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2023 (10) TMI 1306 - AAR - CustomsClassification of goods intended to be imported - Compounded Rubber - to be classified under CTH 4005 1000 or not - HELD THAT - In view of scope of tariff headings under CTH 4005 of the first schedule to the Customs Tariff Act, 1975 Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber) and Compounded rubber formulation 3 (without Carbon Black but with less than 5 parts of clay) merit classification under CTH 4005 99 90 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - 'Other' and are not eligible for duty exemption benefit under serial number 503 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time. However, they are eligible for partial duty exemption benefit under serial number 504 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification. It is to mention that the presence of zinc oxide and stearic acid in this formulation requires sample testing post-importation from the point of view of checking whether this formulation is still in a unvulcanized state or not. Applicant has categorically submitted that the presence of zinc oxide and stearic acid in this formulation is not as an active agent or vulcanizing agent. Claim of applicant is required to be objectively proved by way of an outcome of the chemical test conducted at the time of importation. This aspect of product testing is a part of Customs Compliance Verification (CCV) process after importation of goods - the utility of the claim of applicant that the presence of zinc oxide and Stearic acid in this formulation is not as an active agent or vulcanizing agent is limited only to support applicant's contention, during advance ruling process, that the goods will not be in a vulcanized state. It is thus concluded that a. Compounded rubber formulation 1 (with less than 5 parts of Carbon Black) mentioned in para 5.1 merits classification under CTH 4005 1000 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica and is eligible for duty exemption benefit under serial number 503 of the notification 46/2011- Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time, b. Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber) mentioned in para 5.1 merits classification under CTH 4005 99 90 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip -Other and is eligible for duty exemption benefit under serial number 504 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time. c. Compounded rubber formulation 3 (without Carbon Black but with less than 5 parts of clay) mentioned in para 5.1 merits classification under CTH 4005 99 90 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip -Other and is eligible for duty exemption benefit under serial number 504 of the notification 46/2011 -Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time.
Issues Involved:
1. Classification of compounded rubber under CTH 4005 1000. 2. Eligibility for duty exemption under Notification 46/2011-Cus and Notification 189/2009-Cus. Issue 1: Classification of Compounded Rubber The applicant, M/s MRF Ltd., sought advance rulings on the classification of compounded rubber under CTH 4005 1000. They proposed to import compounded rubber with Carbon Black or Silica or Styrene Butadiene Rubber (SBR) and claimed that these imports should be classified under tariff heading 4005 1000. The applicant provided three formulations for classification: - Compounded rubber with less than 5 parts of Carbon Black. - Compounded rubber without Carbon Black but with less than 5 parts of SBR. - Compounded rubber without Carbon Black but with less than 5 parts of clay. The Customs Commissionerate of Hazira Port emphasized that the classification under CTH 4005 1000 requires the rubber to be unvulcanised. The applicant failed to initially disclose whether the rubber was vulcanised or not. Upon further clarification, the applicant confirmed that the rubber formulations did not contain vulcanizing agents, ensuring they remained unvulcanised. Issue 2: Duty Exemption Eligibility The applicant also sought confirmation on the eligibility for duty exemption under Notification 46/2011-Cus (as amended) and Notification 189/2009-Cus. The Customs Authority for Advance Ruling (CAAR) noted that the duty exemption would be contingent upon the fulfilment of conditions specified in the notifications, including the origin criteria under the ASEAN-India Free Trade Agreement (AIFTA). Rulings: A. Compounded Rubber Formulation 1: - Contains less than 5 parts of Carbon Black. - Classified under CTH 4005 1000. - Eligible for duty exemption under serial number 503 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus. B. Compounded Rubber Formulation 2: - Contains less than 5 parts of SBR and no Carbon Black. - Classified under CTH 4005 99 90. - Not eligible for duty exemption under serial number 503 but eligible under serial number 504 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus. C. Compounded Rubber Formulation 3: - Contains less than 5 parts of clay and no Carbon Black. - Classified under CTH 4005 99 90. - Not eligible for duty exemption under serial number 503 but eligible under serial number 504 of Notification 46/2011-Cus, subject to the fulfilment of conditions of the said notification and Notification 189/2009-Cus. The ruling emphasized the necessity of chemical composition testing upon importation to verify the unvulcanised state and the presence of non-vulcanizing agents, which is crucial for classification and duty exemption eligibility.
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