs, at the time of introducing the Customs Tariff (Amendmen....
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....tion in HSN Explanatory Notes regarding firing above 800°C applied to ceramic products classifiable under CTH 6904 to 6914 in sub-chapter II of Chapter 69 and did not apply to refractory products classifiable under CTH 6901-6903 in sub-chapter I of Chapter 69. The condition of firing at 800°C or more was not applicable to ceramic products obtained from Rock, fired after shaping, and was applicable only to ceramic products obtained by firing inorganic, non-metallic material which had been prepared and shaped previously at, in general, room temperature. Even if Chapter Note 1 of Chapter 69 is applicable, there is no stipulation that firing has to take place at 800 degree C or more for all the ceramic products to be classified under Chapter 69. The legislative changes made in the year 2022 clearly establishes that prior to such amendment, the Subject Goods were classifiable under CTH 69021040 and they are eligible for the concessional rate of BCD under Serial No.304 of Notification No.12/2012-Cus dated 17.03.2012 as claimed by them in the impugned Bills of Entry. 6.10. Accordingly, we hold that the demand of differential customs duty confirmed in the impugned order by re-cl....