2026 (1) TMI 1447 - AT - Customs

Conversion of manganese ore into concentrates denied import CVD exemption as processing yields distinct excisable concentrates; interest payable.

Conversion of imported manganese ore into concentrates by screening, sizing and crushing constitutes manufacture under the statutory definition and, by ... Conversion of ores into concentrates - imported consignments characterised as Manganese Ore - entitlement to exemption from Countervailing Duty (CVD) under Notification No.12/2012-CE (S. No.56) - deeming provision in Chapter Note 4 to Chapter 26 - manufacture as defined in section 2(f) - classification under Chapter Heading 2602 (Manganese ores and concentrates) - HELD THAT:- Admittedly, the ore has been supplied in terms of contract and certain specifications stipulated by the appellants. It is not an ore in the form, which has emerged in the mine i.e., Run of Mine (ROM) Ore. There is also a clear finding of the adjudicating authority based on evidence on record that process of screening and sizing, etc., has been carried out on ROM ore before it is shipped to the appellants. Even crushing of ore and removal of overburden i.e., stone etc., has taken place. The issue is whether these are normal process or special process. We find that similar issue has been dealt by this Tribunal in the case of M/s Sarda Energy & Minerals Ltd & Ors Vs CC, [2026 (1) TMI 532 - CESTAT HYDERABAD], wherein, in the similar set of facts and admitted positions, it was held that the subject processes undertaken on ROM ore has resulted into emergence of concentrate, keeping in view the chapter note and HSN explanation, which is a distinct excisable goods in view of deeming provisions. Even on the issue of interest in the facts of the case, it was held that in terms of statutory provisions, which are quite clear that when there is delay in payment of duty due, applicable interest is required to be paid. Thus, following the said order, we find in the facts of the case, the appellants would not be eligible for exemption claimed by them at the time of import in respect of impugned goods. We, therefore, do not find any merit in the appeals filed by the appellants and accordingly, the appeals are dismissed. Issues: (i) Whether the imported consignments characterised as Manganese Ore are to be treated as 'ores' entitled to exemption from Countervailing Duty (CVD) under the notification, or whether they have undergone processes amounting to conversion into 'Manganese Concentrates' and are therefore not entitled to exemption; (ii) Whether interest is payable on delayed payment of duty where exemption is denied.Issue (i): Whether the imported goods are 'Manganese Ores' eligible for CVD exemption or are 'Manganese Concentrates' excluded from exemption.Analysis: The classification headings for manganese distinguish ores and concentrates and Chapter Note 4 to Chapter 26 contains a deeming provision treating conversion of ores into concentrates as manufacture. The explanatory HSN notes and the concept of beneficiation describe processes which remove foreign matter to improve grade. The presence of admitted pre-shipment activities such as washing, crushing, screening, sizing and removal of overburden, together with contractual specifications and evidence that such processes were carried out, indicate removal or reduction of foreign material and improvement in grade. Pre-insertion practice of testing is superseded by the deeming provision; therefore demonstration of undertaken processes is sufficient to treat the resultant product as concentrate where those processes effect conversion as contemplated by Chapter Note 4.Conclusion: The imported consignments are 'Manganese Concentrates' and not 'Manganese Ores' for the purpose of exemption; exemption from CVD is denied.Issue (ii): Whether interest is payable consequent to denial of exemption and delayed payment of duty.Analysis: Statutory provisions applicable to delayed payment of duty require payment of applicable interest where duty is due and unpaid. The deeming treatment of ores converted into concentrates results in levy of duty; in the factual matrix where exemption is denied, interest is payable as per the statutory scheme.Conclusion: Interest is payable on the duty found payable.Final Conclusion: The appeals are dismissed; the import consignments are treated as concentrates not entitled to CVD exemption and duty with interest is payable.Ratio Decidendi: Where admitted pre-shipment processes on run-of-mine ore amount to removal of foreign matter or improvement of grade such that conversion into concentrate occurs, Chapter Note 4 to Chapter 26 deems that conversion as manufacture, thereby treating the resultant material as concentrate (a distinct excisable good) and excluding it from exemption notifications applicable only to ores.