2023 (9) TMI 1474 - AAR - Customs

Classification of import goods - Nickel Hydroxide Compound under Customs Tariff Subheading (CTSH) 28254000 Or Not - whether or not containing impurities - HELD THAT - The Nickel Hydroxide, though containing cobalt in minor quantities, remains suitable for general use in manufacture of Nickel Cadmium batteries. Inclusion of Cobalt metal as a conducting additive during the electrode fabrication of pasted electrodes is expected to enhance the electrochemical performance of Nickel Hydroxide. Thus, the addition of Cobalt does not change the character and application of Nickel Hydroxide. Hypothetically, Nickel Hydroxide does not act as a reaction initiator, accelerator or catalyst to any product, and it cannot do so even with refinement or enrichment processes. Thus, the proposed goods is classifiable under tariff entry 28254000, on the basis of its nature and composition in terms of the chapter notes and the Rule 1 of the GIR. As per the general Rule 3 (a) of General Interpretation Rules, the specific heading shall prevail over the general heading. In this case there is a specific heading for Nickel Hydroxide under the tariff entry 28254000. Therefore the proposed goods are appropriately classified under the specific tariff entry 28254000. Thus, it is in terms of the Chapter Note 1 of chapter 28 read with Rules 1, 2 and 3(a) of the GIR, the goods proposed to be imported i.e. Nickel Hydroxide Compound (containing Nickel Hydroxide of 92% to 100%, and balance of Cobalt Hydroxide and Sodium Sulphate) is classifiable under sub-heading 28254000

Summary

Issues Involved:
1. Classification of Nickel Hydroxide Compound.

Summary:

Issue 1: Classification of Nickel Hydroxide Compound
- Applicant's Submission: M/s. Saft India Private Limited intends to import Nickel Hydroxide Compound (containing 92% to 100% Nickel Hydroxide, with the balance being Cobalt Hydroxide and Sodium Sulphate) and seeks to classify it under Customs Tariff Subheading (CTSH) 28254000. The compound is primarily used in the manufacture of Nickel-Cadmium Batteries, where Nickel Hydroxide serves as the main raw material for the positive electrode. The applicant argues that the presence of Cobalt Hydroxide and Sodium Sulphate does not alter the product's classification as Nickel Hydroxide.

- Jurisdictional Commissionerate's Comments: The Commissionerate agrees that the goods are a stable compound of Nickel Hydroxide with Cobalt Hydroxide and Sodium Sulphate, and should be classified under HSN 28254000. Chapter Note 1(a) of Chapter 28 indicates that the product should be a separate chemically defined compound, which the proposed goods meet, despite containing minor additives to enhance performance and life cycle.

- Personal Hearing: During the virtual hearing, the applicant reiterated their points and emphasized that the additives are for efficiency enhancement, not for changing the product's use or nature. They cited previous rulings and tribunal orders to support their classification request.

- Authority's Analysis: The classification of imported goods is governed by the General Rules of Interpretation (GIR). Rule 1 of GIR states that classification should be determined according to the terms of the headings and any relative Section or Chapter Notes. The Nickel Hydroxide Compound, being a separately defined chemical compound, fits under HSN Code 28254000. The presence of cobalt and sodium sulphate does not change the product's nature or function but enhances its performance and life cycle. Rule 2(b) and Rule 3(a) of GIR further support this classification, as the specific heading for Nickel Hydroxide prevails over a general heading.

- Ruling: In terms of Chapter Note 1 of Chapter 28, read with Rules 1, 2, and 3(a) of the GIR, the Nickel Hydroxide Compound (containing Nickel Hydroxide of 92% to 100%, and balance of Cobalt Hydroxide and Sodium Sulphate) is classifiable under sub-heading 28254000.