9911796707
TMI Blog2023 (10) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... such a change has occurred as a result of the leaching process. Further, only natural Rutile stands excluded from the heading CTH 2823 as per HSN and it remains classified under Chapter 26 - the goods in question i.e., synthetic Rutile can only be classified under CTH 2823. In the order of learned Hyderabad Bench in the case of M/s. Trimax Sands Pvt. Ltd. [ 2017 (11) TMI 489 - CESTAT HYDERABAD] , it has been held that Assuming that the Department s argument is that only upgraded Ilmenite which is synthetic rutile is classifiable under 2614 00 20, the argument is self-defeating because rutile clearly falls under 2614 00 31, 2614 00 39 and 2614 00 90 in the tariff and no distinction is made between naturally occurring rutile and synthetic rutile in the Heading for Rutile. The ratio in the above order is squarely applicable to the case on hand to justify the conclusion that the goods in question could only be classified under Chapter Heading 2823. It is well known that classification depends on various factors including description, and not description per se. Assuming that the description is the only criterion, then the same should sync with the HSN. It is well settled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aside the re-classification proposed and confirmed by the original authority. 1.4 Against the said Order-in-Appeal, the Revenue has preferred Customs Appeal No. 41778 of 2013 before this forum. 2.1 Further, it appears that the assessee filed another set of 21 shipping bills between 03.04.2013 and 14.05.2013 for export of the very same material by classifying the same under CTH 2823. But, however, the adjudicating authority proceeded to reclassify the same under Tariff Item No. 2614 00 20. 2.2 It appears that the assessee filed appeals against the said reclassification before first appellate authority. But however, this time, the first appellate authority appears, vide Order-in-Appeal Nos. 160 to 180/2013 dated 23.08.2013, to have not accepted the classification adopted by the assessee and confirmed the reclassification of the adjudicating authority. It is against this order of the first appellate authority that the assessee has filed another set of appeals in Customs Appeal Nos. 42216 to 42236 of 2013, before this forum. 3. Agreeably, the issue revolves round the classification of the same material in both the appeals filed by the Revenue as well as the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral, then they are natural Rutiles. If the tetragonal molecular structure, which is called rutile structure, is achieved by any chemical processes, then the same is called synthetic Rutile. (vii) The original raw Ilmenite procured by the assessee will be having the following hexagonal structure : (viii) After subjecting the procured ore to various processes ending with the process of Leaching, the following TETRAGONAL molecular structure is obtained: (ix) It is in the leaching process that the crucial manufacturing process happens, resulting in the change of the molecular structure from hexagonal Ilmenite to tetragonal Titanium Dioxide. This rutile structure is not occurring naturally, but is achieved by means of chemical reaction in the process of leaching in the digesters, and therefore the assessee had only mentioned the same as synthetic Rutiles and not natural Rutiles. (x) The resultant synthetic rutile Ilmenite slurry is transferred to slurry tanks after blowing down the supernatant liquor, which is thereafter subjected to the next stage of the process. (xi) The slurry so obtained contains about 30-40% solids and such solids a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. For the purposes of headings 26.01 to 26.17, the term concentrates applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. Processes to which products of headings 26.01 to 26.17 may have been submitted include physical, physiochemical or chemical operations, provided they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading, agglomeration of powders (e.g., by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small quantities of binders), drying, calcination, roasting to oxidise, reduce or magnetise the ore, etc. (but not roasting for purposes of sulphating, chloridating, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h physical and chemical processes during the conversion from Ore to synthetic Rutile; the chemical formula of mineral ore is FeTiO 3 and its crystal structure is hexagonal. The synthetic Rutile that is finally exported, is identified with the chemical formula TiO 2 and its crystal/molecular structure is tetragonal. 5.6 Our attention was drawn to the following test reports of the experts, wherein it has been opined that there is a chemical as well as crystallographic change in the impugned product, and the same occurs after the process of leaching, which happens at the digesters: - Sl.No. Name of the Organization Report Reference No. 1 CSIR Institute of Minerals Materials Technology TSP-001/07/14/210 dated 14-08-2014 2 TSP-001/11/14/218 dated 12-11-2014 3 Pondicherry University, Department of Earth Science PU/Esc/SB/DCW-02 dated 11-05-14 4 Bhabha Atomic Research Centre (BARC) ACD/Sample/AVRReddy/R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO 2 95% Min. by the assessee itself. (ii) The process of leaching carried out only reflects that there was an increase in the concentration of TiO 2 and thereby resulting in the reduced FeO content. (iii) Even the final product is claimed to have 95% of Titanium and 5% of impurities. This indicates that the Titanium is not fully separated from the Ore. (iv) The description itself therefore clearly indicates that Ilmenite still contains TiO 2 and not pure TiO 2 . (v) The test report of the Department of Earth Science, Pondicherry University referred to by the Commissioner (Appeals) was not available with the adjudicating authority. (vi) Moreover, the logic behind the conclusion is not forthcoming from the report of Pondicherry University, as to how the university concluded that the change in the structure occurs only during the process of leaching. The report of the Puducherry University indicates that the crystallographic structure change of the product happens during the process of leaching whereas, the website of Kerala Minerals indicates that the chemical change and crystallographic change can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke in their case. 7.5 With regard to the reliance on the website of Kerala Minerals, he would contend the same has to be ignored since a third-party website cannot outweigh the expert opinion obtained from reputed Government testing houses like CSIR, BARC and Pondicherry University. 8. We have heard the rival contentions, we have perused the orders of lower authorities, and we have also carefully considered test reports/certificates issued by the various organisations. 9. After hearing both sides, we find that the only issue that is to be decided by us is: whether the item exported by the assessee namely Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO 2 95% Min. Moisture 0.5% Max. is classifiable under CTH 2614 as contended by the Revenue, or CTH 2823 as declared by the exporter-assessee? 10. At the foremost, it is essential to understand the importance of a structure of a molecule. It is the structure that determines the chemical and physical properties of a substance. The shape of a molecule can affect how it contacts with other molecules, including how it binds to receptors in the body or how it reacts with other substances in a chemical reaction. The unders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal molecular structure of Ilmenite ore changes into a Tetragonal molecular structure as Rutile of TiO2. This argument, according to the Ld. Advocate, finds support from the test reports issued by the testing houses like CSIR and BARC. 14. We find that Revenue has nowhere disputed the fact of crystallography change between the raw Ilmenite Ore and the final product. In any case, therefore, we find that it is the HSN Explanatory Notes which guide us to the most appropriate classification, especially where scientific facts are involved. 15.1 We find it relevant to have a re-look into the Explanatory Notes (General Notes) of Chapter 26 and the heading 26.14 of the HSN, which are reproduced below: - Headings 26.01 to 26.07 are limited to metallic ores and concentrates which: (C) Are of mineralogical species actually used in the metallurgical industry for extraction of the metals of Section XIV or XV, of mercury or of the metals of heading 28.44, even if they are intended for non-metallurgical purposes, and (D) Have not been submitted to processes not normal to the metallurgical industry. The term ores applies to metalliferous minerals associated with the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asting, are excluded from Chapter 26 and would thus fall under Chapter 28. The assessee has claimed before us that there has been a change in chemical composition and change in the molecular structure which is caused during chemical process of Leaching in the digesters and not during calcining or roasting. In its support, they have furnished test reports of experts in the field which are not disputed or doubted by the Revenue. 15.3 On the other hand, the stand of the Revenue is only that the said change canvassed by the assessee occurred only during calcining/roasting. But we do not see any documentary evidence placed in support of this argument other than the website of Kerala Minerals. Other than this, nothing is placed on record to indicate as to in which context was the website found useful. Also, nothing is forthcoming as to investigation/analysis, if any, carried out by any concerned who uploaded in the website. Hence, the alleged reference also tantamount to mere allegation, without any basis or any stuff. For this reason, the same does not take anyone anywhere. 16.1 At this juncture, we find it appropriate to look at the test report dated 14.08.2014 of CSIR. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rutile TiO 2 Tetragonal 98-002-2144 Annexure- 5 16.2 From the table, it is very clear that the Ilmenite Ore with the chemical formula FeTiO 3 is identified by its hexagonal crystal structure. What emerges as the final product, at serial number five, is the synthetic Rutile having more than 93% of TiO 2 with a tetragonal structure. The same is not issued merely based on visual inspection/description, but after carrying out scientific analysis/tests, which is evident from the attachments to such reports. 16.3 Report of Pondicherry University, Department of Earth Sciences, which is placed at page 72 of the appeal paper book, gives the summary as under: - Summary: . . . The ilmenite crystal structure belongs to hexagonal crystal system while rutile crystal structure belongs to tetragonal crystal systems inferred from XRD analysis 16.4 Report of BARC is also placed on record at page 86 of the paper book. Perusal of the table at the same page reveals the processes involved and the result in each stage, structure in each stage, with composition and resultant prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spherical autoclaves with special materials of construction for withstanding the highly corrosive condition. The ore and hydrochloric acid of 30-31% concentration are charged to the digestors and subjected to repeated leaching under high pressure and temperature. The leaching is continued till the iron content drops from 33-35% to 2.5%. The iron gets converted to ferric chloride. On completion of leaching, the beneficiated Ilmenite synthetic rutile is subjected to repeated water washing to remove the ferric chloride formed in the reaction and excess unreacted acid. The synthetic rutile ilmenite slurry after blowing down of the supernatant liquor is transferred to slurry tanks for feeding to the next step of operation. The slurry contains about 30% - 40% solids. The solids are separated from the slurry by vacuum filtration operation by which the moisture content is reduced to 20-25%. The wet cake is then dried in oil fired rotary dryers by direct contact of flue gas with cake reducing the moisture to 1.5 to 2% and the final product is obtained. We herewith enclose the central excise registration issued to us in 1991 wherein it has classified our upgraded beneficiated ilmenite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utile under one category which we would like the department to take cognizance off. 18. In view of the above, we have no hesitation to hold that the scientific analysis carried out by the Government agencies like BARC/CSIR are clear and understandable and hence, the same prevails over the mere download from website of Kerala Minerals. It is the above Government agencies who have reported that the change in the chemical composition/crystallographic structure from Raw Ilmenite ore and the final exported goods has happened during the chemical process of leaching. In view of this, the final product that emerges and which is exported is nothing but synthetic Rutile and not natural Rutile, not only because there is a structural change but also for the fact that such a change has occurred as a result of the leaching process. Further, only natural Rutile stands excluded from the heading CTH 2823 as per HSN and it remains classified under Chapter 26. In view of our above discussions and by applying the guidelines set out in the HSN/Explanatory notes as above, the goods in question i.e., synthetic Rutile can only be classified under CTH 2823. 19.1 In the order of learned Hyderabad Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the case on hand to justify our conclusion that the goods in question could only be classified under Chapter Heading 2823. 19.3 We find that in the decision of M/s. D.L. Steels (supra), the Hon ble Supreme Court has held as under: - 12. We would, at this stage, take on record the well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. When a word is not explicitly defined, or there is ambiguity as to its meaning, it must be interpreted for the purpose of classification in the popular sense, which is the sense attributed to it by those people who are conversant with the subject matter that the statute is dealing with. This principle should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker. However, the above rule is subject to certain exceptions, for example, when there is an artificial definition or special meaning attached to the word in a statute, then the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CSIR, BARC are very much relevant. 19.4 Further, as rightly pointed out by the Ld. Advocate, we find that in the case of M/s. V.V. Minerals (supra), the issue was relating to processed and unprocessed Ilmenite ore and between Tariff item 2614 0010 and 2614 0020. Moreover, we do not find any reference to chemical processes being involved and nor any dependency on the resultant change in the chemical composition and crystallographic structure, as against the issue in the case on hand. 20.1 In the Order-in-Original dated 26.03.2013, the Assistant Commissioner has observed that the General Interpretative Rules (GIR) are to be applied whenever there arises any dispute or ambiguity in classification. (paragraph 6, page 5 of the Order-in-Original No. 575/2013 dated 26.03.2013) 20.2 At paragraph 3 of the said order, the original authority has recorded the submissions made on behalf of the exporter. Clauses (iv) and (v) reflect the regular/usual practice followed by the assessee for many years which was also accepted by the Revenue. 20.3 Surprisingly, the original authority, however, chooses to apply the GIR solely based on description of goods declared by the assessee. Even w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster and thereafter, it is mentioned as under: - 23. What is conspicuously absent is the specific observation as to when the chemical or crystallographic change occurs and what is the molecular structure at each stage of the processes that are mentioned in the said page. Hence, this download from website may not be of much relevance, especially when compared to the reports of Government agencies. 24.1 It may not be out of context to mention that it is for the authorities to properly look into the description of goods and then classify the same on its merits, if the description is the sole criterion. Further, they should not go with the classification in the statute first and then fit-in the goods under the said classification to suit their convenience. Because, the role of officers is clearly to adjudicate/assess. 24.2 In the Order-in-Original, the adjudicating authority has placed on record his own analogy, but unfortunately what is relevant is the supporting evidence. It is also the well settled position of law that even the strongest allegations or assumptions cannot take the place of proof. This case involves scientific facts which decide the classification and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been consistent, which was not disputed at all by the Revenue for more than 30 years and hence, to deviate from the practice in place for more than three decades, the Revenue has to come up with formidable defence to break the forte. But unfortunately, there has only been a half-hearted attempt, without any supporting evidence, whatsoever. 28.1 In the Order-in-Appeal dated 23.08.2013, we find that the Commissioner (Appeals) has nowhere referred to the reports/certificates issued by CSIR or BARC. Though reference is made to the report from Bureau of Mines, Bangalore but however there is no discussion on this either, in the impugned order. Moreover, the first appellate authority has chosen to refer to part of the description as declared by the assessee in the export documents. 28.2 It is well understood that the description is not the deciding factor, especially in an issue relating to classification, that too when a part of the description of the export product is considered for deciding the classification. The description of the export product is Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO 2 95% Min. Moisture 0.5% Max. The lower adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
