PR. COMMR. OF CUS., AIR CARGO (IMPORT) Versus IBIDEN SINGAPORE PT. LTD.>2017(01)LCX0016

2017(01)LCX0016

IN THE HIGH COURT OF DELHI

S. Ravindra Bhat and Najmi Waziri, JJ.

PR. COMMR. OF CUS., AIR CARGO (IMPORT)

Versus

IBIDEN SINGAPORE PT. LTD.

W.P. (C) No. 148 of 2017 and CM Nos. 723-724 of 2017, decided on 9-1-2017

Advocated By -

S/Shri Sanjeev Narula, Abhishek Ghai and K. Gupta,
Advocates, for the Petitioner.
None, for the Respondent.

[Order]. -

CM No. 723/2017 (for exemption) : Allowed, subject to all just exceptions.

2. The application stands disposed of. W.P. (C) 148/2017 & CM No. 724/2017

3. The Union of India acting through the Principal Commissioner of Customs, Air Cargo (Import) has preferred this writ petition impugning a decision of the Authority for Advance Ruling (Central Excise, Customs and Service Tax) dated 17-8-2016. The Authority had expressed its opinion that two products in question i.e. Selective Catalytic Reduction Honeycomb ('SCR') and SCR with Ammonia Slip Catalyst Honeycomb ('SCR with ASC') were classifiable under the Custom Tariff Heading (CTH) 3815 19 00 and CTH 3815 12 10 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter to be referred as 'CTA').

4. The importer sought an opinion from the authority with respect to the correct classification of SCR and SCR with ASC. The SCR is composite of Titanium dioxide (Ti02) - 79%; Tungsten tri-oxide (WO3) - 8%; Glass fibers - 11% and Vanadium Pent oxide (V2O5) - 2%. It is designed to ensure that composites of Nitrogen oxide are removed from exhaust gases emitted by machinery especially automobiles. They are selectively reduced by ammonia in the presence of oxygen. In this process, a catalyst consisting of titanium dioxide is used as it shows a high activity, selectivity and resistance. The SCR is a catalytic preparation used for reducing nitrogen oxides outside the automobile engine cylinders. Nitrogen oxides are converted to nitrogen and water by adding ammonia to exhaust gas on the surface of the catalyst and this technology used to reduce nitrogen oxide emissions from the diesel exhaust to harmless nitrogen (N2) and water (H20) using ammonia as reactant.

5. The Authorities issued notice and received responses from three Commissionerates of Customs. The responses were varied and the Commission- erates expressed that the two products were classifiable under different combina tion of heads. According to the opinion of Principal Commissioner of Customs, Air Cargo, Chennai, the SCR was classified under CTH 3815 19 00. Another Commissioner of Customs i.e. Patparganj, Delhi, opined that SCR was classifiable under CTH 8421 39 90. The opinion of subject expert, from the IIT, sought is as under :-
"5
I am of tile considered opinion that the products proposed to be imported by IBIDEN should not be considered to be part of Diesel Internal Combustion automobile engine. Further, in my view, they should also not be considered to be conventional air purifier or filter technology or simple oxidation catalyst used for converting carbon monoxide into carbon dioxide in automobiles.
In my view the product under discussion are of wider applications and are catalysts made from complex active metal oxides, which also require for operation a supporting reducing agent (such as NH3) for selective reduction of desired pollutants (NOx)."

6. The Authority was of the opinion that SCR was classifiable as CTH 3815 19 00 and SCR with ASC was classifiable under CTH 3815 12 10 is final on this. The relevant portion reads as under :-
"10. Finally, it is to be examined if SCR and SCR with ASC are classifiable under CTH 3815. Chapter 38 of the Customs Tariff covers 'Miscellaneous Chemical Products' and CTH 3815 covers 'Reaction initiators, Reaction ac-celerators and Catalytic preparations not elsewhere specified or included' -. The product in question functions only as a pass through apparatus of catalytic preparation, wherein the NOx passing through ammonia enters through one end of SCR and post chemical reaction, exits at other end by breaking down into N2 and H2O. Therefore, SCR and SCR with ASC are catalytic preparations, not elsewhere specified or included. This view is also confirmed by the expert opinion dated 29-7-2016 obtained from Dr. Shanta-nu Roy, Professor, Department of Chemical Engineering, IIT, Delhi concluding that goods in question are catalysts made from complex active metal oxides, which also require for operation a supporting reducing agent (such as NH3) for selective reduction of desired pollutants (NOx). It is also to be observed that the Ruling No. DE3736/13-1 of Binding Tariff Information System of European Commission, classified "Selective Catalytic Reduction Honeycomb " under Heading 3815 and said Ruling was brought to our notice by the applicant. It is to be noted that no Commissionerate has furnished views against said expert opinion except Commissioner of Customs (Import), ICD, Tughlakabad, New Delhi, who agreed with the classification proposed by the applicant inter alia stating that SCR (Selective Catalytic Reduction) is classifiable under CTH 3815 19 00. It is observed from the above that undoubtedly the subject products are classifiable under CTH 3815 and specifically SCR under CTH 3815 19 00. However, Commissioner, of Customs (Import), ICD, Tughlakabad, New Delhi proposes classification of product SCR with ASC under CTH 3815 12 90 i.e. supported catalysts with precious metal or precious metal compound, other than of platinum or palladium catalysts with base of activated carbon. However, applicant proposes classification under CTH 3815 12 10 as supported catalysts with precious metal or precious metal compound of platinum or palladium catalysts with base of activated carbon. It is admitted fact that SCR with ASC will contain PGM i.e. Precious Group of Metals. However, the precious metal has not been specified. Applicant proposes to place the product under head "platinum or palladium catalysts with base of activated carbon", which indicate that the PGM in the product would be platinum or palladium. Therefore, it would be classifiable under CTH 3815 12 10. In view of foregoing, we hold that SCR (Selective Catalytic Reduction) is classifiable under CTH 3815 19 00 and SCR with ASC (Selective Catalytic Reduction with Ammonia Slip Catalyst)' is classifiable under CTH 3815 1210."

7. Learned counsel urges that the Ruling Authority is incorrect and emphasises the expression 'with precious metal or precious metal compounds as the active substance' in 'TI 3815 12' and submits that in the circumstances, the classification of SCR with ASC as falling under 3815 12 10 is incorrect. Learned counsel relied upon the opinion of the expert and submitted that it did not support the applicant's position and that there is nothing on the record to suggest that the precious metals were used as an active substance - rather they were only used as a coating for the ASC (Ammonia Slip Catalyst).

8. The facts noticed previously would show that there is difference of opinion amongst the various Commissionerates. Apparently, two Commission-erates have expressed opinions, particularly, favouring the applicant's view, whereas the third Commissionerate i.e. Patparganj Commissionerate, has taken a contrary view. In the light of the opinion, the Authorities appear to have resolved that controversy. By itself, this resolution of the controversy, in our opinion, is not premised upon a grave or erroneous understanding of the law. Moreover, at the time of the import, the likely effect of the classification is the same. In other words, where the products are classifiable under one sub-head of Chapter 3815 or the other, the duty impact is the same. The question, therefore, as of now is really academic.

9. In these circumstances, the Court is of the opinion that in the facts of the case, there is no justification to interfere with the impugned order of the Authority.

10. The writ petition along with pending application is dismissed accordingly.

Equivalent 2017 (348) ELT 0220 (Del.)