1. The question for decision in h appeal is interpretation of the word 'small' used in Chapter Note 3 (C) of Chapter 25 of First Schedule to Customs Tariff Act, 1975 hereinafter: called 'Customs Tariffallied question is what quantity or percentage content of other oxides in the present case Chromium Oxide CraO8 would dis-entitle the goods imported by the appellants to classification as dead burnt (sintered) magnesite or magnesia hereinafter called (DBM) under Heading 25.01/32 of the Customs Tariff read with Exemption Notification No. 80-Cus. dated 1.3.1982 as subsequently amended by Notifications No. 115/83-Cus dated 30.4.1983. No. 155/83 dated 27.5.1983 and No. 114/84 dated 26.4.1984, Further question is whether the goods imported are classifiable under Heading 25.01/32 of Customs Tariff or Heading 38.01/19 as Misc.
Chemical products 2. Though not very material, the Collector of Customs, Calcutta in his order describes the imports as follows : Importation of Britmag 88% Mgo (1) Per S.S. Bengal Progress Rot No. 365/84 Line No. 7W.R. No. 4015 dt. 30.8.198 (2) Per S.S. Bengal Progress Rot No. 388/84 Line No. 6 S.R. No. 4012 dt. 30.8.84 (3) per S.S. Bengal Progress Rot No. 498/84 Line No. 8 W R. No. 4705 dt.
22.10.1984 (4) per S.S. Bengal Progress Rot No. 458/84 W.R. No 4621 dt 18.10.1984 (5) per S.S. Bengal Progress Rot No. 458/84 Line No. 191 W.R. No. 4622 dt. 16.10.84 (6) Importation of Britmag 215 PT, Britmag 15 CP per S.S. Bengal Progress Rot No. 255/84 Line Mo. 30 W. R. No. 1778 dt. 28.5.1984" In the Show Cause notice dated 12.7 1985 issued by the Asstt.
Collector of Customs (Appraising Group I) Calcutta, the particulars of imports in respect of which demand of differential duty of Rs. 24,50,588.00 was raised gives the particulars of these imports as below. This Show Cause notice, as would be seen, refers only to 6 consignments. This show cause notice was further amended by letter dated 24.7.1985 of the Assistant Collector and the demand of extra duty said to be Rs. 31,55,552.07 instead of Rs. 24,60,588/- as originally demanded by show cause notice dated 12.7.1985 (Annexures C & E of the Memo of Appeal) 1. T.M. No. S43-923/1/84 A Ex. ss. Bengal Rs. P. Progress Rot No. 388/84 Line 7 B/E WR 4013 dt. 30.8.1984.
4,09,432.90 ______________________________________________________________________________ 1 2 ______________________________________________________________________________ 2. T.M. No. S 43-924/1/84 A Ex. ss. Bengal Rs. Progress Rot No. 388/84, Line 6 B/E WR 16.10.1984 2,01,624.54 _____________ ______________________________________________________________________________________ During arguments, Shri K. V. Kunikrishnan gave a chart inter-alia containing consignment particulars and other details. The particulars on merits which number 7 are as follow and correctness of these particulars was not disputed by Sh. Sunder Rajan, Departmental Representative for the respondents ________________________________________________________________________________________ Sr. No. Consignment Quantity Amount of duty particulars in MT paid _________________________________________________________________________________________ 28.5.1984 118.620 1,65,159.83 _______________________________________________________________________________________ At page 12 of the Memo of appeal, particulars of 7 consignments are also set out. There are no doubt minor discrepancies as to dates and quantities but in view of reproduction above of the portion of the order of the Collector and the undisputed chart, further reproduction of page 12 of Memo of appeal appears unnecessary.
3. It appears that the appellants cleared the imported consignments in terms of Heading 25.01/32 read with Notification No. 80-Cus dated 1.3.1982 as amended and samples of consignments were taken These samples were subjected to tests by the Deputy Chief Chemist of the Customs House. After receipt of the test report, the Assistant Collector of Customs felt that the consignments did not merit classification as dead burnt magnesia under heading 25.01/32 of the Tariff but as Magnesite Chrome Type Refractories material. This led to the Show Cause notice already referred to above. After following usual procedure of reply and hearing, the Collector of Customs, Calcutta held that goods imported are not dead burnt magnesite as the chromium oxide content in the same exceeded 0.9%. According to him, the goods are not dead burnt magnesite because they contain chromium oxide varying from 4.3% to 4.9% The Collector for coming to this conclusion, after referring to a number of authorities, relied only on Encyclopedia of Chemical Technology by Kirk Othmer which according to him is an internationally recognised book He made use for the purpose of specifications of burnt magnesia bricks which sets out the chromium oxide content at 0.9%. He confirmed the demand of differential duty.
Aggrieved with this decision, the appellants have filed appeal to this Tribunal.
4. Shri K. V. Kunhikrishnan, learned Consultant representing, the appellants, explained that Britmag is only a trade name of the product.
He also explained that Britmag 215 PT did not contain any chromoum oxide and there is no dispute about the same. This was also to disputed by Sh. Sunder Rajan, learned Departmental Representative representing the respondents. About Britmag 15 CP which contains 14 09% /T nearly 15% chromium oxide, he stated that he would not press his claim f classification of the same as DBM.5. At the outset. Shri K. V. Kunhikrishnan submitted extras from Glossery of terms relating to Refractory materials from IS-404-1967. of these terms, following 2 for the purpose of this appeal, are material- 2. 48 : Sintering : The bonding of powdered material by solid state reaction at a temperature lower than 6.4 : Dead Burned : Rendered unreactive by appropriate heat treatment.
Sh. Kunhi Krishnan referred to analysed test reports on the samples (excluding britmag 15 CP and 215 PT) Nos. S-43-923/I/84 -dated 18.9.1984 Britmag 88% MGO (5 CPT DBM) chromium 3% by weight, No.S43-924/ T/84-A dated 13.9.1984 Britmag 88% MGO (5 CPT DBVI) Chromium 4.7% by weight. S43/2043/I/84-A dated 7.2.1984 Britmag 88% MGO Chromium content 4.9% by weight. S43-2042/I/84A dated 19.11.1984 Britmag 88% MGO DBM chromium content 4.8% by weight.
6. In support of the argument that addition of 5 to 7% of chromium oxide in DBM would not alter its technical character and it would still be DBM, Sh. Kunhikrishnan relied on the following certificates : 1. Certificate dated 28.12.1984 issued by Shri M. K, Chatterjee, Prof. of Ceramic Engg., Head of Department of Chemical Technology, University College of Science & Technology, Department of Chemical Technology, Calcutta ; 2. Certificate dated 16.5.1986 by Sh. K. N. Srivastava, Chief, Techno- logy Utilisation, National Metallurgical Laboratory, Council of Scientific & Industrial Research Jamshedpur ; 3. Certificate dated 23.7.1986 of Prof. M. K. Sarkar. Head, Chemical Engineering Department, Indian Institute of Technology, Delhi 4. Certificate dated August 6, 1986 of Dr. T. V. Prasad, Refractories Specialist, Engineers India Ltd., New Delhi; 5. Certificate dated 1.9.1986 of Dr. B.V.S. Subba Rao, Deputy Director, Defence Metallurgical Research Laboratory, Hyderabad; 6. Correspondence between North Refractories Association (Letters dated 9.1.1987 and 2.1.87) and Directorate General of Technical Development dated 1 9.1986 ; 7. Bharat Refractories letter dated November 7, 1986 addressed to the appellants.
7. Shri Kunhikrishnan also referred to notifications No. 241/85-Cus dated 1.8.1985 and No. 474/86-Cus dated 28.11.1986 in support of the argument that other oxide content could be upto 6% and this would not disqualify DBM from such classification. He submitted that though these notifications were later in point of time, there is no reason why these could not be used to interpret the word 'small' in Chapter Note 3 (C) of Chapter 25 of the Customs Tariff. He also submitted that the Collector of Customs was in error in making use of the specifications of burnt magnesia bricks given in Kirk-Othmer's Encyclopedia of Chemical Technology in respect of appellants product which was different from bricks. On these grounds, Sh. Kunikrishnan urged that upto 6% content of 'other oxides in the present case Chromium oxide Cr2Os, could be small quantity with reference to DBM and would not disentitle for classification "of the above stated DBM from such classification under Heading 25.01/32.
8 Sh Sunder Rajan, learned Departmental Representative representing the respondent-Collector of Customs, in his arguments did not dispute that the Collector had made use of his specification relating to refractories bricks for classification of the appellants product which was not refractory bricks but raw material for the same. He generally defended the orders of the respondent. In his arguments, he relied on the following documents : 1) Regional Research Laboratory, Bhubaneswar letter dated 25/26.3.1986, 2) Technical opinion dated 13.10.1986 of the Deputy Chief Chemist, Customs House, Calcutta These, wherever necessary, would be referred to later Both the parties stated that on the point, there is no precedent and the word 'small is not defined in any statute. They also agreed that the IS1 standards, a copy of which was placed on file, does not refer to the imported product in question which has been sintered.
9. We have carefully considered the submissions made by the parties. In absence of definition of word 'small' in the statute, it would have to be understood in its etymological sense or as understood commercially by the people dealing with the goods. To us, it appears that so much percentage or quantity of other oxides in DBM, in the present case Chromium oxide should be understood as being a small quantity for the purpose of the notes as does not alter its character as DBM. In the light of this, if we examine the material placed by the appellants on record, most of which comes from sources which we have no reason to disbelieve, we find that according to certificate dated 28.12.1984 by Shri M.K. Chatterjee, Prof, of Ceramic Engineering and Head of Department of Chemical Technology, University College of Science & Technology, 4 to 6% content of Chromium oxide would make the product improved DBM. According to him, the addition of a few percent Cr2O3 does not alter the technical name of DBM.10. Sh K N. Srivastava, Chief Technology Utilisation, National Metallurgical Laboratory, Council of Scientific & Industrial Research, Jamshedpur in his certificate dated 16.5.1986 says as follows: In this connection, it may be stated that to obtain a good dead burnt magnesite, it is well-known that certain mineral additives are added to natural magnesite in pre-determined quantities. In India it is the standard practice to add iron oxide. In foreign countries, it is also the practice to add chromium containing minerals in order to obtain a good dead burnt magnesite. The CraO8 content of such dead burnt magnesite may be even upto 6% and such magnesites are commercially manufactured abroad. We are therefore, of the considered opinion that the addition of CraO3 to the limit specified above will not technically alter the name of the dead burnt magnesite and therefore these can be termed as dead burnt magnesite (DBM).
11. Prof M. K. Sarkar, Head, Chemical Engg. Department, Indian Institute of Technology, Delhi in his certificate dated 23.7.1986 inter-alia certifies that addition of Cr2O3 to an extent of 6 to 7% will not alter the technical name of dead burnt magnesite as it is only a variety of DBM.12. According to certificate dated 6th August, 1986 of Dr. T. V.Prasad, Refractories Specialist, Engineers India Ltd., New Delhi, other oxides could be approximately upto 5% of the finished products depending upon the purity and nature of supporting material. According to this certificate, DBM containing a small addition of Cr2O3 as mineraliser and currently manufactured and marketed abroad is in no way, different from other types of DBM and should be treated technically as DBM for the purpose of classification.
13. According to certificate dated 1.9.1986 of Dr. B.V.S. Subba Rao, Deputy Director, Defence Metallurgical Research Laboratory, Hyderabad, 5 to 6% Chromium oxide content does not alter the technical name of DBM as classified under Customs Tariff Act.
14. The appellants had addressed letter dated 5th November, 1986 giving out the commercial composition of the 6 brand names 31 PE 222 215 PT 15 CP Britmag Basit A 88% MgO It is seen that Cr2O3 content about 15CP was 14 29%. Nevertheless, Dr N.R. Sircar, General Manager (Technical) by his communication dated "7th November, 1986 addressed to the appellants, replied The chrome-containing varieties mentioned above are known in Commercial parlance, as a variety of Dead Burnt Magnesite only.
15. The above apart, the Directorate General of Technical Development (Ceramic and Refractory Dte) Govt. of India by their letter dated 1.9.1986 (Sh. L.T.P. Sinha, Development Officer) called upon the Indian Refractories Makers Association for confirming whether 5 CPT DBM would be eligible for concessional rate of import duty. They also called upon the Association as to what would constitute a small quantity of other oxides- over 4 per cent or below 1 per cent. By their letter dated 2.1.1987 addressed to Sh. L.T.P. Sinha, the Association reproduced the Customs definition of magnesia and stated that the description would suffice. By another letter dated 9.1.1987 in continuation of the earlier letter, the Association wrote as under I write in continuation of the IRMA letter dated 2nd January, 1987 (copy enclosed).
It is further noted that the issues raised in your letter are two fold (a) what constitutes small quantities of other oxides' and (b) whether britmag 5 CPT is dead burnt magnesite.
After careful consideration in our Committee we have reached the following conclusion : (1) Small quantities of other oxides can be within 5% since oxides like lime, Silica, Iron, Chrome etc. are each within this percentage for Dead Burnt Magnesite.
(2) With specific reference to Britmag 5 CPT, we feel that according to above clarification of the definition, this would come within the purview of dead burnt magnesite and should be treated as such 16. Notification No. 474/86-Cus. dated 28.11.1986 also gives some clue as to what should be the other oxide content in DBM. This notification though later in point of time grants partial concession in respect of customs duty where magnesia oxide the main ingredient in the DBM is not less than 90% by weight and silica content less than 4%. Adding the two together, it would appear that the remainder content of DBM could be upto 6%. Notification No. 241/85 dated 1.8.85 does not set out the magnesite oxide content of DBM. But if the same be taken at being not less than 90%, the same result would follow." 17. As against the above material adduced by the appellants, the Collector in the impugned order relied on specifications of Refractories bricks which would clearly not apply to the imported product DBM. It may be stated that when DBM is converted into refractory, there is some combustion loss and this might explain the very low 0.9% Cr2O3 content in the refractory bricks to which Collector has made reference relying on the Kirk-Othmer's Encyclopedia of Chemical Technology. Clearly, this specification could not have been applied for judging the small quantity content of DBM Cr2O3.
18. As for Shri Sunder Rajan's reliance on the Regional Research Laboratory, Bhubaneswar, Orissa's letter 25.3.1986 (Shri J.R. Sahu, Scientist-in-Charge), it refers to dead burnt chrome and says it should not contain any chromium oxide. Rest of this letter is not very relevant for the issue involved in the present appeal. This letter does not help the respondents.
19. The next opinion is dated 13.10.1986 of Deputy Chief Chemist.
Customs House, Calcutta. After setting out the issue for opinion and whether refractory material produced by dead burning of magnesite which contains Cr2O3 to the extent of 4.9% by weight can be considered as DBM for the relevant heading gives out the source of obtaining magnesite.
It refers to composition of refractory raw material in Austria, Greece and US and then says that in all the three cases, Cr2O3 content is nil.
Then it refers to basic products (bricks) and the IS-1764/61 specification for Magnesite Refractories or Steel Plants and after saying all this concludes that it is amply clear that DBM does not contain chromium oxide Cr2O3 to the extent of 4%. It refers again to 0.9% Cr2O3 content in refractory brick as given by Encyclopedia of Chemical Technology by Kirk Othmer. It adds, Any authority is not available which states that chromium oxide to the extent of 5% can be added during sintering of natural magnesite or sea water magnesite.
20. Technical opinion dated 12.4.1984 after setting out the chemical composition opines that sample under reference may not be recorded as dead burnt magnesite for the purposes of the notification (No. 80-Cus.
dated 1.3.1982 as subsequently amended). We do not think that this information could carry any weight before a quasi-judicial or judicial authority.
21. The other two documents--Statement of Test Results and Statements of imports do not require any comments nor are they helpful for answering the point in issue. The only important document is letter dated 30.12.1986 from Tata Refractories Ltd. According to this letter, in the opinion of Tata Refractories Ltd., DBM should not contain any Cr2O3. At most, it may have small quantities upto 0.2 to 0.3% due to contamination from the rotary kiln lining at the time of dead burning.
They have also enclosed with this letter a Chemical analysis of DBM imported by them. It does not show any Cr2O3 content.
22. We have in paras 6, 7, 9 to 16 referred to various materials and evidence adduced by the appellants which would show what could be the Cr2O3 content in DBM which will not alter its quality. According to Sh.
M.K. Chatterjee, it could be 4 to 6%. According to Shri K.N. Srivastava upto 6%, according to Prof. M. K. Sarkar 6 to 7%, according to Dr. B.Prasad 5%, according to Dr. B.V.S. Subba Rao 5 to 6%. Dr. N.R. Sircar's opinion for the reasons set out in para 14 does not appear readily acceptable. Indian Refractories Makers Association in reply to DGT&D opined that other oxides can be within 5%. Most of these letters come from Government sources and there is no reason to doubt their veracity.
All these find support from the two notifications to which we have referred to above. In view of all these evidence, the opinion of Tata Refractories or Deputy Chief Chemist that DBM should contain 9% or nil Cr2O8 appears unacceptable.
23. The cumulative effect of the acceptable evidence adduced by the appellants leads us to conclude that upto 5% content by weight of CraO8 in DBM should be considered a small percentage for the purposes of the note 3 (C) of Chapter 25 of the Customs Tariff and DBM containing upto 5% of Cr8Os would be eligible for benefit of exemption notification No.80-Cus. dated 1.3.1982 as amended.
24. The demands and refunds if any, shall be worked out in the light of above findings with consequential relief, if any. The appeal is disposed of in the foregoing terms.