Deeming manufacture of ores into concentrates under Chapter 26 upheld, while mine-based exemption claim was remanded for verification.

Chapter Note 4 to Chapter 26 deems conversion of ores into concentrates to be manufacture, so physical processing of beach sand ores by washing, magnetic separation and gravity separation was treated as a statutory conversion into concentrates and liable to excise. The earlier no-manufacture line of cases was distinguished because they did not address the later deeming provision, and a claimed increase in purity was not decisive once the fiction applied. Exemption under Notification No. 63/95-CE for goods manufactured in a mine was not finally denied on merits; the claim was remanded for fresh verification on the basis of the later certificate and the prescribed conditions.

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Issues: (i) whether the processes undertaken on beach sand ores resulted in conversion of ores into concentrates so as to amount to manufacture under Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985 and Section 2(f)(ii) of the Central Excise Act, 1944; (ii) whether the goods were eligible for exemption under Notification No. 63/95-CE dated 16.03.1995 as goods manufactured in a mine.

Issue (i): whether the processes undertaken on beach sand ores resulted in conversion of ores into concentrates so as to amount to manufacture under Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985 and Section 2(f)(ii) of the Central Excise Act, 1944.

Analysis: The operative chapter note creates a statutory fiction that conversion of ores into concentrates amounts to manufacture. The term "ores" in Chapter Note 2 and the meaning of "concentrates" in the HSN Notes were read together. The physical processes of washing, magnetic separation, gravity separation and similar treatment were treated as special treatment leading to removal of unwanted matter from the ore. The earlier decisions relied upon by the appellant were distinguished as they did not decide the effect of the later inserted Chapter Note 4. The test of actual increase in purity was held not to control once the deeming provision applies.

Conclusion: The processes result in concentrates and amount to manufacture. This issue is decided against the assessee and in favour of Revenue.

Issue (ii): whether the goods were eligible for exemption under Notification No. 63/95-CE dated 16.03.1995 as goods manufactured in a mine.

Analysis: The claim for exemption was not finally rejected on merits because the adjudicating authority had not accepted the earlier certificate. A later certificate from the Secretary to the Government of India was produced, and the exemption claim required fresh verification by the adjudicating authority.

Conclusion: The question of exemption under Notification No. 63/95-CE is remanded for reconsideration.

Final Conclusion: The levy issue is decided against the appellant, but the exemption claim is left for fresh examination by the adjudicating authority, and the matter stands remitted for that limited purpose.

Ratio Decidendi: Where Chapter Note 4 to Chapter 26 deems conversion of ores into concentrates to be manufacture, the HSN meaning of concentrates and the earlier no-manufacture line of cases cannot override the statutory fiction; exemption based on manufacture in a mine must be separately verified on the prescribed conditions.

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