Zircon sand classification dispute: imported goods treated as zirconium ore, preserving CVD exemption under the notification.

Zircon sand imported from Australia was examined for classification as zirconium ore or zirconium concentrate for CVD exemption under Notification No. 12/2012-C.E. The notification covered ores under Chapter 26 but not concentrates. Applying the Chapter Note, HSN Explanatory Note and Board clarification, the material was treated as ore where foreign matter had not been removed by special treatment; mere crushing, screening, washing, cleaning or drying was insufficient to make it a concentrate. Because the Department drew no samples for expert analysis and the importer produced chemical certificates showing about 65% zirconium oxide content, the goods were held to be zirconium ore. Denial of exemption was therefore unlawful.

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Issues: Whether zircon sand imported from Australia was to be treated as zirconium ore or zirconium concentrate for the purpose of denying the exemption from countervailing duty under Notification No. 12/2012-C.E. dated 17.03.2012.

Analysis: The exemption under the central excise notification applied only to ores under Chapter 26 and not to concentrates. The distinction between ore and concentrate was examined with reference to the Chapter Note, the HSN Explanatory Note, and the Board's clarification that concentrates are ores from which foreign matter has been removed by special treatment, while mere crushing, screening, washing, cleaning or drying does not by itself convert ore into concentrate. The Department did not draw samples of the impugned consignments for expert analysis, whereas the importer produced chemical analysis certificates showing zirconium oxide content of about 65%. Earlier tests and the relied-on expert material indicated that zircon sand with such composition answers to ore rather than concentrate. In the absence of contrary expert evidence, the Department could not treat the goods as concentrate merely on the basis of alleged physical processing.

Conclusion: The imported goods were held to be zirconium ore and not zirconium concentrate. Denial of the exemption from CVD under Notification No. 12/2012-C.E. dated 17.03.2012 was held to be unlawful, and the appeal succeeded.

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