Hydrated Lime/Slaked Lime containing less than 98% of Calcium Oxide & Calcium Hydroxide classifiable under CTH 2522 20 00

Hydrated Lime/Slaked Lime containing less than 98% of Calcium Oxide & Calcium Hydroxide classifiable under CTH 2522 20 00

Summary: In the case of M/s Balveer Singh [Advance Ruling No. RAJ/AAR/2024-25/2017], the Rajasthan Authority for Advance Rulings (AAR) clarified the GST classification of slaked/hydrated lime containing less than 98% calcium oxide and calcium hydroxide. The applicant, an unregistered individual planning to manufacture hydrated lime for various industries, sought clarity on its tax rate. Laboratory analyses revealed impurities such as clay and oxides, making the product’s purity range between 60% and 96%. The AAR relied on past rulings and the Harmonized System of Nomenclature (HSN) to determine that hydrated lime with less than 98% purity is classified under Chapter Tariff Heading (CTH) 2522 20 00. This classification falls under Entry No. 131 of Schedule I of Notification No. 01/2017-Central Tax (Rate), attracting 2.5% CGST and 2.5% SGST. The ruling excluded the product from Heading 28.25, which pertains to high-purity calcium oxide and hydroxide, aligning with judicial precedents such as Commissioner Central Excise v. Bhadradri Minerals Pvt. Ltd. and M/s Jindal Stainless (Hisar) Ltd v. Commissioner of Customs. The decision emphasizes that slaked/hydrated lime with lower purity levels is taxable under the specified rate schedule, providing clarity for manufacturers and traders.

The Rajasthan AAR, in the case of M/s Balveer Singh [Advance Ruling No. RAJ/AAR/2024-25/2017 dated September 20, 2024] slaked/hydrated lime containing less than approximately 98% of the calcium oxide and calcium hydroxide, are classifiable under CTH 2522 20 00 taxable at 2.5% CGST and 2.5% SGST as per entry SI. No. 131 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017 (“the Rate Notification”).

Facts:

M/s Balveer Singh (“the Applicant”) was unregistered person intending to start business of manufacture and sale of Hydrated Lime, which is used as raw material in various industry, chemical industry, leather industry, sugar industry, dairy industry, water treatment, road construction, etc.

The necessary infrastructure to maintain above product was procured and developed by the Applicant in the due course. The Hydrated Limed proposed to be manufactured by the Applicant consisted of calcium hydroxide less than 96% (ranging from 60% to 96% maximum), which contains atleast 4% impurities such as clay, iron oxide, manganese oxide etc.

The laboratory reports of the analysis of the chemical composition of the sample of slaked/hydrated lime to be manufactured by the Applicant was done at 2 laboratories.

The rate of GST applicable of supply of said Hydrated Lime is given in the Rate Notification. For hydrated lime/ slaked lime, rate of GST has been provided in Sr. No. 131 of Schedule -1 which classifies it under Chapter/Heading/Sub-heading/Tariff item 2522.

The hydrated lime/slaked lime is specifically covered in the description of goods provided against Sr. No. 131 for HSN 2522 whereas Sr. No. 39 of Schedule-III of the rate notification gives a general description for all inorganic chemicals falling under Chapter 28 taxed at 9%.

Hence, aggrieved by the circumstances, the Applicant filed for Advance Ruling.

Issue:

Whether manufacturing of Hydrated Lime containing less than 98% of the Calcium Oxide and Calcium Hydroxide will be classifiable under HSN 2522?

Held:

The Rajasthan AAR, in Advance Ruling No. RAJ/AAR/2024-25/2017 held as under:

• Relied on, Commissioner Central Excise, Hyderabad-III v. Bhadradri Minerals Pvt. Ltd. [2015 (324) E.L.T. 395 (Tri-Bang.)] wherein it was held that HSN Explanatory Note under Heading 28.25 excludes Calcium Oxide with purity less than 98% whereas purity of burnt lime is 70% to 75%. Therefore, not covered by Heading 28.25 which discusses Burnt Lime is classifiable under Heading 25.05 and similarly the Applicant relied upon the case of M/s Jindal Stainless (Hisar) Ltd v. The Commissioner of Customs by Hon’ble Delhi Tribunal [Custom Appeal No. 51224 of 2019] where the Hon’ble Tribunal held that quick lime with purity range of 92% to 97% is classifiable under Chapter 25 (as purity is less than 98%) and will attract 5% tax rate.
• Noted that, Chapter 2522 of the Customs Tariff covers Quicklime, Slacked Lime and Hydraulic Lime, other than Calcium Oxide and Hydroxide of Heading 2825 and CTH 2522 10 00 covers Quicklime and CTH 2522 20 00 covers slacked lime. As per the Explanatory Notes, Quicklime is obtained by calcination of limestone i.e. calcium carbonate giving calcium oxide and carbon dioxide and when it is further combined with water, it produces slacked lime which is calcium hydroxide. Quicklime is used for building purposes such as white washing, whereas slacked lime is used in soil improvement and plasters. However, purified calcium oxide and purified calcium hydroxide is excluded from 2522.
• Noted that, slaked lime and hydrated lime of purity less than approximately 98% merit is classifiable under CTH 2522 20 00.
• Held that, slaked/hydrated lime manufactured by the Applicant containing less than approximately 98% of the calcium oxide and calcium hydroxide, are classifiable under CTH 2522 20 00 taxable at 2.5% CGST and 2.5% SGST as per entry SI. No. 131 of Schedule I of the Rate Notification.

Our Comments:

The Rate Notification governs the Central Goods and Services Tax Rate Schedule under Section 9(1) of the Central Goods and Services Tax Act, 2017 which notifies rates of CGST @ 2.5%, 6%, 9%, 14%, 1.5% and 0.125% on Supply of Goods.

Schedule-2.5%

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