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2008 (5) TMI 8 - SC - CustomsApplicability of Chapter Note 1 of Chapter 25 for Classification of Imported Goods - Appellant imported 200 MT of Brimstone 90 . The certificate of analysis available on record shows the Sulphur content of the imported goods was 90.10 % , inert filler (Bentonite) at 9.60 % and, the moisture content was 0.30 %. - Brimstone 90 was classified by the CESTAT under the Customs Tariff under Heading 3808.19 (sic) 3808.90 Order of CESTAT set aside correct classification is Heading 25.03
Issues Involved:
1. Classification of "Brimstone 90" under Customs Tariff Heading 25.03 or Heading 38.08. Issue-wise Detailed Analysis: 1. Classification of "Brimstone 90" under Customs Tariff Heading 25.03 or Heading 38.08: The primary issue in this legal judgment is determining whether "Brimstone 90," which contains about 90% Sulphur and 10% Bentonite as an inert filler, should be classified under Heading 25.03 or Heading 38.08 of the Customs Tariff and Central Excise Tariff. Background and Tribunal's Initial Decision: The Customs, Excise, and Service Tax Appellate Tribunal initially classified "Brimstone 90" under Heading 25.03 in the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. vs. Commissioner of Customs, Nhava Sheva. The Tribunal observed that the addition of Bentonite clay does not alter the chemical properties of the Sulphur particles, thus maintaining its classification under "unrefined Sulphur." Appellant's Classification and Deputy Commissioner's Decision: The appellant filed bills of entry classifying the goods under Heading 25.03. However, the Deputy Commissioner of Customs classified the imported goods under Heading 38.08, denying the benefits of an exemption notification applicable to "crude or unrefined Sulphur" under Heading 25.03. Commissioner (Appeals) and Tribunal's Referral to Larger Bench: The Commissioner (Appeals) allowed the appellant's appeal, relying on the Deepak Fertilizers decision. However, the Tribunal's Division Bench, questioning the correctness of its earlier decision, referred the matter to a Larger Bench. The Larger Bench concluded that the goods were classifiable under Heading 3808.90. Appellant's Argument: The appellant argued that the Larger Bench failed to consider the manufacturing process, purpose, and technical materials of "Brimstone 90." The product is manufactured by mixing liquid Sulphur with Bentonite, creating a homogeneous mixture used for agricultural purposes. Legal and Technical Analysis: - Chapter 25 and Chapter Note 1: Chapter 25 deals with mineral products, including Sulphur. Chapter Note 1 specifies that headings cover products in the crude state or subjected to certain processes but not those obtained by mixing or processing beyond specified methods. - Entry 2503: Entry 2503 covers Sulphur of all kinds except sublimed, precipitated, and colloidal Sulphur. It includes Sulphur recovered as a by-product in refining crude oil, indicating a broad nature of the entry. - Chapter 38 and Entry 3808: Chapter 38 deals with insecticides, fungicides, herbicides, etc., put up for retail sale or as preparations. Entry 3808.90 covers other similar products, but not Sulphur itself. Supreme Court's Interpretation: - Ordinary Meaning and Context: The Supreme Court emphasized that an entry should be given its ordinary meaning. If goods fit within one entry, they should not be included in another, especially not in the residuary. - Agricultural Use and Packaging: The Court noted that "Brimstone 90" is used for agricultural purposes and is not typically sold in retail packaging. The Tribunal's finding that it was marketed in retail bags was questioned, as agriculturists would not purchase 25 kg bags. - Precedents and Analytical Look: The Court referred to previous cases and the detailed descriptions in the tariff entries. It concluded that the product does not fit within the scope of insecticides, fungicides, or herbicides under Heading 3808. Conclusion: The Supreme Court held that the Tribunal's decision to classify "Brimstone 90" under Heading 3808.90 was incorrect. The product should be classified under Heading 25.03, as it fits the description of Sulphur in the crude or unrefined state used for agricultural purposes. The appeal was allowed, and the impugned judgment was set aside.
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