CESTAT Hyderabad Sets Aside ₹26.60 Lakh Customs Duty Demand, Rules Imported Quicklime Is Not Chemical Product

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the appeal filed by V I S A Steel Ltd., holding that imported quicklime is classifiable as lime under the Customs Tariff and not under the tariff entry applicable to chemically defined compounds. The tribunal set aside a differential customs duty demand of ₹26.60 lakh, along with the interest and penalty.

A bench of Judicial Member Angad Prasad and Technical Member P. Anjani Kumar observed:

“There is no dispute on the fact that the imported goods in the present case are 'quicklime' and thus by applying GIR1 it would be classifiable under tariff item 25221000.”

The dispute arose after V I S A Steel Ltd. imported quicklime through 11 Bills of Entry and classified the goods as lime under the Customs Tariff. The Customs Department disputed the classification and issued a show cause notice seeking to recover ₹26.60 lakh in differential customs duty, along with interest and penalty. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld that decision.

Before the tribunal, V I S A Steel Ltd. argued that the issue was no longer open to debate because the Hyderabad Bench had already decided the same classification dispute in Jindal Stainless Ltd. in favour of the importer. The Department supported the order passed by the Commissioner (Appeals).

Accepting the appellant's contention, the tribunal relied on its earlier ruling, which held that Chapter 25 covers mineral products such as quicklime, while Chapter 28 applies to separate chemical elements and chemically defined compounds. Since there was no dispute that the imported goods were quicklime, the tribunal held that they fell within the specific tariff entry covering quicklime.

The tribunal observed, “There is no case for application of Rule 3 of GIR in this case. In view of the above, we are of the view that the imported goods are appropriately classifiable under CTH 25221000.”

The tribunal also noted that the same issue had earlier been decided in favour of importers by the Principal Bench, the Kolkata Bench and the Mumbai Bench of the CESTAT.

It further observed that the Supreme Court had affirmed the Mumbai Bench's decision in Viraj Profiles Ltd., settling the classification of imported quicklime under the tariff entry applicable to quicklime.

Holding that nothing survived for consideration in view of the settled legal position, the tribunal allowed the appeal and set aside the differential customs duty demand, along with the interest and penalty.

For Appellant: Satyanarayan Gupta, Chartered Accountant

For Respondent: Kakarala Prasanth Kumar, Authorised Representative