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TMI Blog2024 (4) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheva. 2. Applicant has stated as follows in their statement of relevant facts having a bearing on the question raised enclosed with the CAAR-1 application : 2.1 The Applicant is primarily engaged in the business, of Trading Alumina Fiber Mat imported from Ibiden Japan and providing marketing support services to promote raw silicon carbide brick used for Diesel Particulate Filters (hereinafter 'DPF') and Fine Graphite Material (hereinafter 'FGM') to associated enterprises of Ibiden Japan. The Applicant is in the process of selling up additional branches in free Trade Warehousing Zones ('FTWZ') from where the Applicant proposes to undertake business to business trading activities of raw silicon carbide bricks. Accordingly, the Applicant would import raw silicon carbide bricks of various shapes used for DPF from their associated enterprises and sell to their customers in India. DPF is a mandated component for all diesel engine driven vehicle platform manufactured in India to achieve Bharat Stage emission standard 6 (BS-6) implemented from April 1, 2020. DPFs are used in diesel engine systems to reduce the emissions of Particulate Matter (PM) and other harmful pollutants. The prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the DPFs are packaged and prepared for distribution to customers or automobile manufacturers for installation in diesel vehicles. 2.3 The Applicant intends to import non-oxide raw silicon carbide bricks in various shapes, including round and oval, based on the 'directions to buy' provided by an automotive Original Equipment Manufacturer (OEM). These silicon carbide bricks will subsequently be sold in their raw form to a coater responsible for applying the necessary coating. The coater will, in turn, supply the coated bricks to a canner for sealing within metal canisters. Finally, the completed Diesel Particulate Filters (DPFs) will be delivered to the OEM for integration into their automotive systems. 2.4 The applicant has further submitted the manufacturing process of raw silicon carbide substrate/brick preparation for a Diesel Particulate Filter (DPF) as follows : Material Selection : Common materials used for DPF substrates are Silicon Carbide (SiC) and cordierite. Silicon carbide is a high-strength ceramic material with excellent thermal and chemical resistance. It is chosen for its ability to withstand the harsh operating conditions or DPFs. Mixing and Forming : Silic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s surface to optimize catalytic activity. Drying : After the coaling is applied, the DPF is typically subjected to a drying process to remove any solvents or liquids from the coating. This step may involve heating the DPF in an oven to evaporate the volatile components of the coating material, leaving the catalyst particles adhered to the substrate. Quality Control : The coater is responsible for ensuring that the coated DPFs meet quality standards. This includes checking for uniform coating thickness, examining the overall integrity of the coating, and inspecting for any defects that might compromise the DPF's performance. Documentation : The coater may also be responsible for keeping records of the coating process. This documentation can include details of the coating materials used, the batch or lot numbers, process parameters, and any quality control results. Cleaning and Maintenance : Coating equipment and tools need regular cleaning and maintenance to prevent contamination and ensure consistent coating quality. Coaters are often responsible for maintaining their equipment and tools. Safety : Safety is a paramount concern in any manufacturing process. Coaters must fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aramount in any manufacturing process. Canners should follow safety protocols, including wearing appropriate protective gear and adhering to safety guidelines to prevent accidents, especially when working with welding or sealing equipment. The canning process is the final step in DPF manufacturing before the filters are ready for packaging and distribution. A well-executed canning process is critical to ensuring that the DPFs will perform effectively in reducing particulate matter emissions from diesel engines. It also contributes to the durability and reliability of the DPF in the demanding conditions of diesel engine exhaust systems. 2.7 Coating and canning would not be undertaken by the Applicant. The reason for usage of silicon carbide ceramic for DPF application is that it is high temperature resistant refractory material. Ceramics have been classified in terms of their silica content; silica or silicon dioxide. The content of silicon dioxide actually determines the temperature up to which it can be used. Higher is the silicon dioxide content, higher is the temperature it can resist. Therefore, the temperature or in refractive terminology, it is called refractoriness, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, in general, room temperature. Raw materials comprise, inter alia, clays, siliceous materials including fused silica, materials with a high melting point, such as oxides, carbides, nitrides, graphite or other carbon, and in some cases binders such as refractory clays or phosphates. Tariff Item Description 6902 Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods, other than those of siliceous fossil meals or similar siliceous earths 6902 20 - Containing by weight more than 50% of alumina (Al2O3), of silica (SiO2) or of a mixture or compound of these products : 6902 20 40 --- Silicon Carbide bricks and shapes 3.4 The Applicant submits that the silicon carbide brick that would be imported is a non-oxide ceramic and all the properties under this HS code are satisfied. Thus, classification of the silicon carbide brick imported by the Applicant would rightly fall under the HS Code 6902 20 40. 3.5 Chapter 84 stipulates classification of "Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof." There is a specific mention under Heading 8421 of "centrifuges, including centrifugal dryers; filtering or purifying m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , elements (of Filters) that are made up of paper would be classified in Heading 4812 or 4823; if made up of textile material for technical use then in Heading 5911; if made up of glass then in Heading 7019; etc. Filters by themselves would be classified under Heading 84.21." 3.7 The Applicant submits that silicon carbide bricks, available in various shapes, are elements used in diesel particulate filter applications. These bricks are composed of high-temperature-resistant, refractory materials, predominantly silicon carbide, with a silica content by weight exceeding 50%. Therefore, the appropriate classification for these products under the Customs Tariff Act, 1975, is 6902 20 40. The Applicant further emphasizes that silicon carbide bricks, being ceramic materials, do not fall under the classification of Chapter 84 as stated in the Chapter note and clarified by the Circular No. 24/2013-Customs, dated June 27, 2013. 3.8 Chapter 38 titled "Miscellaneous chemical products", contains the classification of the catalysts that are used for coating the silicon carbide bricks used by the coaters. Relevant extracts of Chapter 38 of Customs Tariff Act, 1975 are reproduced as under : Misc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction, which distinguished persons or things grouped together in the class from others left out of it. Two, the differentia adopted as the basis of classification must have a rationale or reasonable nexus with the object sought to be achieved by the statute in question. 3.11 As per general rules for the interpretation of the First Schedule to Customs Tariff Act, 1975, when goods are classifiable under two or more headings, classification would be done under the heading which provides the most specific description than to headings providing a more general description. The relevant extract of the rule is reproduced as under : "3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows : (a) the heading which provides the most specific description shall be preferred to headings providing a more general description." 3.12 Based on the detailed discussions in the aforementioned paragraphs, since HSN 6902 20 40 is the most specific description, the correct classification for raw silicon carbide brick is 6902 20 40. 4. A personal hearing in the matter was conducted on 13- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that the section (i.e. XVI) does not, however, cover : xx xx xx (d) Certain ceramic goods of Chapter 69 (sec General Explanatory Notes to Chapters 84 and 85). Further, I have gone through the General Explanatory Notes to Chapters 84 and 85 and in General Explanatory Note (A) to Chapter 84 it is explained that Subject to the provisions of the General Explanatory Note to Section XVI, this Chapter covers all machinery and mechanical appliances, and parts thereof, not more specifically covered by Chapter 85, and not being : xx xx xx (c) Ceramic articles of Chapter 69. Further, in General Explanatory Note (A) to Chapter 84 it is clearly explained that "Since machinery or appliances (for example, pumps) of ceramic material and ceramic parts of machinery or appliances of any material (Chapter 69), laboratory glassware (Heading 70.17) and machinery and appliances and parts thereof, of glass (Heading 70.19 to 70.20) are excluded from this chapter, it follows that even if a machine or mechanical appliance is covered, because of its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wear, etc. However, to fall in heading 69.02 or 69.03 as refractory goods, articles must not only be capable of resisting high temperatures, they must also be designed for high temperature work. Heading 69.03 would therefore include crucibles of sintered alumina, but textile machine thread guides of the same material would fall in heading 69.09 since they are designed for clearly non-refractory uses". In this explanatory note, further, it is also explained that the main types of refractory goods are inter alia 'refractories based upon silicon carbide'. From the information available on open source websites it is learnt that recently, Silicon Carbide (SiC) has been investigated and pursued as an alternative material for Diesel Particulate Filter (DPF) applications. SiC has acceptable physical properties such as good thermal conductivity, refractoriness, and chemical durability. Materials for DPF applications require a particular mean pore size, porosity, and permeability. In addition, these material attributes must be coupled to an appropriate thermal design so that the filter can survive the extreme temperature gradients generated during the regeneration process. From the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 this chapter applies only to ceramic products which have been fired after shaping : (a) & (b) xx xx xx (c) Ceramic articles are obtained by firing inorganic, non-metallic materials which have been prepared and shaped previously at, in general, room temperature. Raw materials comprise, inter alia, clays, siliceous materials including fused silica, materials with a high melting point, such as oxides, carbides, nitrides, graphite or other carbon, and in some cases binders such as refractory clays or phosphates. The applicant has explained the manufacturing process of silicon carbide substrate/brick preparation for a Diesel Particulate Filter (DPF) which is reproduced in Para 2.4 (supra). It is explained by the applicant that the forming process can be accomplished through extrusion or injection molding. In extrusion, the mixture is forced through a die with specific cell configurations to shape the honeycomb structure. Injection molding involves injecting the mixture into a mould with the desired shape, which is then cured and hardened. The dried substrate is then sintered at high te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are proposed to be imported for further use in DPF (i.e. Diesel Particulate Filter). Therefore, even, the design of the subject product and the fact that the subject product is proposed to be used in Diesel Particulate Filter which is a machinery of the Section XVI, the subject product i.e. raw Silicon Carbide Bricks cannot be classified in Heading 8421 and these are to be classified in Heading 6902. 7. The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation ('GRI') set out in the First Schedule to the Customs Tariff Act, 1975 (Tariff). Rule 3 of the GRI reads as follows : "3. When by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as fallows : (a) The heading which provides the most specific description shall be preferred to headings, providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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