2007(04)LCX0181

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE

Dr. S.L. Peeran, Member (J) and Shri T.K. Jayaraman, Member (T)

MPR Refractories Ltd.

Versus

Commissioner of Central Excise & Customs, Visakhapatnam

Final Order No. 498/2007, dated 30-4-2007 in Appeal No. C/7/2005

Cases Quoted -

DEPARTMENTAL CLARIFICATION QUOTED
C.B.E. & C. Circular dated 24-3-1986 [Para 5]

Advocated By -

Shri V.J. Sankaram, Advocate, for the Appellant.
Shri Anil Kumar, JDR, for the Respondent.

[Order per : T.K. Jayaraman, Member (T)]. -

This appeal arises from Order-in-Appeal No. 30/2004(V)CH, dated 30-9-2004 passed by the Commissioner of Customs & Central Excise (Appeals), Visakhapatnam.


2. The issue involved in this appeal is the correct classification of Brown Fused Alumina imported by the appellants. According to the Revenue, the impugned goods are classifiable under Tariff Heading 2818.20 as Aluminum Oxide other than Artificial Corundum. However, the appellants contended that the goods are correctly classifiable under CTH 26.06 as Bauxite.


3. Shri V.J. Sankaram, the learned Advocate argued that the impugned product namely Brown fused Alumina should be classified under CTH 26 only as Bauxite ore. He said that the Commissioner (Appeals) has classified it as Artificial Corundum. He said that there is lot of difference between the impugned product imported by them and the Artificial Corundum. He submitted that in artificial corundum, the percentage of Alumina will be higher than 99% whereas in the impugned product, the alumina content is only 95 to 96%.


4. The learned Departmental Representative Shri Anil Kumar informed the Bench that the Commissioner (Appeals) has given a very detailed order on the basis of technical literature and also the HSN Explanatory Notes. Hence, he requested the Bench to uphold the impugned order.


5. We have gone through the records of the case carefully. The description of the item imported is Brown Fused Alumina. The appellant company is known as M/s. MPR Refractories. At the time of import, the goods were classified under CH 2606 as Aluminium ores. Later, before finalisation of the assessment, Show Cause Notice was issued for classifying the items under Chapter 28. The original authority has given a very clear finding that Brown Fused Alumina cannot be considered as falling within the category of Bauxite. He has negatived the contention of the appellant that there is no difference between Calcined Bauxite and Brown Fused Alumina as all the ingredients present in Bauxite are present in Fused Alumina. We also do not agree with this type of argument. If the ingredients in Bauxite and the ingredients in Brown Fused Alumina are same, it does not mean that both are one and the same. For example, the percentage of A1203 in Bauxite is 89.05% whereas in BFA, it is 95.00%. The percentage of S1O2 is 35.00% in Bauxite whereas in BFA, it is 0.62%. We do not want to enumerate the percentage of other ingredients. A reading of technical literature shows that in order to manufacture BFA, Bauxite is required. BFA is manufactured by a process of fusion of calcined bauxite, coke and iron borings in an electric arc furnace whereby the coke reduces iron dioxide, silicon di-oxide and part of titanium dioxide. We agree with the finding of the original authority that the treatment involved in this process is not mere washing and calcinations but further chemical reaction involving reduction of iron oxide, silicon dioxide, titanium dioxide etc. There is always a difference between calcinations and fusion. Calcination is heating the ore in order to remove the volatile materials. The temperature in the process of calcinations is much less than that of fusion. Fusion is a process wherein the material is heated so that it becomes a liquid. Therefore, calcined bauxite cannot be the same as BFA. We are not accepting the contention of the appellant that the impugned item is only Bauxite ore and should be classified under CTH 2606. The original authority further relied on the test report, according to which, the impugned goods are composed of alumina. In fact, the test report is as follows.
"The sample is in the form of grey crystalline mass composed of alumina."
On the basis of the above test report, the original authority classified the item under CTH 2818.20 as Aluminum Oxide other than Artificial Corundum. After holding the above classification, he confirmed the demand of Rs. 11,83,989/-which is the differential duty. The appellant approached the Commissioner (Appeals). The Commissioner (Appeals) has given very elaborate findings in paras 7 to 16 of the impugned order. She has extracted the relevant portions of Chapter 26 of the Tariff, which relates to Ores, Slag and Ash and Chapter 28 relating to Inorganic Chemicals. Heading 28.18 covers Artificial Corundum and also Aluminum Oxide and Aluminum Hydroxide. The original authority classified the impugned product under CSH 2818.20 which refers to Aluminum Oxide, other than Artificial Corundum. However, while upholding the finding of the original authority that the impugned product would not fall under Chapter 26, the Commissioner (Appeals) has given a finding that the impugned product is nothing but Artificial Corundum. The CBEC Circular dated 24-3-1986 clarifies that Calcined Bauxite, used for manufacturing refractory bricks and grinding wheels are classifiable under CTH 26.01. This is not relevant for the impugned product because the impugned product is distinct from Calcined Bauxite. In fact, in order to manufacture the impugned product, Calcined Bauxite is needed. She has reasoned that the impugned item cannot be classified under CH 2818.20 as decided by the lower authority for the simple reason that according to HSN Note, the product which comes under 2818.20 is "white powder, insoluble in water, with specific gravity about 3.7" whereas the test report in the present case indicates that the item is a grey crystalline mass. Further, she has relied on the technical literature to conclude that Fused Alumina is nothing but Artificial Corundum. The book "Science and Technology Handbook" edited by L.D. Hart, has a detailed paper on the subject. She has quoted the following to hold that Fused Alumina is nothing but Artificial Corundum.
" fused alumina (otherwise called artificial corundum or electrocorundum) was first made by " (emphasis supplied)

"Many varieties of fused alumina appeared on the market. They differ mainly due to composition (alumina content and kind and amount of alloying oxide) and crystal size (being a function of melt solidification rate). The different varieties of fused alumina are : (1) brown; (2) white; (3) pink and ruby; (6) black."

5.1 We wanted to find out whether there is any difference between BFA and Artificial corundum. A search in the internet was made. We could find a document of the American Customs wherein certain Anti Dumping investigation was undertaken in respect of BFA from China. In the said document, it is stated that Artificial corundum is otherwise known as Brown Fused Aluminum. We are giving an extract of the document.

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-882]

"Notice of Preliminary Determination of Sales at Less Than Fair Value : Refined Brown Aluminum Oxide (Otherwise known as Refined Brown Artificial Corundum or Brown Fused Alumina) from the People's Republic of China."

(Source: http://a257.g.akamaitech.net/7/257/2422/14mar20110800/edocket.acce ss. gpo. gov/2003/03-11171.htm)

Further, we could also find from the site of Japanese Customs Laboratory that chemically, it is difficult to find distinction between alumina and artificial corundum. However, it is stated that through Electron Microscope, one can find the difference. The impugned goods are crystalline in nature. Therefore, the conclusion that they are artificial corundum is not without substance. The Commissioner (Appeals) has also relied on the HSN Notes relating to Artificial Corundum wherein it is stated that 'Artificial Corundum is formed by fusing aluminum oxide in an electric furnace. The aluminum oxide may contain small proportions of other oxides (e.g. titanium oxide, chromium oxide) either deriving from the natural starting material (bauxites) or added to improve the hardening by modifying the colour. Mixture of Artificial Corundum and other substances is excluded from the scope of Chapter 28.' However, the Commissioner (Appeals) has stated that in the present case, there is no justification to classify the item under Chapter 38. She has also referred to Notification No. 21/2002-Cus., dated 1-3-2002 at SI. No. 59(5) wherein Brown Fused Alumina is indicated to fall under Chapter 28. We do not find any infirmity in the finding of the Commissioner (Appeals). The appellant has not made a strong case to classify the impugned goods under Chapter 26 whereas there are sufficient reasons to hold that the impugned product is only Artificial Corundum. Therefore, we dismiss the appeal.
(Pronounced in open Court on 30-4-2007)

Equivalent 2007 (214) ELT 0342 (Tri. - Bang.)

Equivalent 2007 (082) RLT 0328 (CESTAT-Ban.)