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TMI Blog2023 (10) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... tyres for domestic market and also export tyre to other countries following due process of law applicable for import, manufacture and clearance. 2.1 Applicant proposes to import approximate quantity of 72,000 Tonnes per annum compounded rubber from the suppliers in Thailand, Malaysia, Indonesia, Vietnam and through Chennai Port, Kattupalli Port, Ennore Port, Nhava Sheva Port, Cochin Port and Hazira Port and has sought the Ruling under Section-28(H) 2(a) of Customs Act, 1962 for the import of compounded rubber with Carbon Black or Silica or Styrene Butadiene Rubber (SBR) which is specifically covered under tariff heading 4005 10 00. It is submitted that there is no issue of import license for import of compound rubber with carbon black or silicon classified under CTH 4005 1000. It is also submitted that there is no issue relating to Import Policy Classification under Customs Tariff currently pending or already decided by the department or in the appellate forum. However, in order to obtain certainty in the customs rate of duty, the Applicant is seeking classification from Customs Authority for Advance Ruling on future import of I. compounded rubber with less than 5 parts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t four-digit, six-digit and eight-digit level. Every four-digit level is heading, six-digit is called sub heading, and eight-digit is called tariff item. India has developed eight-digit code. The process of arriving at a particular heading or sub heading either at four-digit, six-digit or eight level for a commodity in the tariff schedule is called classification. The title, sections, chapters and sub chapter are provided for ease of reference only. 2. General Interpretative Rules are a set of 6 rules for classification goods in the tariff schedule These rules have to be applied in sequential manner. * Rule 1 gives precedence to the section notes and chapter notes. * Rule 2(a) applies to goods imported in incomplete/finished, assembled/unassembled condition. * Rule 2(b) is applicable to mixture or composite goods. Goods which cannot be classified under 2(b) will be classified under Rule 3 by application of most specific description as per Rule 3(a); Rule 3(b) essential character, 3(c) heading that occurs last in numerical order. * Rule 4 applies to goods which are most akin. * Rule 5 applies to packing material and * Rule 6 applies to arrive appropriate su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiating part whether to classify the goods under HSN 4005 1000 or otherwise. d. Customs, Hazira Port has gone through the various consignments of rubber being imported in past one year and found NIL Bills of Entry classified under 4005 1000. Further, in terms of classification, the important factor which speaks about the goods is whether the goods are vulcanized or not. The applicant, vide their submission, has failed to describe exact quality of the goods, though they may be compounded with various additives and chemicals, they cannot be classified in 4005 1000, if the same are vulcanized. e. Vulcanization of rubber is a complex process, which involves treatment of raw/natural rubber with Sulphur and other chemicals to make it more durable. Sulphur is an integral part of compounding because it forms cross links with natural rubber making it more durable and elastic appropriate to manufacture tyres etc. Thus, rubber compounding can be done using various methods and using various chemicals, however compounding with Sulphur, which is essentially vulcanizing, restrict importer to classify them under 4005 1000. f. It is further informed that the applicant, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assify under tariff entry 4005 1000 and hence the duty exemption benefit under serial number 503 of the notification 46/2011-Cus read with notification 189/2009 (N.T.)-Cus. is not applicable to these two products. I find that the present CAAR-1 application is seeking a ruling under section 28 H 2 (a) on classification under CTH 4005 1000 of the first schedule of the Customs Tariff Act, 1975, and Section 28 H 2 (b) on duty exemption benefit under serial no. 503 of Notification 46/2011 issued under section 25 (1) of the Customs Act, 1962 read with notification 189/2009 (N.T.) in respect of following compounded rubber formulations. Compounded rubber formulation 1 (with less than 5 parts of Carbon Black): Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 100 5 2 Carbon black 2.6 1.5 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber): Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 95 5 2 Styrene butadiene rubber 5 2 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 Compounded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the tariff heading 4005 accommodates only unvulcanised compounded rubber. It is further stated by the applicant that though the applicant did not face any problem on import of a sample consignment of compound rubber through Chennai Customs, the applicant intends to import substantially large consignments of compound rubber through multiple ports in the above stated category so as to increase applicant's manufacturing activities. In order to safeguard the interest of applicant and to avoid dispute, ruling is sought from the Customs Authority for Advance Ruling under section 28(H) 2(a) and (b) of Act. The applicant further submits that they would fulfil the conditions prescribed under the said notification. The Certificate of Origin required for availing the benefit of the Notification would be obtained at the time of import and the same would be kept ready at the time of clearance of the subject goods. Conditions prescribed under Notification 189/2009 (N.T) would be followed by the applicant. From the standpoint of provisions of the Tariff, as discussed in foregoing para, it is seen that the Customs tariff heading 4005 reads as "Compounded rubber, unvulcanised, in primary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4005, the expression "primary forms" applies only to the following forms: (a) Liquids and pastes (including latex, whether or not pre-vulcanised, and other dispersions and solutions); (b) Blocks of irregular shape, lumps, bales, powders, granules, crumbs and similar bulk forms." Further, the chapter note 3 to the Chapter 40: Rubber and articles thereof reads as follows: "In headings 4001, 4002, 4003, 4005 and 4008, the expressions "plates", "sheets" and "strip" apply only to plates, sheets and strip and to blocks of regular geometric shape, uncut or simply cut to rectangular (including square) shape, whether or not having the character of articles and whether or not printed or otherwise surface-worked, but not otherwise cut to shape or further worked." As rightly pointed out by the jurisdictional Customs Commissionerate of Hazira Port it is clear that the compounded rubber has to be in unvulcanised state for its classification under the heading 4005 and any chemical test report should specifically state the unvulcanised or vulcanized status of the goods. 5.5 In addition to the issue of classification the applicant wants to ascertain the eligibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the applicant and reproduced in the tables in para 5 above. A. Compounded rubber formulation 1: Sr. No. Ingredient Parts per hundred rubber (PHR) Tolerance (+/-)PHR 1 Natural Rubber 100 5 2 Carbon black 2.6 1.5 3 Zinc Oxide 1 0.5 4 Stearic Acid 1 0.5 It is observed that this formulation contains carbon black in 2.6 % with a tolerance of +/- 5%. Tariff entry 4005 1000 reads as Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica. Here applicant has claimed that the compounded rubber formulation mentioned in the table is unvulcanised. Hence I find that presence of either of carbon black or silica in unvulcanised compounded rubber of heading 4005 is sufficient to classify this formulation under tariff entry 4005 1000. However, presence of zinc oxide and stearic acid in this formulation requires examination from the point of view of checking whether this formulation is still in a unvulcanised state or not. Applicant has categorically submitted that the presence of zinc oxide and stearic acid in this formulation is not as an active agent or vulcanizing agent. Claim of applicant is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... black or silica in unvulcanised compounded rubber of heading 4005 is required to classify this formulation under tariff entry 4005 1000. HSN Explanatory Notes to heading 4005 state that this heading includes Compounded rubbers not containing carbon black or silica. Further such compounded rubber may contain substances such as organic solvents, vulcanising agents, accelerators, plasticisers, extenders, thickeners and fillers (other than carbon black or silica). Some of them may contain red clay or protein. However, absence of both Carbon black as well as silica renders this formulation unfit for classification under tariff entry 4005 1000 and subsequent duty exemption benefit under AIFTA under serial no. 503 of the notification 46/2011-Cus. amended from time to time. In view of scope of tariff headings under CTH 4005 of the first schedule to the Customs Tariff Act, 1975 Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber) and Compounded rubber formulation 3 (without Carbon Black but with less than 5 parts of clay) mentioned in para 5.1 merit classification under CTH 4005 99 90: Compounded rubber, unvulcanised, in primary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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