Upgraded Beneficiated Ilmenite is synthetic Rutile: CESTAT sets aside Reclassification [Read Order]

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that upgraded beneficiated ilmenite as Synthetic Rutile and set aside the re-classification.

 M/s. DCW Limited, the assessee is engaged in the manufacture of Titanium Dioxide (TiO2) which is exported as “Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO2 95% Min. Moisture 0.5% Max.” The same was declared under Tariff Item No. 2823 00 90 of the Customs Tariff and it is a matter borne on record that the assessee has been declaring the said item under the said Tariff Heading since 1986.

It was evident that the above product has also been cleared in the domestic market under the very same classification under the Central Excise Tariff (CET) since 1986. In fact, a copy of invoices placed on record supports the above claim.

Similar to its earlier exports, the assessee filed two shipping bills both dated 02.03.2013, for the export of Upgraded Beneficiated Ilmenite (Synthetic Rutile) under CTH 2823. The Revenue, however, not accepting the above classification of these goods, sought to classify the same under CTH 2614 00 20. 

The Assistant Commissioner of Customs, classified the goods under export under Tariff Item No. 2624 00 20, as proposed. The appellant-assessee preferred an appeal before the first appellate authority against the said reclassification by the adjudicating authority and the first appellate authority accepted the classification made by the assessee thereby setting aside the re-classification proposed and confirmed by the original authority. The Revenue has preferred Customs Appeal.

Shri S. Jaikumar, Advocate, appeared for the assessee and Shri R. Rajaraman, Assistant Commissioner, argued for the Revenue. 

The assessee normally procures raw Ilmenite ore containing 50 to 54% of Titanium Dioxide (TiO2), either from M/s. Indian Rare Earths Ltd. or imports the same from outside. Naturally, the ore so procured is impure, with 5-10% of other materials like Garnet, Silica and other heavy metal traces.

It was well understood that the description is not the deciding factor, especially in an issue relating to the classification, that too when a part of the description of the export product is considered for deciding the classification.

The description of the export product is “Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO2 95% Min. Moisture 0.5% Max.” The lower adjudicating authority appears to be considering only “Upgraded Ilmenite” for the purpose of classification.

Moreover, the departmental guidelines in the form of CTH or Explanatory Notes / HSN clearly do not classify goods just based on the description. If the description was sufficient, then there was no need to specify that those which undergo structural change after the process will fall under different classifications. All such similar goods could have been just placed/classified under a single CTH.

It was observed that there have been various chemical processes which have resulted in the final product, with a different molecular structure. There is also an observation that the chemical and crystallographic structure of change has occurred only after the process of leaching.

A two-member bench comprising Mr P Dinesha, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) has held that “the goods in question are synthetic Rutile which merits classification only under CTH 2823 and hence, the stand of the assessee is accepted.”

The CESTAT upheld the order of the first appellate authority vide Order-in-Appeal No. 47/2013 (TTN) and dismissed the appeal filed by the Revenue.

To Read the full text of the Order CLICK HERE

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