2023 (10) TMI 1260 - AT - Customs

Classification of imported goods - Quicklime - to be classifiable under Customs Tariff Item 2522 10 00 as claimed by the appellants; or, is it classifiable under Customs Tariff Item 2825 90 90 as contended by the Department? - HELD THAT - From careful examination of the tariff entries of chapter heading 2522 2825, it reveals that it is not the case that the goods covered under CTH 2522 and CTH 2825 represent contending classification for applying GIR 3 as made out by Revenue. This is for the reason that quick lime cannot be referred to as containing wholly or partly of goods of CTH 2522 and CTH 2825. There is clear exclusion of calcium oxide and hydroxide of CTH 2825 from the scope of CTH 2522, and only separate chemical elements or separate chemically defined compounds are covered under the scope of CTH 2825. n the present case, the facts reveal that the imported goods are quicklime. There is no case of mixture of different material or substance to merit application of GIR 2 or 3. Thus, the Revenue s argument for classification of quick lime under heading 2825 as it occurs last among other classification under heading 2522 is not legally sustainable - there is no case for application of Rule 3 of GIR in this case. In view of the above, the imported goods are appropriately classifiable under CTH 2522 10 00. From the above HSN explanatory notes it could be concluded that lime stone being a mineral product is calcined to produce quicklime . Further, when lime stone is subjected to the process of low temperature of calcination then hydraulic lime is produced. These two products would remain classifiable under Chapter heading 2522. However, when the lime stone is subjected to high temperature calcination ranging as high as 1340 C, dissociation of limestone happens i.e., a general chemical process in which molecules (or ionic compounds such as salts, or complexes) gets separated or split into other things such as atoms, ions, or radicals, usually in a reversible manner. In simple words, it can be said that the mineral product quicklime when subjected to high temperature calcination becomes calcium oxide by eliminating carbon-dioxide (CO2) and such calcium oxide is not covered under Chapter 25, as these are chemical products classifiable under heading 2825. From the test reports of samples of imported goods, which are relied upon documents in the adjudication proceedings, we find that the chemical test conducted by the Central Revenue Control Laboratory (CRCL), Jawaharlal Nehru Custom House, on the samples of imported goods and its report dated 18.04.2018 indicate that the description of the goods as white lumps of irregular shapes sizes along with waste powder - in terms of the HSN explanatory notes, both on account of presence of specified material making it not in pure state and the composition of calcium oxide not upto the requisite 98% making it not a product of high degree, would not enable the imported goods to be classified under sub-heading 2825. The imported goods quicklime would be appropriately classifiable under Customs Tariff Item 2522 10 00 and not as other under the Customs Tariff Item 2825 90 90, as claimed by Revenue - the impugned order passed by the learned Commissioner (Appeals) dated 05.04.2021 cannot stand for judicial scrutiny by confirming the classification under the Customs Tariff Item 2825 90 90 in respect of the impugned goods and thus, the same is liable to be set aside. The confirmation of demands and penalties imposed on the appellants in the impugned orders are set aside - Appeal allowed in favour of appellant.

Summary

Issues Involved:
1. Classification of "quicklime" under Customs Tariff Act.
2. Applicability of exemption benefits under relevant notifications.
3. Determination of differential duty, interest, and penalties.

Summary:

1. Classification of "quicklime":
The primary issue was whether the imported "quicklime" should be classified under Customs Tariff Item 2522 10 00 or 2825 90 90. The appellants argued that the "quicklime" was used in the steel industry for removing impurities and had been consistently classified under CTH 2522 10 00 for over 20 years. They cited previous Tribunal decisions (e.g., Commissioner of Central Excise, Hyderabad-III Vs. M/s Bhadradri Minerals Pvt. Ltd.) which held that CTH 2825 covers calcium oxide of 98% purity or more, while their product had a lower purity level.

The Tribunal examined the Harmonized System of Nomenclature (HSN) explanatory notes and the General Rules for Interpretation (GIR). It concluded that "quicklime" is correctly classified under CTH 2522 10 00 as it is an impure calcium oxide obtained by calcining limestone, and does not meet the purity requirements for classification under CTH 2825.

2. Applicability of exemption benefits:
The appellants claimed exemption benefits under Notification No. 50/2017-Customs and Notification No. 01/2017-Integrated Tax. The Tribunal found that the imported goods were covered under the description "quicklime" and the relevant chapter heading 2522, thus qualifying for the exemption benefits. The Tribunal rejected the Revenue's argument that the goods should be classified under 2825, which would exclude them from the exemption.

3. Determination of differential duty, interest, and penalties:
The Revenue had issued a Show Cause Notice for recovery of differential duty, interest, and penalties based on the reclassification of the goods under CTH 2825 90 90. The Tribunal found that the reclassification by the Revenue was not legally sustainable and that the goods were correctly classified under CTH 2522 10 00. Consequently, the demands for differential duty, interest, and penalties were set aside.

Conclusion:
The Tribunal set aside the impugned orders, confirming the classification of "quicklime" under Customs Tariff Item 2522 10 00, and allowed the appeals in favor of the appellants, thereby nullifying the demands and penalties imposed by the Revenue.