2014 (7) TMI 313 - AT - Central Excise

Waiver granted on excise duty for rare minerals from beach sand; detailed legal analysis required.

The Tribunal granted a waiver of pre-deposit of dues, indicating a strong prima facie case for the Applicant regarding the levying of excise duty on rare ... Waiver of pre-deposit of duty - Manufacture - Marketability - process of converting ‘ores’ to ‘concentrates’ - products, viz.Ileminite, Sillimenite, Rutile, Zircon and Garnet - deemed manufacture - The claim of the Applicant is that even after the insertion of this Chapter Note, since the goods emerge after processing of beach sand ores, which continue to remain as ‘ores’ only and are not converted into ‘concentrates’, hence no manufacture takes place and accordingly, no duty is payable. - Held that:- that even though the earlier decision of the tribunal has been delivered prior to insertion of Chapter Note 4 to Chapter 26 of CETA,1985, but its findings and reasoning on other aspects, like the marketability of resultant product, its composition, etc. which led to the conclusion that the resultant product is not excisable, requires a thorough analysis to arrive at a conclusion on its applicability after the insertion of Chapter note 4 to Chapter 26 from 01.03.2011. Also, prima facie, we find that there are four different Laboratories report, wherein, it has been opined that the aforesaid products manufactured/processed by the Applicant out of beach sand are ‘ores’ and not ‘concentrates’; whereas, only one report of RRL, BBSR describes these goods as ‘concentrates’. In nutshell, the issue is highly debatable and needs closure analysis and interpretation of the relevant Chapter Note, HSN meaning of concentrates vis-`-vis the process of manufacture and gamut of case laws on the subject including the decision of this Tribunal in the Applicant’s own case [2001 (9) TMI 167 - CEGAT, KOLKATA]. Since provisions of the Mining Act are applicable to their processing plant situated in the Mining area, and the definition of ‘mining’ as prescribed under the Mines Act being incorporated in the exemption Notification No. 63/95 CE dt,16.03.1995, accordingly, the products manufactured/processed by them could fall under the said exemption Notification No.63/95 dated 16.03.1995. - Applicant could able make out a strong prima-facie case for total waiver of pre-deposit of dues adjudged. Accordingly, pre-deposit of all dues adjudged is waived and its recovery stayed during pendency of the appeal - Stay granted. Issues:Levying excise duty on rare minerals extracted from beach sand, interpretation of Chapter Note 4 to Chapter 26 of CETA,1985, applicability of exemption under Notification No.63/95-CE dated 16.03.1995.Levying Excise Duty on Rare Minerals:The dispute revolves around the excisability of minerals like Ileminite, Sillimenite, Rutile, Zircon, and Garnet extracted by the Applicant from beach sand. The Revenue sought to levy duty on the products resulting from processing the ores, considering them as 'concentrates' post the insertion of Chapter Note 4 to Chapter 26 of CETA,1985 from 01.03.2011. The Applicant argues that even after processing, the products remain as 'ores' and not 'concentrates', hence not excisable. The Tribunal noted the previous judgment in the Applicant's favor but emphasized the need for a detailed analysis post the insertion of Chapter Note 4. The issue is complex, requiring an interpretation of relevant legal provisions and case laws.Interpretation of Chapter Note 4 to Chapter 26 of CETA,1985:The Applicant contends that the products emerging from processing beach sand ores do not transform into 'concentrates' as per the inserted Chapter Note 4. The Revenue argues that the physical and physico-chemical processes make the final products usable for metallurgical operations, thus classifying them as 'concentrates'. The Tribunal acknowledges the debatable nature of the issue, with conflicting laboratory reports on whether the products are 'ores' or 'concentrates'. A thorough analysis of the Chapter Note, HSN meaning of 'concentrates', and relevant case laws is deemed necessary to reach a conclusive decision.Applicability of Exemption under Notification No.63/95-CE dated 16.03.1995:The Applicant asserts eligibility for exemption under the mentioned Notification, citing their processing plant's location within the 'mining area'. The Revenue challenges this claim, arguing that the plant cannot be considered a mine. The Tribunal finds merit in the argument that the Mining Act provisions apply to the processing plant, potentially making the products eligible for the exemption. A detailed analysis, considering the Supreme Court's precedent, is deemed necessary. The Tribunal grants a waiver of pre-deposit of dues, indicating a strong prima facie case for the Applicant.In conclusion, the judgment addresses the complexities surrounding the levying of excise duty on rare minerals extracted from beach sand, the interpretation of Chapter Note 4 of CETA,1985, and the potential applicability of an exemption under Notification No.63/95-CE. The Tribunal emphasizes the need for a thorough analysis of legal provisions, case laws, and factual evidence to arrive at a final decision.