Ore-to-concentrate processing was treated as manufacture, and the ore-only exemption could not extend to concentrate.

Chapter Note 4 to Chapter 26 treats conversion of ore into concentrate as manufacture where processes such as washing, removal of waste and sizing remove foreign matter and improve grade for metallurgical use. Applied to imported manganese ore, these operations were held to bring the goods within the meaning of concentrate rather than mere ore. An exemption notification limited to ore was construed strictly, so concentrate could not claim the benefit merely because it originated from ore or because the processing did not change chemical composition. On provisionally assessed Bills of Entry, differential duty on final assessment carried interest. The result was denial of exemption and confirmation of consequential liability.

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Issues: (i) Whether washing, removal of waste and sizing of imported manganese ore amounted to conversion of ore into concentrate under Chapter Note 4 to Chapter 26; (ii) Whether the exemption under S. No. 4 of Notification No. 04/2006-CE was available even if the goods were treated as concentrate; (iii) Whether the demand of interest on the differential duty was sustainable on final assessment.

Issue (i): Whether washing, removal of waste and sizing of imported manganese ore amounted to conversion of ore into concentrate under Chapter Note 4 to Chapter 26.

Analysis: Chapter Note 4 to Chapter 26 created a deeming provision treating conversion of ore into concentrate as manufacture. The explanatory notes to Chapter 26 showed that concentrates are ores from which part or all foreign matter has been removed by special treatment, and that physical processes such as screening, grading and related preparatory operations fall within the scope of preparation for metallurgical use where they remove unwanted matter and improve grade. On the admitted facts, the imported run-of-mine ore had undergone washing, removal of waste and sizing before shipment, which were found to be processes aimed at removing foreign material and improving concentration for metallurgical use and economic transport.

Conclusion: The imported goods were correctly treated as concentrate and not as mere ore.

Issue (ii): Whether the exemption under S. No. 4 of Notification No. 04/2006-CE was available even if the goods were treated as concentrate.

Analysis: The notification exempted only ore. Once Chapter Note 4 deemed conversion of ore into concentrate to be manufacture, ore and concentrate became distinct commodities for the purpose of the exemption. The exemption notification was therefore required to be construed strictly, and concentrate could not be brought within its scope merely because it originated from ore or because certain physical processes did not alter chemical composition.

Conclusion: The exemption was not admissible and denial of CVD exemption was upheld.

Issue (iii): Whether the demand of interest on the differential duty was sustainable on final assessment.

Analysis: The Bills of Entry were provisionally assessed and finally assessed after denial of exemption. In such a case, the differential duty became payable on finalisation of assessment, and the statutory scheme under the Customs Tariff Act and the Customs law was held to permit recovery of interest on the delayed payment of duty.

Conclusion: The demand of interest was upheld.

Final Conclusion: The appeals failed in entirety, and the orders denying exemption and confirming consequential liability were sustained.

Ratio Decidendi: After insertion of Chapter Note 4 to Chapter 26, processes undertaken on ore that remove foreign matter and convert it into concentrate attract the deeming provision of manufacture, and a notification exempting only ore cannot be extended to concentrate by implication.

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