Case of Authority for Advance Rulings, August 30, 2007 (case Lhoist India Private Limited Vs Commissioner of Customs and Central Excise)
| President | P.V. Reddi, J. (Chairman), A. Sinha and Chitra Saha, Members |
| Resolution Date | August 30, 2007 |
Judgment:
Chitra Saha, J.
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In the Application filed under Section 23C of the Central Excise Act, 1944, the Applicant M/s Lhoist India Pvt. Ltd., Mumbai, has sought an advance ruling on the following question:
For the purposes of Central Excise laws of India read with the Central Excise Tariff Act, 1985, what should be the classification with respect to the finished product (i.e. high purity burnt Lime) proposed to be manufactured by the Applicant under the process enumerated in the facts contained in Annexure I.
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The applicant has submitted in Annexure I that high purity lime stone, i.e. calcium carbonate (CaCo3) is proposed to be imported. This lime stone would be crushed and heated to high temperatures. During the heating the calcium carbonate would decompose into carbon dioxide (CO2) and calcium oxide (CaO). The carbon dioxide contained in the lime stone would escape leaving behind calcium oxide. This calcium oxide, referred to as lime or quick lime or burnt lime would be further crushed to smaller sizes as per customers' requirements. Apart from calcium oxide, the finished product, i.e. burnt lime would also have traces of certain impurities. While calcium oxide would comprise 94 to 96% of the product, the other elements/compounds present in it would be magnesium oxide (MgO constituting less than 1.5%), silicon oxide (SiO2 accounting for less than 1%), sulphur (S which would be less than 0.05%) and R2O3 which has been clarified by the applicant, in the course of the hearing, to be aluminum oxide (Al2O3) which would constitute less than 0.5%.
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The applicant states that the two possible classifications of the high purity burnt lime in the First Schedule (hereafter referred to as the 'tariff') to the Central Excise Tariff Act 1985 are: 2522 under Chapter 25 and 2825 in Chapter 28. Chapter 25 covers "Salt; sulphur; earths and stone; plastering materials; lime and cement". The Tariff head 2522 under this Chapter covers "Quick lime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825". Note 1 of this Chapter reads as follows:
Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levitated, sifted, screened, concentrated by flotation, magnetic separation or any other mechanical or physical process (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading.
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It is the applicant's submission that since the burnt lime is obtained by heating, i.e. calcining the raw material, lime stone, the finished product, i.e. burnt lime, gets excluded from Chapter 25 by virtue of Note 1. The applicant further states that classification of burnt lime under Chapter 25 is also ruled out as 2522 specifically excludes calcium oxide and hydroxide of heading 2825.
4.1 The applicant has referred to Chapter 28 which covers "Inorganic chemicals, organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes." Note 1 of the said Chapter states that the headings of this Chapter apply only to separate chemical elements and separate chemically defined compounds, irrespective of whether or not they contain impurities. Burnt lime comprising predominantly of the separate chemically defined compound, calcium oxide, which is a metal oxide, would get covered under the residuary sub-head 2825 90 90 falling under 2825 which covers "Hydrazine and hydroxylamine and their inorganic salts; other inorganic bases; other metal oxides, hydroxides and peroxides."
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In the course of the hearing on 17.7.2007, the applicant has referred to the definition of "impurities" in the Explanatory Notes (Volume I, page 261 Third Edition) on Chapter 28 of the Harmonized Commodity Description and Commodity System (hereafter referred to as HSN Notes) to state that the presence of the impurities magnesium oxide, aluminum oxide, silicon oxide and sulphur in the burnt lime does not take away the product from Chapter 28 in view of the following definition of the term "impurities" in the HSN Notes:-
Separate chemical elements and separate chemically defined compounds containing impurities, or dissolved in water, remain classified in Chapter 28.
The term "impurities" applies exclusively to substances whose presence in the single chemical content results solely and directly from the manufacture process (including purification). The substances may result from any of the factors involved in the process and are principally the following:
(a) Unconverted starting materials.
(b) Impurities present in the starting materials.
(c) Reagents used in the manufacturing process (including purification).
(d) By-products.
It should be noted, however, that such substances are not in all cases referred as "impurities" permitted under Note 1(a). When such substances are deliberately left in the product with a view to rendering it particularly suitable for specific use rather than for general use, they are not regarded as permissible impurities.
Since the impurities in the final product...
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