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2025 (5) TMI 455 - AT - CustomsClassification of imported Quick Lime - to be classified under CTH 2522 1000 or under CTH 2825 9090? - HELD THAT - Based on the Tariff Headings and the Explanation given in the HSN Notes it is very clear that Quick Lime is classifiable under CTH 2522 unless the chemical analysis proves that it has purity of 98% calcium oxide. Admittedly in the present case the purity is only 92%. Moreover there is a specific classification of the product Quick Lime under CTH 2522 1000 while the classification prompted by Revenue is 2825 9090 is only a Residuary Entry and taking into consideration the Interpretative Rules of Classification specific heading is to be preferred to the residuary entry unless it is established that the product is pure calcium oxide. The decision in the case of CCE Hyderabad-III vs. Bhadradri Minerals Pvt Limited 2015 (10) TMI 1836 - CESTAT BANGALORE relied upon by the appellant has been brushed aside only on the ground that the product there was 80% on the same analogy that the calcium oxide with purity less than 98% does not merit classification under CTH 2825. Conclusion - The chemical analysis clearly states that the purity is only 92% and accordingly the product Quick Lime is rightly classifiable under CTH 2522 1000. Appeal allowed.
The core legal question considered in this appeal is the correct classification of the imported product "Quick Lime" under the Customs Tariff Act, 1975-specifically whether it falls under Customs Tariff Heading (CTH) 2522 1000 (Quicklime) or CTH 2825 9090 (Calcium Oxide in pure state). This classification determines the applicable customs duty rate and has significant financial implications.
The Tribunal examined the following issues:
Issue-Wise Detailed Analysis 1. Classification of Quick Lime under Chapter 25 versus Chapter 28 and the effect of calcination The legal framework centers on the Customs Tariff Act, 1975, and the Harmonized System of Nomenclature (HSN) Explanatory Notes. Note 1 to Chapter 25 states that headings in this chapter generally cover products in a crude state or subjected only to physical or mechanical processes, excluding those that have been roasted, calcined, or otherwise processed beyond the described methods, except where the context or Note 4 otherwise requires. The appellant argued that "Quick Lime" is obtained by calcining limestone-a process explicitly mentioned in the Note 1 exclusion-but contended that the phrase "except where their context or Note 4 to this Chapter otherwise requires" applies, allowing classification under Chapter 25. The Tribunal relied on Supreme Court precedents, notably the decision in Deepak Agro Solution, which held that the interpretation of Note 1 depends on the context of the entries. If a heading expressly includes a calcined product, the exclusion does not apply. Further, the Supreme Court's ruling in the case concerning Calcined China Clay was cited. The Court held that calcined China Clay remained classifiable under Chapter 25.05, as the heading explicitly included calcined products ("whether or not calcined"). This established the principle that calcination does not automatically exclude a product from Chapter 25 if the heading's context requires inclusion. The Tribunal noted that the HSN Explanatory Notes under Chapter 25.22 specifically describe "Quicklime" as "an impure calcium oxide obtained by calcining limestone," thus explicitly including calcined products within this heading. Therefore, the exclusion in Note 1 does not apply to "Quick Lime" classified under 2522 1000. 2. Purity and chemical composition as criteria for classification under CTH 2522 versus CTH 2825 The Revenue's classification under CTH 2825 9090 was based on chemical test reports showing the product as mainly Calcium Oxide (CaO) with impurities, and the contention that Chapter 25 excludes calcined products. However, the HSN Explanatory Notes under Chapter 28.25 clarify that this heading covers only Calcium Oxide and Hydroxide in the "pure state," defined as containing practically no impurities such as clay, iron oxide, or manganese oxide, with a typical purity of approximately 98% CaO. The chemical analysis of the imported goods revealed a CaO content of 92.2% with impurities including Silicon Oxide, Aluminium Oxide, Sodium Oxide, Ferric Oxide, and Magnesium Oxide. The Tribunal held that such a product does not meet the purity threshold for classification under Chapter 28.25, which is reserved for high purity calcium oxide products. Precedents were relied upon, including the Tribunal's decision in Bhadradri Minerals Pvt. Ltd., which emphasized that calcium oxide with less than 98% purity does not merit classification under Chapter 28.25 but falls under Chapter 25. The Board's Circular dated 10-7-1991, clarifying classification post the 1990 amendment to Note 1 of Chapter 25, was also considered. This circular supports classification of burnt lime under Chapter 25.05 despite calcination, provided the product is not of high purity calcium oxide. 3. Application of interpretative rules and treatment of competing arguments The Tribunal applied Rule 3(a) of the General Rules for Interpretation of the Customs Tariff Act, 1975, which mandates that the heading providing the most specific description shall be preferred over more general headings. Since CTH 2522 1000 specifically covers "Quick Lime" without purity conditions, and CTH 2825 9090 is a residuary entry for "other" calcium oxide products of high purity, the specific heading was held to prevail. The Revenue's reliance on the product being calcined and the exclusion in Note 1 was rejected on the basis that the context of the heading and the specific inclusion of calcined quicklime in the HSN Explanatory Notes overrides the general exclusion. The purity criterion further excluded classification under Chapter 28.25. The Tribunal also distinguished the Revenue's reliance on an advance ruling in a different case involving burnt lime with 94-96% CaO, noting factual differences and that the ruling did not consider the relevant Chapter Note 11 to Chapter 28. 4. Reliance on judicial precedents and authoritative circulars The Tribunal extensively relied on authoritative judicial precedents, including:
The Tribunal also considered the Board's Circular No. 112/6/91-CX3 dated 10-7-1991, which aligned Indian tariff notes with HSN and clarified classification of burnt lime under Chapter 25.05 despite calcination. Conclusions and Significant Holdings The Tribunal concluded that the imported "Quick Lime," with a CaO purity of approximately 92.2% and containing impurities, is correctly classifiable under Customs Tariff Heading 2522 1000. The exclusion of calcined products in Note 1 to Chapter 25 does not apply here because the heading's context explicitly includes calcined quicklime. The purity threshold for classification under Chapter 28.25 (approximately 98% CaO) is not met, thus excluding the product from that heading. The Tribunal held: "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." It was further observed: "Since CTH 2522 1000 specifically covers 'Quick Lime' without any condition, the imported 'Quick Lime' is rightly classifiable under CTH 2522 1000." The principle of preferring the specific tariff heading over the residuary one was emphasized, and the Tribunal reversed the impugned order that had classified the product under CTH 2825 9090. The appeal was allowed, and consequential relief granted as per law.
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