2023 (12) TMI 529 - AT - Customs

Classification of export goods - Iron Oxide Powder - to be classified under chapter 28211010 or under Tariff Heading 26011119? - It is claimed by the appellants that processes carried out by them make it fit for use in oilfield chemicals - HELD THAT - There was a definite claim by the party by virtue of above flow chart that they had subjected the Iron Ore to various processes, that no more allowed it to be considered product of metallurgical industry. Learned Commissioner (Appeals) while dealing with the proposition extended the scope of the same by using expression manufacturing processes - It is found that in the statute only the requirement of processes having been under taken is existing in Section note to Chapter 26, so as to make it no more a metallurgical item. However, both the lower authorities have not considered the processes as above in the flow chart and whether processes done by them have made item it fit for oilfield industry as claimed. In which case it will be an item of Chapter 26, but of Chapter 28. Matter remanded back to the Commissioner (Appeals) to consider the processes, which are stated already on record and the outcome of such processes. Appeal is allowed by way of remand.

Summary

Issues: Classification of Exported Product

The case involved the classification of an export consignment of Iron Oxide Powder, with the department seeking to classify it as Iron ore based on a chemical examiner report indicating high iron content and presence of siliceous matter. The appellant claimed to have processed the Iron Ore to make it suitable for use in the oilfield industry, challenging the classification under Tariff Heading 26011119.

Summary of Judgement:

The Chemical Examiner's report highlighted the composition of the product, leading the department to classify it as Iron ore under Tariff Heading 26011119. The appellant presented a flow chart showing processes done on the Iron Ore, arguing that it no longer qualified as a metallurgical product but was suitable for the oilfield industry.

The Commissioner (Appeals) emphasized the need for evidence of manufacturing processes to support the reclassification of the product, noting that the Chemical examination report indicated characteristics of Iron Ore. However, the appellant failed to provide proof of manufacturing processes transforming the product.

The Section note to chapter 26 specified that minerals should not undergo processes outside the metallurgical industry to remain classified under headings 2601 to 2617. The appellant contended that their processes made the product unsuitable for metallurgical use but fit for the oilfield industry, challenging its classification.

The Tribunal found that the lower authorities did not adequately consider the processes outlined in the flow chart and their impact on the product's classification. As a result, the matter was remanded back to the Commissioner (Appeals) for further examination of the processes and their outcomes, allowing the appeal by way of remand.