2023 (10) TMI 1003 - AT - Customs

Classification of exported goods - Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO 2 95% Min. Moisture 0.5% Max. - classifiable under CTH 2614 as contended by the Revenue, or CTH 2823 as declared by the exporter-assessee? - HELD THAT - There are no hesitation to hold that the scientific analysis carried out by the Government agencies like BARC/CSIR are clear and understandable and hence, the same prevails over the mere download from website of Kerala Minerals. It is the above Government agencies who have reported that the change in the chemical composition/crystallographic structure from Raw Ilmenite ore and the final exported goods has happened during the chemical process of leaching. In view of this, the final product that emerges and which is exported is nothing but synthetic Rutile and not natural Rutile, not only because there is a structural change but also for the fact that such a change has occurred as a result of the leaching process. Further, only natural Rutile stands excluded from the heading CTH 2823 as per HSN and it remains classified under Chapter 26 - the goods in question i.e., synthetic Rutile can only be classified under CTH 2823. In the order of learned Hyderabad Bench in the case of M/s. Trimax Sands Pvt. Ltd. 2017 (11) TMI 489 - CESTAT HYDERABAD , it has been held that Assuming that the Department s argument is that only upgraded Ilmenite which is synthetic rutile is classifiable under 2614 00 20, the argument is self-defeating because rutile clearly falls under 2614 00 31, 2614 00 39 and 2614 00 90 in the tariff and no distinction is made between naturally occurring rutile and synthetic rutile in the Heading for Rutile. The ratio in the above order is squarely applicable to the case on hand to justify the conclusion that the goods in question could only be classified under Chapter Heading 2823. It is well known that classification depends on various factors including description, and not description per se. Assuming that the description is the only criterion, then the same should sync with the HSN. It is well settled that the core element of determinative factor has to be gone into which is the first and essential step. Whereas, the classification appears to have been made on incorrect assumptions, which is not as per law. The goods in question are synthetic Rutile which merit classification only under CTH 2823 and hence, the stand of the assessee is accepted - Appeal allowed.

Summary

Issues Involved:
1. Classification of "Upgraded Beneficiated Ilmenite (Synthetic Rutile)" under the Customs Tariff.
2. Validity of reclassification by Revenue authorities.

Summary:

Issue 1: Classification of "Upgraded Beneficiated Ilmenite (Synthetic Rutile)" under the Customs Tariff:
The core issue revolves around whether the exported product "Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO2 95% Min. Moisture 0.5% Max." should be classified under CTH 2614 (as contended by the Revenue) or under CTH 2823 (as declared by the exporter-assessee). The assessee has consistently classified the product under CTH 2823 since 1986, both for domestic and export purposes. The product undergoes a series of physical and chemical processes, including electrostatic and magnetic separation, roasting, and leaching, which result in a change from hexagonal Ilmenite (FeTiO3) to tetragonal Titanium Dioxide (TiO2). This transformation is supported by test reports from CSIR, BARC, and other experts, indicating a crystallographic change due to the leaching process, not just calcining or roasting. The Tribunal concluded that the scientific analysis carried out by the Government agencies prevails over the mere description or assumptions by the Revenue, and thus, the product is correctly classifiable under CTH 2823.

Issue 2: Validity of reclassification by Revenue authorities:
The Revenue reclassified the product under CTH 2614, arguing that the description "Upgraded Beneficiated Ilmenite (Synthetic Rutile)" fits within this heading. However, the Tribunal found that the Revenue's argument lacked supporting evidence and did not consider the significant chemical and crystallographic changes documented by expert reports. The Tribunal emphasized that classification should be based on scientific facts and proper evidence, not mere assumptions or partial descriptions. The Tribunal upheld the classification under CTH 2823, dismissing the Revenue's appeal and allowing the assessee's appeals with consequential relief.

Conclusion:
The Tribunal ruled that "Upgraded Beneficiated Ilmenite (Synthetic Rutile)" is classifiable under CTH 2823, based on scientific evidence of chemical and crystallographic changes, and dismissed the reclassification by the Revenue under CTH 2614. The appeals filed by the assessee were allowed, and the appeal by the Revenue was dismissed.