TaxTMI 
TaxTMI 
2026 (9) TMI 1294
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.... CTH 2610. 3. These goods were supplied during the period 2016-17. 4. In 2020, the Directorate of Revenue Intelligence (DRI) came to the conclusion, after recovery of samples from shipping bills of one exporter by the name of M/s. Falcon Exports, that these goods are classifiable under CTH 2610. In effect, no duty is payable if the goods are classified under CTH 3816 0000 as claimed by the appellants. 5. Accordingly, proceedings were initiated against all the appellants and consequently, by way of the impugned order, the demand of duty came to be confirmed; penalties were also imposed. 6. Aggrieved from the said order, the appellant is before us. 7. Heard the parties and considered their submissions. 8. We find that an identical issues has already been dealt with by this Tribunal in the case of Commissioner of Customs (Port) v. Alliance International [2025 (2) TMI-1214-CESTAT, Kolkata] (Final Order Nos. 75441-75460/2025 dated 24.02.2025 - CESTAT, Kolkata) wherein it was observed as under: - "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, t....
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....r 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, of the metals of heading 2844 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. Headings 2601 to 2617 do not however, include minerals which have been submitted to processes not normal to the metallurgical industry." 10. We further take note of the fact that the chemical composition of Chromite is FeCr2O4. It also forms a solid solution with magnesiochromite (MgCr2O4). So, (Fe,Mg)Cr204 is the general chemical formula. This composition will consist of compounds Cr2O3, FeO and MgO. Chromites may be formed by reaction of chromium(III) oxide with a metal oxide: Cr2O3+MgO → MgCr2O4, Or Cr2O3 + FeO - FeCr2O4 The exported product has chemical composition of : Cr2O3 minimum 59% and actual in range 66.8% to 73.7%, Fc203 maximum 26% and actual in range 10.1% to 13.9%, Al2O3&nb....
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.... 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 headings and any relative section or chapter notes. 3.6) In this present case the items exported are declared as "Indian Refractory Mortar", as declared by the party in the shipping Bills in annexure A to C of SCN. The Test report Nos: 76 to 79/DSM/06.10.2020 dated 07.12.2020 of Chemical Examiner Customs House Lab Chennai, for the four samples of Indian Refractory Mortar drawn under Mahazar dated 12.09.2020 from the shipping Bill No. 4864104 dated 04.09.2020 filed by M/s Falcon Exports gave following details (para 4.4.8 of the SCN): Brownish black coloured coarse powder Chemical composition: 72.1% to 73.7% Cr2O3, 10.6% to 13.9% Fe2O3, 4.1% to 5.6% Al2O3, 4.7% to 6.2% MgO, 0.69% to 0.90% SiO2. Based on the test findings, HSN chapter general notes and literature available in the laboratory, samples may be....
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.... 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% * Fe2O3 maximum 26% and actual in range 10.1% to 13.9%, Al2O3 maximum 15% and actual in range 4.0% to 7.1%, MgO maximum 11% and actual in range 4.7% to 8%, SiO2 maximum 1% and actual in range 0.69% to 3.6%, The exported product purchaser M/s ITACA Spain is clearing it as "Harina De Cromita" (broadly translated to "Chromite flour/ Dust" in English) and classified under the CTH "2610 0000" with Spanish Customs. Further CRCL Chennai Lab has opined that based on HSN chapter, general notes and literature available in the laboratory, samples may be considered as Chrome ore concentrate. 3.9) There are three specific headings which are applicable to the exported goods. (a) Heading: 2610-Chromium ores and concentrates (b) Heading: 3816 Refractory cements, morta....
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....um, 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 of this Section and of elements not falling within this Section is to be treated as an alloy of base metals of this Section if the total weight of such metals equals or exceeds the total weight of the other elements present; (c) in this Section, the term "alloys" includes sintered mixtures of metal powders, heterogeneous intimate mixtures obtained by melting (other than cermets) and intermetallic compounds 6. Unless the context otherwise requires, any reference in this Schedule to a base metal includes a reference to alloys which, by virtue of Note 5 above, are to be classified as alloys of that metal. 8. In this Section, the following expressions have the meanings hereby assigned to them: (a) waste and scrap: metal waste and scrap from the manufacture or mechanical working of metals, a....
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....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 Wikipedia: https://en.wikipedia.org/wiki/Chromite). It also forms a solid solution with magnesiochromite (MgCr2O4). So, (Fe,Mg)Cr204 is the general chemical formula. This composition will consist of compounds Cr2O3, FeO and MgO. Chromites may be formed by reaction of chromium(III) oxide with a metal oxide: Cr2O3+MgO→ MgCr2O4, Or Cr2O3+ FeO→ FeCr2O4 The exported product has chemical composition (as per para 3.8 above) of: Cr2O3 minimum 59% and actual in range 66.8% to 73.7%, Fe2O3 maximum 26% and actual in range 10.1% to 13.9%, Al2O3 maximum 15% and actual in range 4.0% to 7.1%, MgO maximum 11% and actual in range 4.7% to 8%, SiO2 maximum 1% and actual in range 0.69% to 3.6%, 3.14 Therefore, the chemical comp....
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....350 °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-materials/)...... Chrome flour is described as a neutral refractory, meaning it is highly tolerant of acidic and basic environments, therefore it is prized for its wide amount of use cases. Another useful classification is by measured refractoriness. Chromite has a melting point in excess of 2,000 °C and is therefore deemed a 'super' refractory - further adding to its wide applicability. Chrome flour is the incredibly finely ground powder of iron chromite and is used extensively in the production of magnesia chrome refractory bricks, for the construction of furnaces and kilns. In refractory brick form, chromite alongside alumina and magnesium oxide has been shown to be stable and strong up to 1,900°C. The export product is domestically procured from M/s ....
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....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 like a business practice with contract through M/s PCF Associates. The description of goods does not change in the switch bill of lading. The classification under CTH 2610 covers chromium ores and concentrates and HSN explanatory notes state 'this heading covers chromite (or chrome iron ore), i.e. oxide of chromium and iron.' The exported good is cleared as chromite flour by M/s ITACA Spain. The test report of export product in India does not cover only chromite. The rationale for change of nomenclature at Spain is not clear as chromite flour is a refractory aggregate. Third evidence is that emails of Falcon Exports (from ID [email protected]) indicate that Sh Amandeep Singh Bal when attempting to negotiate with the potential Customers would hold o....
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....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 classification is decided by the proper officer under section 17 of Customs Act. Eight evidence is para 4.5.6.1 of the notice) wherein the Statement of Shei Amandeep Singh Bal, on 08.12.2020 and 09.12.2020, on basis of samples lab report, he stated, "I would like to mention that from the said documents, it clearly appears that the product exported by firms M/s Falcon Dxports, M/s Meglad Export House and M/s Alliance International controlled by me by declaring as "Indian Refractory Mortar appears to be "Chrome Ore Concentrate and may be classifiable under CTH 2610 0000.". This statement is based on evidence that is already evaluated above, wherein the heading 3816 is the classification of export products in place of hearing heading 2610. Ninth evidenc....
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....ed 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 nomenclature emerging from HSN. (c) In OK Play (India) Ltd Vs CCE (2005 (180) ELT 300 (SC)] Hon'ble Apex Court has observed that functional utility, design, shape and predominant usage have also got to be taken. 3.21) With the classification held at 8-digit level as CTH 38160000 (refractory mortar), the declarations (shipping bills) at time of export are held as correctly filed and all the proceedings need to be dropped. 3.22) Considering the fact that the chemical composition is essential to differentiate between chrome ore & concentrate and refractory mortar made out of chromite, the declarations made by exporter is held as incomplete without the chemical composition at time of export. A general declaration as "Indian refractory mortar witho....