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TMI Blog2022 (4) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... . The TPO is not specifically mentioned in any of the tariff entries. Therefore, the item needs to be classified on the basis of physical, chemical and functional characteristics. There is no standardisation of TPO, as the properties of the TPO depend upon feedstock and process parameters. Therefore, in the present case, an appropriate classification entry would have to be based on the submissions made by the applicant. The item under consideration can be classified either as biodiesel under Heading 3826 since it is derived from the rubber part of a tyre or alternatively, it can be classified as mineral fuel under Chapter 27 - TPO is obtained from the pyrolysis process as compared to the process of transesterification followed to obtain biodiesel. Further, the source material for manufacturing biodiesel can be vegetable oils, animal fats or used oils or fats. The source material for TPO is the end of life tyre. Based on the above-mentioned differences, TPO does not appear to merit classification as biodiesel under Heading 3826. TPO is not obtained from crude. In the pyrolysis of the tyre, the polymers are cracked to obtain hydrocarbon oil. Pyrolysis is also referred to as cra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. CAAR/CUS/APPL/06/2022 - - - Dated:- 11-4-2022 - Shri M.R. Mohanty, Authority for Advance Rulings, Customs Shri Ezhil Arrasan, Director, Mohit Prabhakar and Ashwini Kumar Prabhakar, for the Assessee. RULING M/s. Pairan Pyrolysis Pvt. Ltd. filed an application seeking advance rulings on the classification of tyre pyrolysis oil and tyre pyrolysis recovered carbon; clarification on whether these products are covered under the negative list of the India-Sri Lanka Free Trade Agreement (ISFTA); and whether the impugned goods are allowed for free trade with exempted customs duty. 2. The applicant is a recycler of the end of life tyres using the pyrolysis process. Tyre Pyrolysis Oil (TPO) and recycled tyre carbon black are recovered under this procedure. It is submitted that they intend to shift the recycling plant to Sri Lanka and import the TPO and carbon black from the plant in Sri Lanka. Central Pollution Control Board (CPCB), New Delhi along with NEERI, Nagpur and IIT, New Delhi carried out a study on the adequacy of various tyre pyrolysis plants, including the plant of the applicant at Erode, to meet environmental concerns. This report, herein referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reported - The sample is in the form of brown coloured liquid. It is mainly composed of mineral hydrocarbon oil. It is other than fuel oil/petrol/diesel/kerosene . As per the applicant, TPO is a dark colour viscous liquid with a tyre smell. It cannot be used in automotive engines due to its high density, high viscosity, carbon residue and lower cetane number. Hence, TPO is used predominantly as industrial liquid fuel oil in burners and other heat applications such as reactors, boilers, heat furnaces, etc. 2.2 The applicant has stated that an independent test of recovered carbon black reported high calorific value from a range of 6000 Kcal/kg. to 6500 Kcal/Kg., 20% by wt of ash, 5% by wt of moisture content and the rest as volatile matter and fixed carbon. It is used in cement kilns for co-processing in calciner as solid industrial fuel. 2.3 The applicant has submitted that the TPO does not correspond to any specific BIS standard and the subject goods are being used as furnace oil. It may be fit to be classified under sub-heading 2710 19 90 of the customs tariff. The applicant proposes the classification of the recovered carbon black under six-digit entry 2803 00. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CARBON 65% TO 90% 80% TO 90% HYDROGEN 05% TO 20% 0.1% TO 01% OXYGEN 0.5% TO 5% 0.1% TO 01% SULPHUR 01% TO 02% 0.1% TO 01% NITROGEN 01% TO 02% 0.1% TO 01% MOISTURE 0.1% TO 01% 0.1% TO 02% MINERAL MATTER 0.1% TO 0.5% 10% TO 15% Q3 : What is the intended use of the TPO and recovered carbon black? Ans . : TPO : As liquid fuel for industrial heat applications in boilers, hot air generators and reactor furnaces. Recovered Carbon black : As solid fuel in calciners of cement kiln for co-processing in calcination process of cement manufacturing. Q4 : Whether the oils are distilled or not? Ans . : Oils are not distilled. It is as recovered from tyre pyrolysis units Q5 : What is the ratio of aromatic constituents compared to the non-aromatic constituent of TPO and recovered carbon black? Ans . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the succeeding rules of classification. The explanatory notes to Heading 3826 state that Biodiesel consists of mono-alkyl esters of fatty acids of various chain lengths, immiscible with water, with a high boiling point, low vapour pressure and a viscosity similar to that of diesel oil produced from petroleum. Biodiesel is typically made by a chemical process called transesterification, whereby the fatty acids in oils or fats react with an alcohol (usually methanol or ethanol) in the presence of a catalyst to form the desired esters. It can be obtained from vegetable oils (e.g., rapeseed, soya-bean, palm, sunflower, cotton-seed, jatropha), from animal fats (e.g., lard, tallow) or from used oils or fats (e.g., frying oils, recycled cooking grease). TPO is not a mono-alkyl ester of fatty acids. TPO is obtained from the pyrolysis process as compared to the process of transesterification followed to obtain biodiesel. Further, the source material for manufacturing biodiesel can be vegetable oils, animal fats or used oils or fats. The source material for TPO is the end of life tyre. Based on the above-mentioned differences, TPO does not appear to merit classification as bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituents exceeds that of aromatic constituents. HSN explanatory notes further state that these oils may be obtained by the low-temperature distillation of coal, by hydrogenation or by any other process (e.g., by cracking, reforming, etc.). TPO is not obtained from crude. In the pyrolysis of the tyre, the polymers are cracked to obtain hydrocarbon oil. Pyrolysis is also referred to as cracking, which is one of the processes to obtain oils mentioned in Heading 2710. Accordingly, the TPO under consideration is classifiable under Heading 2710. Fuel specified in tariff entries of Heading 2710, in general, has to satisfy a particular BIS standard associated with the item. As mentioned earlier, the TPO is not a standardised oil and its characteristics depend upon the feedstock and process variables. Therefore, the item merits classification under residual sub-heading 2710 19 90 as the oil, other than crude oil, and not being a waste oil or biodiesel, having utility as industrial liquid fuel oil in burners and other heat applications such as reactors, boilers, heat furnaces, etc. 7. In respect of the 2nd item under consideration, i.e., recovered carbon black, there is a specific en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r comes within the purview of advance rulings in customs. Section 28H of the Customs Act, 1962 lists the issues on which advance rulings can be sought. The issue of free trade having no bearing on duty rate is not included in Sec. 28H. Therefore, ruling on this particular issue cannot be pronounced, as the question is beyond the scope of advance rulings. 10. Notification No. 26/2000-Cus., dated 1-3-2000 specifies the goods eligible for concessional rate of duty on import under ISFTA. As per the said notification, as amended, both the items under consideration are exempted from the basic customs duty, i.e., as of now, the rate of customs duty is 0%, subject to satisfaction of the conditions specified in the said notification, ISFTA and any other law in force. 11. In view of the aforesaid discussions, I rule that the tyre pyrolysis oil and recovered carbon black merit classification under sub-headings 2710 19 90 and 2803 00 10 respectively, of the first schedule of the Customs Tariff Act, 1975. These items are not covered under the negative fist of ISFTA. The goods are exempted from basic customs duty under ISFTA. On the issue of free trade (importability) from Sri Lanka, no ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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