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PETITIONER: TOSHIBA ANAND BATTERIES LTD. ANAND HOUSE,COCHIN

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, COCHIN

DATE OF JUDGMENT20/12/1990

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. KASLIWAL, N.M. (J) AGRAWAL, S.C. (J)

CITATION:  1990 SCR  Supl. (3) 614  1992 SCC  Supl.  (1)  38  JT 1991 (1)    14        1990 SCALE  (2)1293

ACT:     Customs  Tariff  Act,  1975:  Item  Nos.  25.01/32   and 28.01/58-Battery grade Manganese dioxide--Classification for custom  duty--Not he ore contents in its crude form but  ore contents in the form purified or upgraded by electrolysis.

HEADNOTE:     The appellant-assessee in the appeals is a  manufacturer of dry patteries. For this it imports electrolytic manganese dioxide  from abroad having a manganese dioxide  content  of 91%. Its claim is that customs duty is payable on this  item under  heading 25.01/32(3) of the Customs Tariff  Act,  1975 whereas  the  revenue authority says that the  tem  imported falls  under heading 28.01/58. The rate of duty  under  both the  headings  is the same, but if the  item  is  classified under 28.01/58 the assessee would be liable to pay  counter- vailing duty as well.     The  Assistant Collector’s findings that Note 1 for  the interpretation  of items under Chapter 25,  clearly  exclude the  goods  imported by the appellant, were revised  by  the Collector  (Appeals),  but confirmed the  Tribunal,  holding that various grades of manganese dioxide exist and only  few are suitable for use as battery grade, that the item import- ed  by  the appellant is Electrolytic Manganese  Dioxide  of very high purity and this chemically pure Manganese  Dioxide would   qualify  for  assessment  correctly  under   heading 28.01/58(1),  of the Tariff with Countervailing  duty  under Item 68 of the Central Excise Tariff.     On the question, under which of the two headings in  the first schedule to the Customs Tariff Act, 1975 the goods  in question fall for the purposes of levy of duty: Dismissing the appeals, the Court,     HELD: 1. In view of Note 1 to Chapter 25, Item (3) under heading  25.01/32 has to be understood, unless  the  context requires  otherwise to refer to the goods described  therein either in their crude state or in a 615 purified  state provided the processes of  purification  em- ployed  are only mechanical or physical processes,  particu- larly those mentioned in the said note. [619G]     In  the  instant case, this raises  two  questions:  (1)

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whether battery grade manganese dioxide is available in  the crude  form,  and (ii) if the goods  in  question  represent manganese dioxide in a purified form, whether the  processes applied for the purification or refinement are the processes permissible under note 1. The evidence on record compels  an answer  to  each  of the questions  against  the  appellant. [619H]     2.  Although  the product imported by the  appellant  is battery  grade  manganese dioxide, it does  not  fail  under heading 25.01/32 because it is not the ore in its crude form but   is  the  ore  in  a  form  purified  or  upgraded   by electrolysis.  Once the applicability of chapter 25  is  out for  this reason, the only item that can cover the goods  in question is heading 28.01/58, since there is no dispute that the  item  in  question is a chemical  product  or  chemical compound. [621C-D]     3.  The manganese dioxide imported by the  appellant  is electrolytic  manganese dioxide which is  manufactured  from the ore by a process of electrolysis. [620C]     4. Purification or upgradation of the manganese  dioxide content  of crude ore by the process of electrolysis,  which is a chemical and not a mechanical or physical process takes it outside the purview of item 25.01/32. [620D]

JUDGMENT: