Case Law Details
In re Suraj Constructions (CAAR Mumbai)
CAAR rule that the subject goods ‘Clear Float Glass’ with absorbent layer on only one side would merit classification under heading 70.05 and more specifically, under subheading 70051090 of the first schedule to the Customs Tariff Act, 1975. The said imports shall also be governed by the provisions of Notification No. 37/2020-Customs (ADD) dated 11.11.2020 supra, that seeks to impose definitive anti-dumping duty on Clear Float Glass, originating in or exported from Malaysia and imported into India. Further, the benefit of Sr. No.934 of the table appended to the notification no. 46/2011-Cus., dated 01.06.2011, shall be extended to the subject goods in terms of the said notification, provided the applicant in each case of import shall produce evidence as to the origin of subject goods before the Deputy/Assistant Commissioner of Customs.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
1. M/s Suraj Constructions (hereinafter, ‘the applicant’) has filed an application for advance rulings on 03.03.2022. On scrutiny of the application, certain infirmities were noticed, and therefore, a communication by way of a deficiency memo was sent to the applicant to re-submit the application after removal of such deficiency. The applicant, vide their communication dated 16.03.2022, resubmitted their application which was received on 21.03.2022. Accordingly, the said application is being taken up for decision.
2. The applicant is a partnership concern involved in the business of trading in glass and mirrors. The applicant is also registered under the GST with registration number 33ABEFS8820K1ZY. The applicant has obtained an IEC and is intending to import “Clear Float Glass with Absorbent layer” (herein after, the subject goods), from M/s. Xinyi Energy Smart (Malaysia) Sdn Bhd, Malaysia and M/s. Kibing Group (M) Sdn, Bhd, Malaysia. The subject goods are stated to be used for decorative, industrial or automotive purposes. The subject goods possess an absorbent layer on one side of the glass only. The applicant is of the view that the subject goods are classifiable under sub-heading 7005 1090. The applicant intends to claim the benefit of ‘Nil’ rate of customs duty under exemption notification no. 46/2011-Cus., (Sr. No. 934), dated 01.06.2011. The said notification is issued under ASEAN India Free Trade Area Preferential Tariff, which grants benefit of ‘Nil’ rate of duty for goods falling under CTH 7005 1090, if the same are imported from Malaysia.
3. The applicant has submitted that the subject goods are clear float glass, with an absorbent layer, which is fluorescent under UV illumination. The subject goods are not wired, not tinted or green in colour. It is submitted that the heading 7005 10 only covers non-wired glasses having an absorbent layer and the sub-headings 7005 21 to 7005 29 deal with non-wired glasses which do not have an absorbent layer. Therefore, the more appropriate classification is 7005 1090. The applicant has also submitted that domestic manufacturers of identical products classify the goods under sub-heading 7005 1090. It is stated that the identical product was imported through the port of Nhava Sheva from Malaysia and after ascertaining that the product had an absorbent layer, customs accepted the importer’s classification under sub-heading 7005 1090. It is also submitted that majority of the imports into India of float glass having absorbent layer have been classified under sub-heading 7005 1090 as evident from the import data collected from the websites Zauba and Planetexim and reliance has been placed upon the said data. They also placed reliance upon Ruling No. CAAR/Mum/ARC/36/2021 dated September 24, 2021 wherein, in an identical case, it was ruled that clear float glass having an absorbent layer is classifiable under sub-heading 7005 1090. In the afore said backdrop, rulings with respect to the following has been sought:
(i) The classification of the subject goods.
(ii) The eligibility of the exemption notification no. 46/2011-Cus., dated 01.06.2011 for the subject goods and,
(iii) The eligibility of the exemption notification no. 46/2011-Cus., dated 01.06.2011 for the subject goods in the event of wrong mention of HS code in the certificate of origin.
4. The applicant, in their application, have indicated their preference for importing the subject goods through the ports under the following jurisdictional authorities: –
1. The Commissioner of Customs, Chennai-II (Import Commissionerate),
2. Principal Commissioner of Customs (Chennai VII) (Air Cargo Commissionerate),
3. The Commissioner of Customs (Nhava Sheva -III), Jawaharlal Nehru Customs House,
4. The Commissioner of Customs, Cochin Custom House,
5. The Commissioner of Customs, Visakhapatnam Port, Visakhapatnam &
6. Commissioner of Customs, Hyderabad GST, Hyderabad
Accordingly, copy of the application was sent to the above jurisdictional authorities, seeking comments on the application for advance rulings. However, no comments have been received from the jurisdictional Principal Commissioners/ Commissioners of Customs, on the impugned subject matter, except the Principal Commissioner of Customs (Air Cargo), Chennai-VII and the Commissioner of Customs, Nhava Sheva-III, which are discussed here-in-after.
5. The hearing was conducted in the virtual mode on 12.04.2022. Shri. Hari Radhakrishnan, advocate, from M/s. AGOL Associates appeared on behalf of the applicant. S/Shri. Kaushalendra Singh, Appraising Officer, Gr. III, from Nhava Sheva and Shri. Monu Sachar, Appraising Officer, Gr. III from ACC, Chennai appeared for the hearing. Shri. Harshanand, Dy. Commr was also present for the revenue.
5.1. The learned advocate explained the product and the reason for seeking advance rulings. Shri. Singh and Shri. Sachar were of the opinion that while the classification sought by the applicant is correct, the benefit of exemption sought under ASEAN FTA couldn’t be extended if the country of origin certificate is not mentioning the HS code which is listed in the notification. Shri. Harshanand couldn’t be seen or heard. Shri. Singh and Shri. Sachar were requested to convey their comments at the earliest.
5.2. In the comments on the aforesaid issue from the office of the Commissioner of Customs (Nhava Sheva -III), Jawaharlal Nehru Customs House, it is stated that serial no. 934 of Notification No. 46-Cus, dated 01.06.2011 levies basic customs duty @ 0% for goods having classification between CTH 7001 0020 to 70051090 whereas serial no. 935 of the said Notification levies basic customs duty @ 5% for goods having classification between CTH 700521 to 700530. Further, as per the explanatory notes, non-wired float glass having an absorbent layer is rightly classifiable under CTH 700510 and non-wired float glass without an absorbent layer is rightly classifiable under CTH 700521 and wired float glass is rightly classifiable under CTH 700530. Regarding the classification of non-wired float glass having an absorbent layer, it is opined that it is classifiable under heading 7005 1010, if it is tinted, else it is classifiable under heading 7005 1090. On the issue of admissibility of the serial no. 934 of the notification no. 46/2011-Cus., dated 01.06.2011 when imported from their overseas supplier M/s. Xinyi Energy Smart, Malaysia, it is stated that as per the overleaf notes of the attachment to the Operational Certification Procedures of the Notification No. 189 (N.T.), dated 31.12.2009, [Determination of Origin of Good under the Preferential Trade Agreement between the Governments of member states of ASEAN and the Republic of India Rules, 2009], it is mentioned that the Harmonized System Number shall be that of the importing party, i.e., India in present case. However, it is advised that in the case of M/s. Xinyi Energy Smart, Malaysia; the CTH mentioned in the country of origin certificate was 7005 2990, which do not match with the CTH 7005 1010 (tinted non-wired float glass) or CTH 7005 1090 (non-wired float glass), and thus, benefit of serial no. 934 of notification no. 46/2011-Cus., dated 01.06.2011 cannot be extended. Moreover, country of origin benefit can be granted if the CTH mentioned in the certificate matches with the correct classification of the goods mentioned in the import documents and bills of entry. It was also categorically informed that no case is pending in their port pertains to the applicants. The Principal Commissioner of Customs (Air Cargo), Chennai-VII has opined that, based on the facts submitted by the applicant, the correct classification would be 700510, subject to submission of test report to verify the authenticity of the applicant’s claim. On the issue of eligibility for the exemption benefit, as claimed, it is opined that the same would be subject to the outcome of the test report submission of requisite declaration as mandated by CAROTAR, 2020. On the third question of the applicant, the opinion is that same would be subject to the outcome of test report.
6. The issue for which the subject advance rulings have been sought can be summarized as: –
(i) Classification of clear float glass having absorbent layer
(ii) Eligibility of exemption notification no. 46/2011-Cus., dated 01.06.2011.
(iii) The eligibility of the exemption notification no. 46/2011-Cus., dated 01.06.2011 for the subject goods in the event of wrong mention of HS code in the COO.
6.1. As mentioned at para 3 above, the issue of classification of clear float glass having absorbent layer on one side and eligibility of the exemption notification no. 46/2011-Cus., dated 01.06.2011 for the subject goods was examined in the advance ruling no. CAAR/Mum/ARC/36/2021 in the case of M/s. Chandrakala Associates and the relevant portion of the said ruling is reproduced as under:-
“7. The issue for which the subject advance rulings have been sought can be summarized as: –
(i) Classification of Clear Float Glass having absorbent layer
(ii) Eligibility of exemption notification no. 46/2011-Cus. dated 01.06.2011. The notes to chapter 70 (glass and glassware) provide that —
1. this chapter……
2. For the purposes of headings 7003, 7004 and 7005:
(a) glass is not regarded as “worked” by reason of any process it has undergone before annealing;
(b) cutting to shape does not affect the classification of glass in sheets;
(c) the expression “absorbent, reflecting or non-reflecting layer” means a microscopically thin coating of metal or of a chemical compound (for example, metal oxide) which absorbs, for example, infra-red light or improves the reflecting qualities of the glass while still allowing it to retain a degree of transparency or translucency; or which prevents light from being reflected on the surface of the glass.
In the chapter 70, the heading 7005 is described as: –
Float glass and surface ground or polished glass, in sheets, whether or not having an absorbent, reflecting or non-reflecting layer, but not otherwise worked.
7005.10 —- Non-wired glass, having an absorbent, reflecting or non-reflecting layer
7005 1010 —- Tinted……
7005 1090 —- Other….
—– Other non-wired glass:
7005 21 ——- Coloured throughout the mass (body tinted), °pacified, flashed or merely surface ground
7005 29 —— Other
7005 30 —— Wired Glass
The heading 70.05 covers float glass in sheets. Its raw materials are melted in a furnace. The manufacturing process of float glass involves common glass-making raw materials, typically consisting of sand, soda ash (sodium carbonate), dolomite, limestone, and salt cake (sodium sulphate) etc. Other materials may be used as colourants, refming agents or to adjust the physical and chemical properties of the glass. The molten glass leaves the furnace and is fed on to a float bath of molten metal. On the float bath, the glass acquires the flatness of a liquid pool and later retains the smooth finish of liquid surfaces. Before it reaches the end of the bath, it is cooled to a temperature at which it is hard enough to be passed over rollers without being marked or distorted. From the float bath the glass moves through an annealing lehr, at the end of which it is cooled and can be cut. This glass is not surface ground or polished: it is perfectly flat as a result of the manufacturing process.
8. Notification no. 46/2011-Cus. dated 01.06.2011 prescribes the effective rate of duty for specified goods imported from Malaysia, Singapore, Thailand, Vietnam, Myanmar, Indonesia, Brunei Darussalam, Laos, Philippines and Cambodia (ASEAN). The said Notification makes provision to exempt goods of the description as specified in column (3) of the table appended thereto and falling under the chapter, heading, sub-heading or tariff item of the first schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the appended table, from so much of the duty of customs leviable thereon as is in excess of the amount calculated at the rate specified, provided the importer proves to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, that the goods in respect of which the benefit of the said exemption is claimed are of the origin of the countries as mentioned in Appendix-I, in accordance with provisions of the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (N.T.), dated the 31′ December 2009.
9. Notification No. 37/2020-Customs (ADD) dated 11.11.2020 seeks to impose definitive anti-dumping duty on Clear Float Glass, falling under Chapter 70 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), originating in, or exported from Malaysia and imported into India. The designated authority has recommended imposition of definitive anti-dumping duty on the imports of subject goods, originating in or exported from the subject country and imported into India, in order to remove injury to the domestic industry.”
6.2. Department of Commerce is the nodal agency in the Government of India to negotiate and finalize trade agreements. Central Board of Indirect Taxes and Customs (CBIC), being the main implementing body for tariff agreement, plays a crucial role in trade negotiations on issues such as tariff concessions, rules of origin, customs facilitation and IPR. Once a trade agreement is finalized, CBIC issues notifications for implementing tariff concessions and rules of origin, under section 25 of the Customs Act, 1962 and section 5 of the Customs Tariff Act, 1975 respectively, in order to incorporate the commitments undertaken in domestic legislation. Under a trade agreement, duty concessions are required to be extended only to such imported goods which are ‘made in’ the exporting country. Each FTA contains a set of rules of origin, which prescribe the criteria that must be fulfilled for goods to attain ‘originating status’ in the exporting country. Such criteria are generally based on factors such as domestic value addition and substantial transformation in the course of manufacture/processing. The goods imported under a trade agreement are required to be accompanied by a ‘Certificate Of Origin’ (COO) issued by the designated authority of the exporting country. The COO contains details of goods covered and originating criteria.
6.3. Chapter VAA and section 28DA were inserted in the Customs Act, 1962, vide clause 110 of Finance Act, 2020. The new section, inter-alia, provides for a basic level of due diligence on the part of an importer to satisfy himself that the claimed originating criteria have been met, and that, mere submission of a certificate of origin may not be sufficient. For this purpose, the importer is required to possess sufficient origin related information. As required in the aforesaid section 28DA, Central Government has also notified the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020) vide notification no. 81/2020-Customs (N.T.), dated 21st August, 2020, to be implemented from 21st September, 2020.
7. I have considered all the materials placed before me for the subject goods. I have gone through the submissions made by the applicant during personal hearing and the comments of the jurisdictional Principal Commissioner/Commissioner of Customs, on the impugned subject matter. The subject goods for which advance ruling has been sought, their characteristics, manufacturing process, utility etc. are already mentioned in the aforementioned paras. The subject goods are clear float glass, with an absorbent layer, which is fluorescent under UV illumination. The subject goods are not wired, tinted or green in colour. The heading 7005 10 covers non-wired glasses having an absorbent, reflecting or nonreflecting layer and the headings 7005 21 to 7005 29 deal with non-wired glasses which are tinted having absorbent layer, opacified, flashed etc. Therefore, the subject goods are appropriately covered under sub-heading 7005 1090. Based on the applicant’s submission about the country of origin and the manufacturer of the subject goods, benefits under sr. no. 934 of the table annexed to the exemption notification no. 46/2011-Cus., dated 01.06.2011, would be available, subject to the condition that in respect of each case of import, the applicant would have to produce evidence before the Deputy/Assistant Commissioner of Customs as to the origin of subject goods.
8. On the issue of whether the benefit of the said exemption would be available even if the subheading mentioned in the COO differs for 70051090, the applicant & their authorised representative were asked to explain the context of the said question. It appears that the subject goods are being exported from Malaysia under its code 70052990. The applicant has submitted a copy of the letter ref. no. MITI.700-2/26 J1d.6(38) dated 30.04.2021 from the Director of Trade and Industry Cooperation, Ministry of International Trade and Industry (MITI, hereinafter), stating that they had been requesting the clear float glass exporters to provide an advance ruling/document of the Government of India or from Royal Malaysian Customs confirming the correct HS code. It appears that M/s. Kibing Group (M) Sdn. Bhd. has obtained a letter from the Royal Malaysian Customs dated 12.03.2021 confirming the classification of clear float glass under HS code 7005.10.90, and therefore, MITI has allowed KGM to apply for a COO with exporting and importing HS code of 70051090. This letter goes on to state that unless M/s Xinyi produces a similar document, their application with different exporting and importing tariff code cannot be approved.
9. While the reasons for adopting the HS code 7005 2990 in the export documents is not clear, the communication from MITI makes it clear that as the organisation responsible for issuing COO certificates, their expertise is not in classification and they would abide by any decision in this regard by Indian or Royal Malaysian Customs. In the paragraph 7 of this ruling, I have already reached a decision that the correct classification of the subject goods is sub-heading 7005 1090. The only question that remains to be answered is whether the benefits of the relevant notification would be allowed to the applicant if the COO certificate do not mention the HS code as 7005 1090. A natural corollary to this question would be if the applicant importer mentions the sub-heading 7005 2990, which appears to be adopted in the exporting country, in their import documents while filing their bills of entry, would that be a legal & correct action. Obviously, the answer to the question would be in the negative. I think there is no dispute that when goods are being imported into India the classification would have to comply with Indian laws. If the classification of the subject goods under sub-heading 7005 1090 is correct, as suggested by the applicant and concurred by the Jurisdictional Commissioner of Customs, it would be a travesty of justice to deny the benefit of an exemption available to that sub-heading. I have also taken note of the fact that in case of M/s. Kibing group, the Royal Malaysian Customs authorities appear to have accepted the HS code 7005 1090 for the subject goods. If that is the case, I see no reason why M/s. Xinyi should be placed on a different footing. I have also perused the overleaf notes to the notification no. 189/2009-Cus. (N.T.), dated 31.12.2009 which gives effect to the ASEAN-India free trade agreement. One of the condition to enjoy preferential tariff under AIFTA is that goods sent to any party must fall within a description of goods eligible for concession in the party of destination. The overleaf Note 6 also mandates that the harmonised system number shall be that of the importing party. Keeping all these facts in view, I am unable to agree with the views of the Commissioner of Customs, Nhava Sheva-III; as well as that of the Commissioner of Customs, ACC, Chennai; conveyed during the personal hearing, that while the subject goods are classifiable under sub—heading 7005 1090, the benefit of Sr. No 934 of the table appended to the notification no- 46/2011-Cus., dated on 01.06.2011 wouldn’t be available unless the said sub-heading is also mentioned in the COOs. Whereas the Principal Commissioner of Customs (Air Cargo), Chennai-VII has adopted a logical, reasonable and legal stand that if the test report confirms the applicant’s claim, then benefit of the exemption would be extended. Therefore, I hold that if the subject goods are classifiable under the sub-heading 7005 1090 based on their nature, characteristics & properties, then they would remain eligible for the afore mentioned exemption irrespective of the HS code mentioned in the COOs.
10. In view of the above discussions, I rule that the subject goods ‘Clear Float Glass’ with absorbent layer on only one side would merit classification under heading 70.05 and more specifically, under subheading 70051090 of the first schedule to the Customs Tariff Act, 1975. The said imports shall also be governed by the provisions of Notification No. 37/2020-Customs (ADD) dated 11.11.2020 supra, that seeks to impose definitive anti-dumping duty on Clear Float Glass, originating in or exported from Malaysia and imported into India. Further, the benefit of Sr. No.934 of the table appended to the notification no. 46/2011-Cus., dated 01.06.2011, shall be extended to the subject goods in terms of the said notification, provided the applicant in each case of import shall produce evidence as to the origin of subject goods before the Deputy/Assistant Commissioner of Customs. I also rule that the eligibility for the above mention exemption wouldn’t be adversely effected in the event of wrong mention of HS code in the Certificate of origin.
