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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 ..... ubject to the fulfilment of conditions of the said notification. It is to mention that the presence of zinc oxide and stearic acid in this formulation requires sample testing post-importation from the point of view of checking whether this formulation is still in a unvulcanized 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 be objectively proved by way of an outcome of the chemical test conducted at the time of importation. This aspect of product testing is a part of Customs Compliance Verification (CCV) process after importation of goods - the utility of the claim of applicant that the presence of zinc oxide and Stearic acid in this formulation is not as an active agent or vulcanizing agent is limited only to support applicant's contention, during advance ruling process, that the goods will not be in a vulcanized state. It is thus concluded that: a. Compounded rubber formulation 1 (with less than 5 parts of Carbon Black) mentioned in para 5.1 merits classification under CTH 4005 1000 Compounded rubber, unvulcanised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, 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 sub-heading within headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, while submitting the facts vide their application dated 15- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption 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 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork governing the classification of proposed imports in the form of relevant section VII notes, chapter 40 notes, supplementary notes, notifications 46/2011 and 189/2009 and HSN Explanatory Notes to the chapter headings. It is already mentioned that earlier the applicant had imported compound rubber through B/E No. 5498937 dtd. 18/09/2021 and got the sample tested in Customs Lab which had stated that 'the sample is in the form of black coloured soft lumps of irregular shape and size and that it was composed of compound rubber'. The bill of entry was assessed under CTH 4005 10 00 applying Notification benefit under Notification 41/2019 dated 31/12/2019 (46/2011) as amended. Here, on perusal of records, I find that the report has not mentioned unvulcanised status of the sample tested. Customs tariff heading 4005 reads as Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip and from the description itself it is clear 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 Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticles. (3) Plates, sheets and strip, consisting of textile fabrics combined with compounded rubber, weighing more than 1,500 g/m2 and containing not more than 50 % by weight of textile material. Such products are obtained either by calendering or by gumming or by a combination of both processes. They are used mainly for the manufacture of tyres, tubes, pipes, etc. (4) Other plates, sheets and strip of compounded rubber which may be used, for example, for repairing tyres or inner tubes (hot process), for the manufacture of adhesive patches, washers for certain airtight seals, rubber granules, etc., for moulding rubber soles. (5) Compounded rubber in the form of granules, ready for vulcanisation, and used as such for moulding purposes (e.g., in the shoe-making industry). The chapter note 3 to the chapter 40: Rubber and articles thereof reads as follows: In headings 4001 to 4003 and 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess conducted for issuing an advance ruling. Whether the product - compounded rubber - is vulcanized or unvulcanised, for deciding eligibility of classification under Customs Tariff Heading 4005, can be ascertained only after subjecting the samples of the imported goods drawn by the concerned agency to the chemical composition test. During the course of Customs Compliance Verification (CCV) it will be jurisdictional Customs authorities' responsibility to check whether all conditions necessary for claiming the benefit of duty exemption under the AIFTA are met by the importer and these include correct chemical composition of the imported products for a given classification, fulfilment of conditions related to origin criteria etc. 5.7 However, based on the submissions of the applicant I take up the classification and duty exemption eligibility of three compounded rubber formulations submitted 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 Natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 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. Further, 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 be objectively proved by way of an outcome of the chemical composition test conducted at the time of importation. 5.9 C . Compounded rubber formulation 3: Sr. No. Ingredi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, it is to mention that the presence of zinc oxide and stearic acid in this formulation requires sample testing post-importation from the point of view of checking whether this formulation is still in a unvulcanized 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 be objectively proved by way of an outcome of the chemical test conducted at the time of importation. This aspect of product testing is a part of Customs Compliance Verification (CCV) process after importation of goods. Jurisdictional Customs Commissionerate carries out process of testing of imported goods with the help of concerned agencies to cross-examine accuracy of declaration of goods in the import documents namely a Bill of entry and it's supporting documents before an out of charge (OOC) is granted. Hence the utility of the claim of applicant that the presence of zinc oxide and Stearic acid in this formulation is not as an active agent or vulcanizing agent is limited only to support applicant's contention, during advance ruling process, that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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