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TMI Blog2024 (10) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... falls under HSN heading 2522. Thus the goods in question fall under the HSN 2522 and accordingly the rate of tax applicable on the same in accordance with rate notification no. 1/2017-Central Tax (Rate) shall be 5%. Classification and HSN Code for supply of slaked / hydrated lime manufactured by the applicant containing less than 98% of the Calcium Oxide and Calcium Hydroxide - The laboratory analysis reports furnished by the applicant reveals that the calcium hydroxide/oxide composition in the said goods are less than 98% and impurities are also available in such goods. Applying the above, to the case at hand, we find that the goods to be supplied is slaked lime and hydrated lime of purity less than approximately 98% merit classifiable under CTH 2522 20 00. We hold that slaked/hydrated lime manufactured by the applicant containing less than approximately 98% of the calcium oxide and calcium hydroxide, are classifiable under CTH 2522 20 00 taxable at 2.5% CGST and 2.5% SGST as per entry Sl. No. 131 of Schedule I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 as amended. RULING Q. 1 What should be the classification and HSN Code for supply of slaked lime manufactured by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, chemical industry, leather industry, sugar industry, dairy industry, water treatment, road construction, etc. 4. That the process of manufacturing of proposed slaked / hydrated lime is as under: a. Purchase: Quick Lime Lumps i.e. Calcium Oxide, having CaO content upto 85% will be purchased from local suppliers. b. Crushing: The Quick Lime lumps will be unloaded from truck for crushing in the Hammer Mill. Crushed material will then go to the Hydrator Machine. c. Hydration: In the Hydrator Machine, water will be mixed in the crushed quick lime and will be strongly mix till the completion of reaction. d. Separation: After the completion of Hydration process, the material will pass through the Separator machine which will separates the finished material into different grades of Slaked/Hydrated Lime ranging from purity of 50% to 96% and will be transferred to Storage Silo. e. Packing: Slaked/Hydrated Lime will then be packed in Jumbo/Small bags for making it ready to dispatch. f. Final Loading: Bags will then be loaded into Trucks for final delivery to the customers. 5. That the necessary infrastructure for manufacturing above product shall be procured and developed by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. To notify the rates of supply of goods, Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 has been issued by Central Government and respective notifications have been issued under SGST and IGST Acts. The Notification has 6 Schedules for tax rates as 5%, 12%, 18%, 28%, 3%, 0.25%. 2. That it is imperative for the purpose of interpretation of this GST notification to refer the Explanation thereto which states as under: 'Tariff item , sub-heading , heading and 'Chapter shall mean respectively a tariff item, sub-heading, heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975. The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 3. That therefore, while the Rate Notification under GST provides the rate of tax on goods, in order to interpret this Rate Notification for purposes of cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% - Chapter 28 2825 Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides hydroxides and peroxides 2825 90 40 --- Calcium hydroxide kg. 7.5% - 9. That the General Rules for the interpretation of Customs Tariff provides guidelines for the classification of goods. That Rule 1 is read as under: Rule 1 The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions [that is, GIRs 2 to 6] 10. That further, Rule 3(a) says that The heading which provides the most specific description shall be preferred to headings providing a more general description . Therefore, heading which provides specific description shall always prevail over the heading which provide general description. 11. That the product under question would be covered under Chapter 2522 as per rule 3 (a) of General Rules for Interpretation of Customs Tariff as produced above. That heading 25 22 specifically covers Quicklime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ltd. v. Commissioner of Central Excise, reported at, [2008 (227) E.L.T. 631 (Tri. - Mum.)] following the ratio laid down by the Supreme Court held as under: 25. Moreover, it is now well settled by various decisions of the Hon'ble Apex Court that HSN Explanatory notes are not only of persuasive value, but are entitled to far greater consideration in classifying goods under the Central Excise and the Customs Tariff as held by the Hon'ble Supreme Court in the case of Collector of Customs, Bombay v. Business Forms Ltd. - 2002 (142) E.L.T. 18 (S.C.) following its earlier decision in the case of CCE, Shillong v. Wood Croft Products Ltd. -1995 (77) E.L.T. 23 (S.C.). Emphasis Supplied c. The Tribunal decision in Nestle India Ltd. (supra) was also approved by the Supreme Court, [2009 (237) E.L.T. A102 (S.C.)]. 17. Thus, on the basis of the above referred decisions it can be said the HSN explanatory notes are important guide with respect to classification and are relied upon by the Courts while determining the classification. In view of the above discussion and judicial precedents, it is clear that while interpreting a heading/sub-heading reliance can be placed on the HSN Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in medicine and in the preparation of cosmetics. Quicklime calcium oxide) and slaked lime (calcium hydroxide) are excluded (Heading 25.22). 19. That clearly from the perusal of the above, it is amply clear that as per the HSN explanatory notes, heading 2825 covers only the calcium oxide and calcium hydroxide in the pure state i.e. containing practically no clay, iron oxide, manganese oxide, etc and fused lime obtained by fusing ordinary quicklime in an electronic furnace having a high degree of purity containing at least 98% of calcium oxide. That quick lime and slaked lime are also excluded in this heading. 20. That in other words, if the composition of slaked / hydrated lime does not contain 98% of calcium oxide, it cannot be said to be having high degree of purity and accordingly shall not fall under chapter 28 as per the HSN explanatory notes, Furthermore, quicklime and slaked lime are specifically excluded from this chapter. 21. That based on the laboratory analysis report of 2 samples in 2 different labs already enclosed and marked as Annexure 1, above clearly, it is amply clear that calcium oxide composition in the said goods is less than 98%. The test reports do clearly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Chapter 25 (as purity is less than 98%) and will attract 5% tax rate. The copy of the said judgement is enclosed and marked as Annexure-3. 25. That further, the applicant would like to bring to your notice the clarification issued by the Rajasthan State Tax department and Office of the Assistant Commissioner, Division-C, Jodhpur CGST in this regard which shall put an end to this debate. The All India Lime Manufacturers Association (AILMA) which is apex body for lime manufacturers and suppliers in India having registration number 63735 and CIN IJ91900RJ2019NPL063735 located at Jodhpur sought clarification from Honorable Commissioner (GST) of both center (CGST) and Rajasthan state (SGST) in which the department vide clarification letter dated 06.03.2020 16.02.2022 has clarified that Hydrated lime/Slaked Lime and Quick Lime with purity less than 98% falls under HSN heading 2522, which is enclosed as Annexure-4 Annexure-5 respectively. 26. The relevant Para of said clarification letter is reproduced below for your ready reference: Clarification letter by Assistant Commissioner CGST dated 06.03.2020: In GST, the tariff has been aligned with the HSN, which clearly lays down that Q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that HSN Explanatory Note under Heading 28.25 ibid excludes Calcium Oxide with purity less than 98% whereas purity of burnt lime is 70 to 75% and therefore not covered by Heading 28.25 ibid - Burnt lime correctly held classifiable under Heading 25.05 ibid And similarly the applicant relied upon the case of M/s. Jindal Stainless (Hisar) Ltd v/s The Commissioner of Customs by Hon'ble Delhi Tribunal in Custom Appeal No. 51224 of 2019. The Hon ble Tribunal held that quick lime with purity range of 92% to 97% is classifiable under Chapter 25 (as purity is less than 98%) and will attract 5% tax rate. 3) The issue to be decided is the classification of slaked/hydrated lime containing less than 98% of the calcium oxide and calcium hydroxide and the applicable rate of tax under GST. 3.1) In terms of explanation (iii) and (iv) to Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to: (a) separate chemical elements and separate chemically defined compounds, whether or not containing impurities; (b) the products mentioned in (a) above dissolved in water; HSN Explanatory Notes to Chapter Heading 2825 states: (11) Calcium oxide, hydroxide and peroxide. This heading covers only the oxide (CaO) and the hydroxide (Ca (OH) 2), in the pure state (i.e., containing practically no clay, iron oxide, manganese oxide, etc.), such as the product obtained by calcining precipitated calcium carbonate. The heading also covers fused lime obtained by fusing ordinary quicklime in an electric furnace. This product has a high degree of purity (approximately 98% calcium oxide); it is crystalline and generally colourless. It is used, in particular, for refractory linings for furnaces, in the manufacture of crucibles and for addition to concrete, in small pieces, to increase its resistance to wear. Calcium peroxide (Ca02) is a white or yellowish powder, hydrated (usually with 8 H20), sparingly soluble in water. Used as a bactericide and as a detergent, in medicine and in the preparation of cosmetics. Quicklime (calcium oxide) and slacked lime (calcium hydroxide) are excluded (headin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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