2018 (9) TMI 128 - AT - Central Excise

Classification of goods - Nuclear Grade Ammonium Di-uranate - whether classified under CETH 2845 9010 or under CETH 2844.1000? Held that - From the records it is seen that Uranium contains 0.7% of Uranium 235 and balance is Uranium 238 isotopes. Therefore it was evident that the composition of the items is in conformity with the description of Natural Uranium as given in HSN. Further the Commissioner found that among the items listed under Note VIB to Heading 2844 in the HSN the item is Di-Ammonium Uranate (NH4)2U207 along with Di-Sodium Uranate (Na2U207) finds a specific entry against the Sl. No.1(d) therein as a Compound of fissile and fertile chemical element or isotopes . It is also noted that isotopes in HSN under Section VI-2844 that Uranium 235 and Uranium 238 are isotopes of the element Uranium - the Commissioner had held that the product NGADU is eligible for exemption in terms of Notification No.3/2005 dated 24.2.2005. The learned Commissioner was right in holding that Chapter Heading No.2845 covers isotopes other than those of Heading 2844 compounds inorganic or organic all such isotopes whether or not chemically defined. Further sub-classification of those heading relates to Heavy Water and others. Therefore in terms of the HSN as cited by the learned Commissioner we find that the product is classifiable under Chapter 2844 as held by the Commissioner in terms of the Chapter Note and HSN - also exemption Notification No.3/2005 dated 24.2.2005 at Sl. No.24 mentions Nuclear Fuel falling under Chapter 28 irrespective of the subheading it is eligible for nil rate of duty. Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of Nuclear Grade Ammonium Di-uranate (NGADU) under Central Excise Tariff Act, 1985.

Analysis:
The Department contended that NGADU was wrongly classified under Chapter Heading 2845 9010, arguing that it should be classified under 2844 1000 as natural uranium. The Department issued show-cause notices seeking to reclassify NGADU and demand duty and interest. The Commissioner initially dropped the notices, but the Department appealed, claiming that the NGADU should be reclassified under 2844 1000. The Department argued that the exemption Notification No.3/2005-CE did not specifically exempt NGADU. The respondents argued that nuclear fuel under Chapter 28 is exempted regardless of subheading.

The Ld. Commissioner examined the manufacturing process of NGADU, finding that it contained 70% Uranium and 30% moisture, with 0.7% Uranium 235 and the rest Uranium 238 isotopes. The Commissioner referenced the HSN description of Natural Uranium to support the classification of NGADU under Chapter Heading 2844 1000. The Commissioner concluded that NGADU is a compound of Natural Uranium and therefore should be classified under 2844 1000, not 2845.

The Tribunal upheld the Commissioner's decision, stating that Chapter Heading 2845 covers isotopes other than those of Heading 2844, while Chapter 2844 covers compounds of Natural Uranium. The Tribunal also noted that the exemption Notification No.3/2005 exempts all nuclear fuel falling under Chapter 28, irrespective of subheading. As the NGADU was certified by BARC as not nuclear fuel, the Tribunal found no need to interfere with the Commissioner's decision, rejecting all appeals filed by the Revenue.

In conclusion, the Tribunal upheld the classification of NGADU under Chapter Heading 2844 1000 and the eligibility for exemption under Notification No.3/2005, rejecting the Department's appeal and affirming the Commissioner's decision.