2007 (8) TMI 224 - AAR - Central Excise

Burnt lime which is in the crystalline form contains 94.96 % of separat4ly defined chemical compound calcium oxide and contains less than 1% of silicon oxide, less than 1.5% magnesium oxide, less than .05% of sulphur and less than .5% aluminum oxide, is classifiable under SH 28259090.

Issues Involved:
1. Classification of high purity burnt lime under Central Excise Tariff Act, 1985.
2. Applicability of Chapter 25 and Chapter 28 for classification.
3. Interpretation of Chapter Notes and Explanatory Notes from Harmonized System of Nomenclature (HSN).
4. Impact of impurities on classification.
5. Relevance of previous judicial decisions and amendments to the Tariff.

Detailed Analysis:

1. Classification of High Purity Burnt Lime:
The applicant, M/s. Lhoist India Pvt. Ltd., sought an advance ruling on the classification of high purity burnt lime under the Central Excise Tariff Act, 1985. The product in question is obtained by heating high purity limestone (calcium carbonate), resulting in calcium oxide (CaO) with impurities such as magnesium oxide, silicon oxide, sulphur, and aluminum oxide.

2. Applicability of Chapter 25 and Chapter 28:
The applicant proposed two possible classifications:
- Chapter 25: Covers "Salt; sulphur earths and stone; plastering materials; lime and cement". Specifically, tariff head 2522 covers "Quick lime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of Heading 2825". Note 1 of Chapter 25 excludes products obtained by calcination.
- Chapter 28: Covers "Inorganic chemicals, organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes". Note 1 states that this Chapter applies to separate chemical elements and chemically defined compounds, irrespective of impurities. The applicant argued that burnt lime, mainly comprising calcium oxide, falls under sub-heading 2825 90 90.

3. Interpretation of Chapter Notes and Explanatory Notes from HSN:
The applicant relied on the definition of "impurities" in the Explanatory Notes of Chapter 28 from the Harmonized Commodity Description and Coding System (HSN). It was argued that the impurities present in burnt lime do not exclude it from Chapter 28. The impurities were inherent in the starting material (limestone) and not added externally.

4. Impact of Impurities on Classification:
The applicant clarified that the impurities were permissible and did not affect the classification under Chapter 28. The burnt lime proposed to be manufactured would be crystalline in structure, and the presence of impurities like silicon oxide and aluminum oxide would not retard crystallization.

5. Relevance of Previous Judicial Decisions and Amendments to the Tariff:
The applicant cited several Tribunal and Supreme Court decisions that excluded quick lime obtained by calcination from Chapter 25. However, the judgment noted that the Central Excise Tariff has undergone amendments since those decisions. The current tariff specifically includes quick lime under Heading 2522, while excluding calcium oxide of Heading 2825.

Judgment Summary:
1. Chapter 25 Exclusion: Both the applicant and the Commissioners agreed that Note 1 of Chapter 25 precludes classification of burnt lime under this Chapter due to its calcination process. The Supreme Court's decision in Nuchem Industries, which excluded quick lime from Chapter 25, was based on the tariff as it existed then. The amended tariff now explicitly includes quick lime under Heading 2522, rendering the previous exclusion inapplicable.

2. Chapter 28 Inclusion: The burnt lime, with 94-96% calcium oxide and permissible impurities, is more akin to a "separate chemically defined compound" and thus falls under sub-heading 2825 90 90 of Chapter 28. The product's high purity and intended use in sophisticated industries like steel manufacturing support this classification.

3. HSN Explanatory Notes: The HSN Notes support the classification of high purity burnt lime under Chapter 28. The notes clarify that quick lime with permissible impurities remains classified under Chapter 28, while impure calcium oxide obtained by calcining limestone falls under Chapter 25.

4. Final Ruling: The Authority ruled that the burnt lime proposed to be manufactured by the applicant, containing 94-96% calcium oxide and permissible impurities, is classifiable under sub-heading 2825 90 90 of Chapter 28 of the Central Excise Tariff Act, 1985.

Conclusion:
The ruling concluded that the high purity burnt lime, predominantly consisting of calcium oxide and intended for industrial use, should be classified under Chapter 28, specifically under sub-heading 2825 90 90, due to its chemical composition and purity level. The amendments to the Central Excise Tariff and the HSN Explanatory Notes played a crucial role in this determination.

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