2025 (7) TMI 648 - AT - Customs

Valuation of imported goods - PCC Lime 0/20MM (Quicklime)(Pulp Conversion Chemical) - to be classified under Customs Tariff ltem No.2825 9090 or under Customs Tariff Item No. 2522 1000 - HELD THAT - A similar issue has been examined by this Tribunal in the case of M/s. JSW Steel Ltd. v. Commissioner of Customs Cochin 2025 (5) TMI 455 - CESTAT BANGALORE wherein the Tribunal observed that the chemical analysis clearly states that the purity is only 92% and accordingly the product Quick Lime is rightly classifiable under CTH 2522 1000. Admittedly in the Bills of Entry filed the purity of Calcium Oxide is less than 98%and therefore the product in question i.e. Quicklime is rightly classifiable under Customs Tariff Item No.25221000 following the decision in the case of M/s. JSW Steel Ltd. - there are no merit in the impugned orders and accordingly the same are set aside. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Tribunal was the correct classification of the imported goods described as "PCC Lime 0/20MM (Quicklime)(Pulp Conversion Chemical)" under the Customs Tariff Act, 1962. Specifically, whether the goods should be classified under Customs Tariff Heading (CTH) 2522 10 00 (Quicklime) or under CTH 2825 90 90 (Other inorganic chemical compounds), based on the chemical composition and purity of the product.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Classification of imported Quicklime under Customs Tariff Heading 2522 10 00 or 2825 90 90.

Relevant Legal Framework and Precedents: The Tribunal examined the Harmonized System of Nomenclature (HSN) chapters and notes relevant to mineral products and inorganic chemicals. Chapter 25 covers mineral products including quicklime, with Note 1 restricting classification to products in crude or mechanically processed states, excluding those subjected to roasting, calcination, or other chemical processing. Chapter 28 covers inorganic chemicals, including pure chemical compounds.

The Tribunal relied on prior decisions, notably the case of M/s. JSW Steel Ltd., which analyzed similar classification issues. The HSN explanatory notes were pivotal, particularly the note under Chapter 28 heading 2825, which states that calcium oxide and hydroxide are covered only if in a pure state (approximately 98% purity or more). Products with lower purity fall under Chapter 25.

Additionally, the Tribunal considered the decision in M/s. Viraj Profiles Limited, which held that quicklime with calcium oxide content below 98% does not qualify for classification under Chapter 28. The Tribunal also reviewed the decision in Bhadradri Minerals Pvt. Ltd., which similarly emphasized purity thresholds and the exclusion of impure quicklime from Chapter 28.

Court's Interpretation and Reasoning: The Tribunal interpreted the HSN notes and tariff headings strictly, emphasizing the purity requirement for classification under Chapter 28. It noted that quicklime with calcium oxide content below 98% is an impure product and thus falls under Chapter 25. The Tribunal highlighted that Chapter 25 specifically includes quicklime, slaked lime, and hydraulic lime, excluding purified calcium oxide and hydroxide covered under Chapter 28.

The Tribunal also applied the principle of specificity in tariff classification, giving preference to the specific heading (2522 10 00 for quicklime) over the residual or residuary entry (2825 90 90 for other inorganic chemical compounds), unless purity criteria justified the latter classification.

Key Evidence and Findings: The chemical analysis reports showed that the calcium oxide content in the imported quicklime was approximately 92%, below the 98% purity threshold required for classification under Chapter 28. The product contained impurities such as iron oxide, magnesium oxide, and manganese oxide, confirming it was not a pure chemical compound.

Application of Law to Facts: Given the chemical composition and impurity levels, the Tribunal applied the HSN notes and tariff classification rules to conclude that the product did not meet the purity standards for classification under Chapter 28. Therefore, the product was correctly classifiable under Chapter 25, specifically under CTH 2522 10 00.

Treatment of Competing Arguments: The Revenue relied on the classification under Chapter 28 based on the chemical nature of quicklime as calcium oxide and on a prior Advance Ruling Authority decision that classified burnt lime with 94-96% CaO under Chapter 28. The Tribunal distinguished this ruling on the ground that it did not consider the relevant HSN Chapter Note 11 and that the facts in that case were materially different.

The Revenue also cited a Supreme Court upheld decision related to Central Excise duties, but the Tribunal noted that the Central Excise Tariff was not aligned with the HSN at the relevant time and thus the precedent was not binding or applicable.

The appellant's reliance on the Bhadradri Minerals decision was accepted by the Tribunal as directly applicable and authoritative, supporting classification under Chapter 25 for quicklime with less than 98% purity.

3. SIGNIFICANT HOLDINGS

The Tribunal held 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."

It preserved the following crucial legal reasoning verbatim from the JSW Steel Ltd. decision:

"Based on the above 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 Tribunal established the core principle that purity of calcium oxide at or above 98% is a determinative factor for classification under Chapter 28; otherwise, the product falls under Chapter 25.

Accordingly, the Tribunal set aside the impugned orders and allowed the appeals, granting consequential relief as per law.