2024 (12) TMI 618 - AT - Customs

Classification of Quick Lime imported by the appellant - to be classified under CTH 25221000 or under CTH 28259090 of the Customs Tariff Act, 1975? - HELD THAT - It could be seen that the description of the Chapter 25 covers Salt; Sulphur; earths and stone; plastering materials, lime and cement which are basically mineral products of Section V of the First Schedule to the Customs Tariff. However the description of Chapter 28 covers inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements of isotopes which are products of chemical or allied industries falling under Section VI of the said Schedule. Further, it can be said that Chapter heading 2522, clearly provides that quicklime, slaked lime and hydraulic lime are classifiable under specific tariff items provided for therein; however, calcium oxide and hydroxide of Chapter heading 2825 are excluded from the scope of coverage under the heading 2522. Heading 25221000 covers within its scope and ambit, mainly of three specific goods such as the following (i) first one i.e., quicklime ; (ii) the second one, slaked lime , and (iii) third one, hydraulic lime . Hence, in simple words, it can be stated that all the goods covered under the above description at (i) to (iii) above would be rightly classifiable under chapter heading 25221000. There is no dispute on the fact that the imported goods in the present case are quicklime and thus by applying GIR 1 it would be classifiable under tariff item 25221000. Further, from the exclusion provided for calcium oxide and hydroxide of heading 2825, it transpires that the quicklime as a mineral product, when subjected to certain processes or treatment, whereby if these mineral products were converted into separate chemical elements or separate chemically defined compounds, such as calcium oxide in the present case, then such products would be more appropriately classified as chemical products under heading 2825, owing to the reason that the chemical properties of the goods have been changed from the mineral product to chemical product - the scope of coverage of goods under chapter heading 2522 and 2825 are exclusive to each other. 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 - it transpires from plain reading of GIR 2 and 3, that GIR 2(b) would apply for classifying goods so as to include mixtures or combination of a particular material or substance when found mixed or combines with other material. In attempting such classification of goods in terms of GIR 2(b), when one is confronted with classification under two or more contending headings, then GIR 3 would apply. As a general rule, the heading that provides most specific description would be preferred to heading which provide a more generic description - 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 25221000 - the imported goods Quick Lime would be properly classifiable under Customs Tariff Item 25221000 and not as others under the Customs Tariff Act Item 28259090. The impugned Order-in- Appeal is not legally sustainable and accordingly set aside - appeal allowed.

Summary

Issues Involved:

1. Classification of "Quick Lime" under Customs Tariff Act, 1975.
2. Determination of appropriate customs duty based on classification.

Detailed Analysis:

1. Classification of "Quick Lime":

The primary issue in this appeal is the classification of "Quick Lime" imported by the appellant. The appellant contends that "Quick Lime" should be classified under Chapter sub-heading 25221000 of the Customs Tariff Act, 1975, which specifically covers "Quick Lime" irrespective of its calcium oxide content. The Department, however, argues that the imported "Quick Lime" falls under Chapter sub-heading 28259090 as a "Metallic Oxide" due to its high calcium oxide content and the calcination process it undergoes, which results in a higher duty rate.

The Tribunal examined the relevant legal provisions, including Section 12 of the Customs Act, 1962, and the Customs Tariff Act, 1975, to determine the correct classification. The Tribunal noted that Chapter 25 covers mineral products, including "Quick Lime," while Chapter 28 covers inorganic chemicals and compounds, including calcium oxide. The Tribunal emphasized that the exclusion of calcium oxide from Chapter 25 indicates that "Quick Lime," as a mineral product, should be classified under Chapter 25 unless it is converted into a chemically defined compound like calcium oxide.

Upon reviewing the General Rules for the Interpretation of Import Tariff (GIR), the Tribunal concluded that "Quick Lime" is not a mixture or composite good that would require classification under multiple headings. Therefore, the Tribunal determined that the imported goods should be classified under CTH 25221000, as it provides the most specific description for "Quick Lime."

2. Determination of Appropriate Customs Duty:

The classification of "Quick Lime" under CTH 25221000 has implications for the applicable customs duty. The appellant argued that they have been clearing "Quick Lime" under this classification by paying the applicable customs duties and the differential duty under protest. The Tribunal's decision to classify "Quick Lime" under CTH 25221000 supports the appellant's claim for a lower duty rate, as opposed to the higher rate under CTH 28259090.

The Tribunal referenced previous judgments, including those involving the same appellant, which consistently held that "Quick Lime" is classifiable under Chapter 25221000. These judgments, along with the Tribunal's analysis, reinforce the conclusion that the imported "Quick Lime" should not be classified under Chapter 28 as a chemically defined compound.

Conclusion:

The Tribunal concluded that the imported "Quick Lime" is properly classifiable under Customs Tariff Item 25221000 and not under 28259090. Consequently, the impugned Order-in-Appeal was set aside, and the appeal was allowed with consequential reliefs as per law. The Tribunal's decision aligns with previous rulings and the principles of tariff classification, ensuring the correct application of customs duties for the imported goods.