“6.6 From the sample commercial invoices attached with the appeal, we find that grade 2B has been indicated against surface which shows that the imported goods apart from cold rolling, have also undergone the process of annealing, descaling and skin passed. The HSN Explanatory Notes under Chapter 72 (under the category IV (c) Subsequent manufacture and finishing), provide that the finished products may be subjected to further finishing treatments or converted into other articles by a series of operations such as mechanical working, surface treatment such as Annealing, Descaling, Pickling, Scraping and surface finishing treatment etc. Further from the Explanatory Notes Vol-IV, Chapter 7174 of the World’s Custom Organization 7th Edition (2022), it is noted that Chapter heading 7220 borrows and applies provisions of Explanatory Notes of Heading 72.1109, 72.12 & 72.10 which in turn borrows Explanatory notes of 72.08 and 72.09 mutatis mutandis. Therefore, multifarious processes are getting included in expression 'not further worked' to the products of heading 7220. We also find that Chapter Heading 72.11 permits certain processes and allows the same to be worked (for example corrugated, ribbed, chequered, embossed, bevelled or rounded at the edges) and heading 72.12 allows the products to be subjected to more than one type of coating, plating or cladding. Thus, there are processes which are allowed to be further carried out by heading 72.20. Similarly Heading 72.08 to 72.10 by virtue of borrowing, the products can be subjected to hot flattening, annealing, hardening, tempering, case-hardening, nitriding and similar heat treatments to improve the properties of metal. It also permits descaling and various other processes. Similarly 72.09 and 72.10 also allow various processes to be done. Therefore, while deciding the classification, it is important to note as to what are the processes which have been carried out on the imported products and whether processes carried out are within the permissible limits of the heading including the Explanatory Notes of the borrowed headings. The imported goods therefore, need close scrutiny to arrive at the most preferred heading irrespective of what heading has been claimed by the party or has been sought in the Show Cause Notice by the department. We therefore, find that the issue is contentious and various considerations will come to the root of the matter to decide the exact nature of imported goods such as processes it has undergone, it’s grade, apart from its composition. In view of our above observation, we find that there is a scope of even going beyond the heading suggested by either party when exact nature of the product gets determined.
