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TMI Blog2023 (10) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 2522 10 00. From the above HSN explanatory notes it could be concluded that lime stone being a mineral product is calcined to produce quicklime . Further, when lime stone is subjected to the process of low temperature of calcination then hydraulic lime is produced. These two products would remain classifiable under Chapter heading 2522. However, when the lime stone is subjected to high temperature calcination ranging as high as 1340 C, dissociation of limestone happens i.e., a general chemical process in which molecules (or ionic compounds such as salts, or complexes) gets separated or split into other things such as atoms, ions, or radicals, usually in a reversible manner. In simple words, it can be said that the mineral product quicklime when subjected to high tempera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CD and Notification No. 01/2017- Integrated Tax dated 28.06.2017 of Schedule-I (Serial No.131) for IGST. While examining the B/E No. 6739528 dated 11.06.2018, the department interpreted on the basis of preliminary reading of Note 1 to Chapter 25 of the Customs Tariff Act, 1975 that the imported product is a calcined product of mined limestone, which has been roasted or calcined, and thus falls out of the purview of classification under chapter 25, and is rightly classifiable under tariff item/CTH 2825 90 90, attracting higher rate of import duties @ 7.5% BCD, 18% IGST and 10% SWS. On pointing out the above observations of the department, the appellants had sought for provisional assessment of the imported goods under Section 18 of the Customs Act, 1962, under CTH 2825 90 90 by executing the provisional duty bonds. Accordingly, the department had initiated show cause proceedings by issue of Show Cause Notice (SCN) dated 10.07.2019 for recovery of differential duty of Customs under Section 28(4) ibid along with interest thereon and for confiscation of imported goods under Section 111(m) ibid, imposition of penalties under Section 114A, 114AA ibid. The Order-in-Original dated 31.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orting the subject goods in the past for more than 20 years and classifying the same under CTH 2522 10 00 of the Customs Tariff Act and the department are well aware that they were clearing it without any demur. It is only in the year 2018, an enquiry into the import of the subject goods was commenced which culminated into issuance of a show cause notice and the impugned order by the Commissioner of Customs (Preventative), Mumbai wherein the demand of differential customs duty for normal period amounting to Rs. 3,72,66,955/- has been confirmed against the appellants on the ground that the subject goods are classifiable under CTH 2825 90 90 and are not eligible for exemption benefit under the notifications, as they ought to have been classified under CTH 2825 90 90 of the Customs Tariff Act, 1975. 2.3 Furthermore he submitted that the issue of classification in the above case is no longer res integra in view of the decision of the Tribunal in the case of Commissioner of Central Excise, Hyderabad-III Vs. M/s Bhadradri Minerals Pvt. Ltd. reported in 2015 (324) E.L.T. 395 (Tri.-Bang.) and Jindal Stainless (Hisar) Ltd. Vs. Commissioner of Customs, New Delhi, reported in 2020 (8) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Authroised Representative (AR) appearing for the Revenue reiterated the findings recorded by the learned Commissioner (Preventive) in the impugned order and stated that the appellant have been importing Hi Cal Quicklime from M/s Carmeuse Majan LLC, Oman and M/s Ras Al Khaimah Lime Co. 'Noora', UAE. The declared description in the bills of entry is 'Quicklime' under CTH 25221000. The imported quicklime is used by the appellants for removing impurities from steel, as part of manufacturing process, in their smelting plant. As the department had noticed that the imported product was calcined product of the mined limestone and preliminary reading of Note 1 to Chapter 25 showed that the products which have been roasted or calcined, fell out of the purview of classification under Chapter 25, they resorted to reclassification of the goods. Further, the Department claimed that the Hi Cal Quicklime was a manufactured product, obtained by calcinations and did not merit classification under CTH 2522 10 00. Thus in respect of B/E No. 6739528 dated 11.06.2018 in which the mis-classification was noticed and thereafter all the assessments were done on provisional basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book by learned Advocate for the appellants as well as Authorised Representatives for the Revenue, and the arguments advanced during the hearings of this case. 5. Brief issue for consideration before us is the classification of imported goods by the appellants as to whether, the same merits classification under Customs Tariff Item 2522 10 00 as claimed by the appellants; or, is it classifiable under Customs Tariff Item 2825 90 90 as contended by the Department, for deciding on the appropriate levy of customs duty, in respect of various Bills of Entries filed during the disputed period. 6. In order to address the above issue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute. Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable. ADDITIONAL NOTES In this Schedule, (1)(a) heading , in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub-headings of tariff items the first four-digits of which correspond to that number; (b) sub-heading , in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number; (c) tariff item means a description of goods in the list of tariff provisions accompanying eightdigit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub-Chapters; (3) in column (3), the standard unit of quantity is spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or Chapter Notes; (GIR 1) (ii) reference to an article, shall also include such article in the incomplete or unfinished state, subject to the condition that article, as presented, has the essential character of the complete or finished article. Further, reference in a heading to a material or substance shall be taken to include mixtures or combinations of that material or substance with other materials or substances, and to goods consisting wholly or partly of such material or substance; (GIR 2) (iii) if the goods are found to be classifiable under two or more headings, then the classification shall be effected as per the rules provided under 3(a), 3(b) and 3(c) [GIR 3] (iv) Goods which cannot be classified in accordance with the aforesaid rules, then the same shall be classified under the heading appropriate to the goods to which they are more akin. (GIR 4) (v) For legal purposes, the classification of goods in the subheadings shall be determined according to the terms of those subheadings and any related sub-heading Notes (GIR 6) (vi) When the description of the goods under a heading is preceded by single dash i.e., - , the said goods shall be taken to be a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kg. 10% - Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides 2825 10 - Hydrazine and hydroxylamine and their inorganic salts : 2825 10 10 --- Hydrazine anhydrous Kg. 10% - 2825 10 20 --- Hydrazine hydrate Kg. 10% - 2825 10 30 --- Hydrazine sulphate Kg. 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % - 2825 90 - Other : 2825 90 10 --- Tin oxide Kg. 10% - 2825 90 20 --- Cadmium oxide Kg. 10% - 2825 90 40 --- Calciumhydroxide Kg. 10% - 2825 90 50 --- Ammoniumhydroxide Kg. 10% - 2825 90 90 --- Other Kg. 10% - 10.1 From the above 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tending 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. 10.4 Further, 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. However, if the goods cannot be classifiable by following GIR 3(a) or 3(b), then by applying GIR 3(c) classification of the product would be decided to bring it under the heading that occur last in the numerical order among those which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation technology and compliance. Accordingly, the extract of relevant Chapter notes in First Schedule to Customs Tariff Act and the WCO s HSN in respect of heading 2522 and 2825 is discussed in detail along with extracted portion of the same as given below: SECTION V MINERAL PRODUCTS CHAPTER 25 Salt; sulphur; earths and stone; plastering materials, lime and cement Notes: 1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products which have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. The products of this Chapter may contain an added anti-dusting agent, provided that such addition does not render the product particularly suitable for specific use rather than for general use. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of chapter note 2. If we analyse the Chapter Note 1, there are six major elements guiding the classification of goods. These have been listed as follows: (a) Mineral products that are in the crude state are only covered under Chapter 25; (b) Mineral products which are subjected to certain specific process such as washing, crushing, grounding etc. (as specified therein) or other mechanical process or physical process would alone be covered under Chapter 25 (c) Mineral products after being subjected to certain processes by which these have become products that have been roasted, calcined are not covered under Chapter 25 (d) Mineral products which are obtained by mixing or subjected to processing beyond that mentioned in each heading is also not covered under Chapter 25 (e) When the context require, mineral product subjected to a particular process such as heating (as mentioned in heading 2517, as whether or not heated ) would still be covered under Chapter 25 (f) Mineral products which are subjected to certain specified process in Chapter Note 4 would still continue to be classified under Chapter 25. In respect of the present issue, the sub-clause (c) (e) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral product is calcined to produce quicklime . Further, when lime stone is subjected to the process of low temperature of calcination then hydraulic lime is produced. These two products would remain classifiable under Chapter heading 2522. However, when the lime stone is subjected to high temperature calcination ranging as high as 1340 C, dissociation of limestone happens i.e., a general chemical process in which molecules (or ionic compounds such as salts, or complexes) gets separated or split into other things such as atoms, ions, or radicals, usually in a reversible manner. In simple words, it can be said that the mineral product quicklime when subjected to high temperature calcination becomes calcium oxide by eliminating carbon-dioxide (CO2) and such calcium oxide is not covered under Chapter 25, as these are chemical products classifiable under heading 2825. 13. 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., reported in 1999 (105) E.L.T. 711 (Tribunal) which has also duly followed the judgement of the Hon ble Supreme Court in the case same assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extract of HS classification in respect of heading 2825 is given below: Harmonized Commodity Description and Coding System Explanatory Notes 28.25- Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides. 2825.10 - Hydrazine and hydroxylamine and their inorganic salts 2825.20 - Lithium oxide and hydroxide 2825.30 - Vanadium oxides and hydroxides 2825.40 - Nickel oxides and hydroxides 2825.50 - Copper oxides and hydroxides 2825.60 - Germanium oxides and zirconium dioxide 2825.70 - Molybdenum oxides and hydroxides 2825.80 - Antimony oxides 2825.90 Other This heading covers : (A) Hydrazine and hydroxylamine and their inorganic salts. (B) The metal oxides, hydroxides and peroxides of this Chapter not included in preceding headings. The most important products are : (1) Hydrazine and its inorganic salts . (2) Hydroxylamine and its inorganic salts XX XX XX XX (10) Berylium oxide and hydroxide. (a) Oxide (BeO). Prepared from beryllium nitrate or sulphate. White powder, insoluble in wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the HSN explanatory notes in the second para of B(11) 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 98% making it not a product of high degree, would not enable the imported goods to be classified under sub-heading 2825. 15. Revenue has also claimed that the exemption entry for the purpose of levy of CVD/IGST under Notification No. 01/2017-Integrated Tax dated 28.06.2017 of Schedule-I (Serial No.131) have specified only quicklime of heading 2522, and impugned order classified the imported goods under 2825, and thus the appellants are excluded in claiming the exemption benefit. In this regard, the exemption entry in the above notification is extracted below: [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption 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 would still be available, 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 (32) E.L.T. 3 S.C. 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. Thus, we find that the impugned order dated 31.10.2019 rejecting the exemption benefit of the above notification, is not legally sustainable. 16. We further find from the standards prescribed by the Bureau of Indian Standards (BIS) in respect of IS:1540 (Part-I):1980 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no clay. It combines very rapidly with water, giving off considerable heat and producing slaked lime (Calcium hydroxide) The heading excludes purified calcium oxide and calcium hydroxide (heading 28.25). The HSN also prescribes as follows: 1. Except where their context ..... otherwise requires, ..... but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. 4.2 It is seen that Revenue has relied on the decision of the Tribunal in the case of Nuchem Industries Pvt. Ltd. (supra) which was upheld by Hon ble Apex Court. It is seen that the said decision has been given in the context of Central Excise duties. At the material time, Central Excise Tariff was not aligned to HSN. Learned Counsel for the appellant pointed out that the Central excise Tariff was align with HSN only with effect from 20.03.1990. He pointed out that this distinction has been specifically examined by Tribunal in the case of Bhadradri Minerals Pvt. Ltd. (supra) in para 5.1 and 5.2. In view of above, it is apparent that the said decision would render in different circumstances and, therefore, cannot be relied as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly, the applicant being convinced of the correct classification, would like to avert the risk of availing the benefit the strength of decisions rendered in a different context and then facing a backlash at a later stage. From the above it is apparent that the facts and circumstances were significantly different. 5. As a result of above observations, we find that the ratio of decisions of Tribunal in the case of M/s Bhadradri Minerals Pvt. Ltd. is applicable to the facts of the instant case. Therefore, the product is rightly classified under chapter 25. The appeal is consequently allowed. 19. In view of the foregoing detailed discussions, analysis and findings recorded in the above paragraphs, 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. 20. Therefore, we are of the considered view that the impugned order passed by the learned Commissioner (Appeals) dated 05.04.2021 cannot stand for judicial scrutiny by confirming the classification under the Customs Tariff Item 2825 90 90 in respect of the impugned goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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