2024 (2) TMI 1029 - AT - Customs

Classification of quicklime imported goods - mis-classifying the same under Customs Tariff Item (CTI) 2522 1000 instead of rightly classifying it under CTI 2825 9090 - levy of customs duty - Claim for exemption entry for the purpose of levy of CVD/IGST - Notification No. 50/2017-Customs (Serial No. 120) for BCD; and Notification No. 01/2017-Integrated Tax - two Chapter Headings 2522 or 2825, whether the imported goods fall under the first category as quicklime or under the second category calcium oxide - manufacturing process of iron steel industry - application of Rule 3 of GIR - HELD THAT - In 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 is a separate chemically defined compound and that it occurs last among other classification under heading 2522 is not legally sustainable. Thus, we find that there is no case for application of Rule 3 of GIR in this case. Hence, we are of the prima facie view that the imported goods are appropriately classifiable under CTH 2522 10 00. We also find that our above views is duly supported by the Order of the Tribunal in the case of Collector of Central Excise, Chandigarh Vs. Nuchem Ind. (P) Ltd 1998 (9) TMI 186 - CEGAT, NEW DELHI which has also duly followed the judgement of the Hon ble Supreme Court in the case same assessee. We find that the chemical test report of the samples of imported goods indicate that the available CaO% of range 91.70% to 92.80% in the 28 consignments which correspond to total CaO% of 93.84% to 94.77%; Unburnt CaCO3 of range 3.00 to 3.72%; Co2 of range 1.34 to 1.58% along with few other impurities viz., SiO2 of range 0.93 to 1.24%; Al2O3 of range 0.28 to 0.34%; SO3 of range 0.17 to 0.80%; Iron Oxide of range 0.19 to 0.21% and MgO of range 1.17 to 1.44%. Thus, from the above chemical composition of the test results of imported goods, it can be concluded that it is mainly composed of calcium oxide (quick lime) along with traces of Iron, Aluminum Silicious matter. On the percentage of chemical composition, the highest percentage of available CaO2/calcium oxide is 92.8% . Further, the HSN explanatory notes also specify that calcium oxide of high degree of purity i.e., app. 98% or more would alone gets covered under the scope of sub-heading 2825. As seen from the test reports, the content of calcium oxide or lime is much less than the requisite 98%. Thus, we are of the considered view that 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 percentage making it not a product of high degree, would not enable the imported goods to be classified under sub-heading 2825. Claim for exemption entry for the purpose of levy of CVD/IGST - We find that the above notification has prescribed the effective rate of Integrated Goods and Service Tax (IGST) that is payable on the imported goods as countervailing duty (CVD). Inasmuch as the imported goods are covered under the description quicklime and by the chapter heading 2522 there is irregularity in the claim of such exemption. Thus, we do not find any infirmity in the claim for exemption benefit made by the appellants. In fact the CBEC circular No. 9/96-Customs dated 13.02.1996, clarifies this aspect by specifically stating that the imported goods when covered specifically by the exemption entry by its description, then notwithstanding the fact that the goods are not covered by the Chapter/Heading No./Sub-heading Nos. mentioned in the notifications, on the basis of the law laid down by the Hon ble Supreme Court in the case of Jain Engineering Vs. Collector of Customs 1987 (9) TMI 46 - SUPREME COURT Further, it is not the case of Revenue that the impugned goods do not find fitment in heading 2522 of the First Schedule to Customs Tariff Act, 1975 or that the integrated tax rate at serial no. 131 of Schedule-I is, by the corresponding description, unquestionably excluded from every tariff item comprising heading 2522 of the First Schedule to Customs Tariff Act, 1975. Nor is it the case of Revenue that the quicklime at serial no. 131 of Schedule-I of the integrated tax rate notification do not find placement in Chapter 25 of First Schedule to the Customs Tariff Act, 1975. We further find from the standards prescribed by the Bureau of Indian Standards (BIS) in respect of IS 1540 (Part-I) 1980 providing the specification for Quick lime and Hydrated lime for chemical industries state in its scope of coverage of the BIS that this standard does not cover lime for the metallurgical industry, besides excluding its scope for other uses such as building, agricultural, glass and ceramic industries. Thus, we find that the IS 1540 is not applicable for the quicklime used in the manufacturing process of iron steel industry as in the present case. Thus, we conclude that 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. Therefore, we are of the considered view that the impugned order passed by the learned Commissioner (NS-I), JNCH 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 set aside. We are also of the considered view that the impugned goods are correctly classifiable under Customs Tariff Item 2522 10 00 as discussed above and thus in setting aside the order to the extent of dropping of the adjudged demands of duty on the appellants. In the result, the confirmation of demands as per the impugned order on the appellants is set aside and the appeal is allowed in favour of the appellants.

Summary

Issues Involved:
1. Classification of "quicklime" under Customs Tariff.
2. Appropriate levy of customs duty.
3. Applicability of exemption benefits under specific notifications.
4. Determination of purity levels for classification.
5. Relevance of BIS standards and previous judicial rulings.

Summary:

Classification of "Quicklime":
The primary issue in this appeal is the classification of "quicklime" imported by the appellants. The appellants classified the product under Customs Tariff Item (CTI) 2522 10 00, while the Department contended it should be classified under CTI 2825 90 90. The Tribunal examined the relevant legal provisions, including Section 12 of the Customs Act, 1962, and the Customs Tariff Act, 1975, along with the General Rules for Interpretation (GIR) and the General Explanatory Notes (GEN) of the First Schedule to the Customs Tariff Act.

Appropriate Levy of Customs Duty:
The Department argued that the imported quicklime, being a calcined product, should attract a higher rate of customs duties under CTI 2825 90 90. The appellants, however, maintained that their product, with a calcium oxide purity of less than 98%, should be classified under CTI 2522 10 00. The Tribunal noted that the classification should be determined according to the terms of the headings and any relative Section or Chapter Notes, giving precedence to GIR 1.

Applicability of Exemption Benefits:
The appellants claimed exemption benefits under various notifications, including Notification No. 50/2017-Customs and Notification No. 01/2017-Integrated Tax. The Tribunal found no irregularity in the appellants' claim for exemption benefits, as the imported goods were covered under the description "quicklime" in heading 2522.

Determination of Purity Levels:
The Tribunal referred to the HSN Explanatory Notes, which specify that calcium oxide of high purity (approximately 98%) falls under heading 2825. The chemical test reports of the imported goods indicated a calcium oxide content of 91.70% to 92.80%, which did not meet the required purity level for classification under heading 2825. Thus, the Tribunal concluded that the imported goods were not classifiable under CTI 2825 90 90.

Relevance of BIS Standards and Previous Judicial Rulings:
The Tribunal considered the BIS standards (IS:1540-1 (1980)) and previous judicial rulings, including the case of Commissioner of Central Excise, Hyderabad-III Vs. M/s Bhadradri Minerals Pvt. Ltd. The Tribunal found that the BIS standard does not cover quicklime used in the metallurgical industry and that the imported goods did not meet the purity criteria for classification under heading 2825.

Conclusion:
The Tribunal concluded that the imported goods "quicklime" are appropriately classifiable under Customs Tariff Item 2522 10 00 and not under Customs Tariff Item 2825 90 90. The impugned order passed by the learned Commissioner of Customs (NS-I), JNCH, dated 06.12.2022, was set aside, and the appeal was allowed in favor of the appellants.