The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favour of the assessee holding that imported “Burgess Calcined Aluminium Silicate” is correctly classifiable as Kaolin and other kaolinic clays under Customs Tariff Item (CTI) 2507 0029, and not as silicates under CTI 2839 9090 as contended by the Customs Department.

The bench of Ajay Sharma (Member Judicial) and M.M. Parthiban (Member Technical) set aside the orders of the lower authorities and allowed the appeal filed by the importer.

The dispute arose from the import of goods described as “Burgess Calcined Aluminium Silicate” from a supplier in the United States. Omya India had filed a Bill of Entry on October 3, 2020, classifying the goods under CTI 2507 0029 and claiming the benefit of customs duty exemption available under Notification No. 50/2017-Customs.

During first-check examination, samples were drawn and tested by the Central Revenue Control Laboratory (CRCL). The laboratory reported that the product was mainly composed of aluminium silicate with trace quantities of titanium, calcium and iron and described it as a processed calcined clay. Based on the report, Customs authorities proposed reclassification of the goods under CTI 2839 9090, treating them as silicates.

As the importer urgently required clearance of the goods, it waived issuance of a show cause notice and personal hearing. Customs subsequently reassessed the goods under CTI 2839 9090, resulting in payment of differential duty. The importer challenged the reassessment before the Commissioner (Appeals), but the appeal was rejected, leading to the present proceedings before the Tribunal.

The importer argued that the imported product is commercially known as Kaolin Clay or China Clay and is widely used as a filler and extender in paints, coatings, plastics and PVC compounds. The company relied upon a clarification from the overseas supplier stating that the product is a naturally occurring aluminium silicate obtained through washing, spray drying and calcination of natural kaolin clay without any chemical alteration of its essential structure.

The importer further contended that merely because the product undergoes calcination, it does not cease to be kaolin clay. Reliance was placed on the Supreme Court’s decision in Commissioner of Customs & Central Excise v. 20 Microns Ltd., which had held that calcined kaolin clay continues to remain classifiable under the tariff heading covering kaolin clay.

The Tribunal examined the competing tariff entries under Chapters 25 and 28 of the Customs Tariff. It observed that Heading 2507 specifically covers “Kaolin and other kaolinic clays, whether or not calcined.” In contrast, Chapter 28 applies to separate chemical elements and chemically defined compounds, including certain silicates.

The Bench noted that the supplier’s technical literature described the product as a naturally occurring mineral composed of kaolin clay, while the CRCL report merely identified it as aluminium silicate in the form of calcined clay containing trace amounts of other elements. The test report did not establish that the product was a separate chemically defined compound capable of classification under Chapter 28.

According to the Tribunal, the presence of trace elements such as titanium, calcium and iron did not alter the essential character of the product as calcined kaolin clay. It further observed that Chapter 25 expressly contemplates classification of kaolin clay even when calcined.

The Tribunal extensively relied upon the Supreme Court’s ruling in 20 Microns Ltd., wherein the apex court had held that calcined china clay or kaolin clay remains within the tariff heading specifically covering kaolin, notwithstanding the process of calcination. The Supreme Court had emphasized that where a tariff heading expressly includes goods “whether or not calcined,” the process of calcination does not take the product outside that heading.

Applying the same principle, the Tribunal concluded that the controversy was no longer res integra and that the lower authorities had erred in classifying the goods as silicates under Chapter 28.

Allowing the appeal, CESTAT held that the imported goods are correctly classifiable under CTI 2507 0029 as “Kaolin and other kaolinic clays, whether or not calcined.” Consequently, the Tribunal set aside the impugned appellate order as well as the reassessment that had shifted the classification to CTI 2839 9090.

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