2025 (9) TMI 342 - AT - Customs

Appeal allowed; order set aside for failure to prove manganese concentrate where only washing, not grinding, was shown

M/s Jagadamba Iron and Steel Pvt. Ltd. Versus Commissioner of Central Excise And Service Tax Visakhapatnam– GST

M/s Jagadamba Iron and Steel Pvt. Ltd. Versus Commissioner of Central Excise And Service Tax Visakhapatnam– GST - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the imported material declared and documented as manganese ore can be re-classified as manganese concentrate in the absence of any sample testing, expert opinion, or documentary evidence of processes other than washing. 2. Whether washing alone, without other physico-chemical operations specified in the HSN General Note to Chapter 26, renders ore liable to classification as concentrate. 3. Whether an adjudicating authority may rely on a presumption that the ore was ground or otherwise processed prior to export, without adducing independent evidence, to justify re-classification. 4. Whether the Tribunal should follow a prior final order on identical facts in the same appellant's other entries or re-open and re-examine the identical issue. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Reclassification of goods as concentrate absent testing or evidence Legal framework: The Harmonized System (HSN) General Note to Chapter 26 specifies that certain physical or physico-chemical operations (crushing, grinding, magnetic separation, gravimetric separation, flotation, screening, grading, agglomeration, drying, calcination, roasting, etc.) render ores liable to classification as concentrates. Provisional assessment under Section 18(1) is permissible, subject to finalization on evidence. Precedent treatment: The Tribunal expressly followed a prior final order rendered on ten other identical Bills of Entry concerning the same issue and appellant; the earlier order was treated as binding or persuasive on like facts for disposition of the present appeal. Interpretation and reasoning: The Court analyzed the record and found that all documents (including the Bill of Entry) consistently declared the imported material as manganese ore. No sample was tested, no expert opinion was obtained, and no documentary proof of processing (other than washing) was placed on record. The adjudicating authority's classification as concentrate rested on the HSN General Note coupled with an unsubstantiated presumption that the ore had been ground or otherwise processed prior to export. The Tribunal held that reclassification on the basis of such a presumption, unsupported by testing or other evidence, is legally untenable. Ratio vs. Obiter: Ratio - An authority cannot classify declared ore as concentrate absent evidentiary support showing one or more of the HSN-listed physico-chemical operations were performed; documentary declaration and lack of testing weigh against reclassification. Obiter - Observations on the scope of provisional assessment procedures under Section 18(1) and general commentaries on evidentiary burdens are illustrative but ancillary to the result. Conclusion: The impugned reclassification is set aside for want of evidence; the appeal is allowed insofar as classification as concentrate was imposed without any testing or proof of requisite processing. Issue 2 - Sufficiency of washing to constitute concentration Legal framework: The HSN General Note lists specific operations that transform ore into concentrate. Only those listed operations (or their logical equivalents) support classification as concentrate. Precedent treatment: The Tribunal treated prior decisions in the appellant's related entries as controlling on identical factual matrices, which had held washing alone insufficient for classification as concentrate. Interpretation and reasoning: The record admitted washing of the ore before export, but the General Note does not include mere washing among the operations that convert ore into concentrates. The Court emphasized the textual scope of the General Note and found no evidence that washing was accompanied by grinding, flotation, magnetic separation, or other listed operations. Consequently, washing alone cannot justify classification as concentrate. Ratio vs. Obiter: Ratio - Washing, standing alone, does not fulfil the HSN criteria for classification as concentrate; evidence of listed physico-chemical operations is required. Obiter - Remarks on common physical appearances of ores and inferences from particle size were noted but not adopted as a basis for classification. Conclusion: Washing alone is insufficient to reclassify ore as concentrate; absent proof of other HSN-specified operations, the imported material remains classifiable as ore as declared. Issue 3 - Permissibility of presuming prior processing without evidence Legal framework: The evidentiary principle that 'he who asserts must prove' applies in customs classification disputes; administrative presumptions cannot supplant the requirement of evidence when a substantive reclassification is imposed. Precedent treatment: The adjudicating authority relied on the HSN General Note and made factual presumptions; the Tribunal, following its earlier disposition in the related entries, rejected reliance on mere presumption absent supporting evidence. Interpretation and reasoning: The Assistant Commissioner explicitly presumed grinding or other processing and concluded manufacture/processing had taken place. The Tribunal found that such presumption, unbacked by laboratory testing, expert opinion or documentary proof of the processes, is insufficient to support the legal inference of conversion into concentrate. The Court reiterated that the department must produce evidence showing the occurrence of the HSN-listed processes prior to reclassification. Ratio vs. Obiter: Ratio - Administrative presumption of process without evidentiary support cannot form the basis for altering the declared classification; positive proof is required. Obiter - The Court's observations on administrative practices regarding sample testing and seeking expert opinion are explanatory. Conclusion: The reclassification based on a presumption of prior grinding or processing is invalid; the absence of testing or expert evidence requires setting aside the classification as concentrate. Issue 4 - Treatment of a prior final order on identical facts Legal framework: Consistent treatment of identical issues in related matters supports predictability and fairness; tribunal may follow earlier final orders on identical factual and legal matrices unless cogent reasons warrant re-examination. Precedent treatment: The Tribunal expressly followed a previous final order disposing of ten similar appeals involving the same importer and identical legal questions, and declined the Revenue's invitation to re-open settled identical issues without new evidence. Interpretation and reasoning: The Court recognized the Revenue's submission that the Bench may re-examine the issue, but noted absence of any distinguishable fact or fresh material in the present appeal. Given the identical factual record (declaration as ore, washing only, no tests) and a prior final order in favour of the same position, the Tribunal applied and followed the earlier decision to set aside the impugned order. Ratio vs. Obiter: Ratio - Where a prior final order on identical facts and law exists and no new evidence is presented, the Tribunal may follow that order and decline to re-examine the matter. Obiter - Comments on the Tribunal's power to re-consider earlier decisions in other circumstances are illustrative. Conclusion: The Tribunal followed its prior final order on the same issue and allowed the present appeal; absent new evidence, re-examination was not warranted. Overall Disposition The impugned order classifying the imported goods as manganese concentrate is set aside for lack of evidentiary basis (no testing, no expert opinion, and only washing proved); the appeal is allowed and consequential relief granted consistent with the Tribunal's prior final order on identical entries.