TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 675
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....tes, and Circular issued by the Board and the judgment of the Hon'ble Apex Court. FACTS 2. The factual matrix leading to the case of the petitioner is that petitioner-Company is engaged in the business/activity of manufacturing Iron and Steel items. For the purpose of manufacture of the said items, the petitioner also carries out the activity of mining and extraction of Iron Ores from various locations in their own captive mines at Tensa, in the district Sundargarh of the State of Odisha. After extraction of the Iron Ore, the petitioner used to carry out the process of crushing and screening of the Iron Ores in order to reduce the size of the Ores in two categories, i.e., 'fines' below the size of 5 mm and 'lumps' within the size of 5 mm and 200 mm. As such the petitioner has been engaged in production of sized Iron Ore, i.e., 'lumps' and 'fines' since 2011. It is further stated that the petitioner was not registered with the Central Excise Department during the relevant period as the sized Iron Ore produced by it was exempted from payment of excise duty under Notification No.4/2006-CE dated 1.3.2006 which exempts Ores under Chapter Headings 2601 to 2617 of Chapter 26 of the Firs....
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.... Rs. 08,08,20,327/- on the said quantity of sized Iron Ore valued at Rs. 78,46,63,365/- for the period from March 2011 to January 2012 on the ground that the Concentrates as covered in Chapter 26 are products which emerge to render the ores in lumps and as such it is the Mineral products under Chapter 26 of HSN and therefore, the product of the petitioner is exigible. The petitioner submitted that Notification No.4/2006-CE dated 1.3.2006 has provided that Ores falling under different headings is exempted but it does not apply to Concentrates making them dutiable. The petitioner replied to the show cause mainly submitting that the petitioner had not undertaken the activity of washing or beneficiation of the Ore in their mines and hence there was no concentration undertaken for which he is not liable to pay any duty on the Ore cleared in their factories. But the Department slapped with two more show cause notices vide C No.V(26)15/Adjn/B-II/89/2014/3699-A dated 25.2.2015 and C No.V (26)15/Adjn/B-II/28/2015/7447A dated 16.4.2015 demanding an amount of Rs. 42,45,70,233/- for the period of February 2012 to March 2014 and an amount of Rs. 17,96,15,969/-for the period from April 2014 to N....
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....rting ore to concentrates shall amount to manufacture". The HSN note to the Chapter 26 states "for the purpose of Heading 26.01 to 26.17, the term 'concentrate' applies to ores which have had part or all of the foreign matters removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operation or with a view to economic transport". So, the process of crushing, screening, grinding, washing etc. to remove foreign materials so as to make it fit for economical transportation and subsequent use in the metallurgical operations can be termed as Iron Ore Concentrate for which the same is dutiable. When process of converting ore to concentrates is required, it amounts to manufacture coming under Chapter 26 of the CETA Act, 1985 to show the Tariff under Chapter 26 covers both "Ores and Concentrates" which have been submitted to process normal ore to the metallurgical industries. 7. It is stated in the counter that processes undertaken by the petitioner are normal to the metallurgical operation for extraction of metals and therefore, nothing but the crushing, screening, grinding, washing etc. are meant to separate the impurities associated with t....
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....that the process of "crushing and screening" does not amount to "special treatment" and therefore, the product that emerges after the process of crushing and screening cannot be considered as Iron Ore concentrate. It is reported in Paper Products Ltd. v. Commissioner of Central Excise, reported in 1999 (112) E.L.T. 765 (S.C.) where Their Lordships observed that Department circulars and clarifications are binding on the Department's Officers. But in the instant case the learned Commissioner has failed to follow the circulars of the Department and as such did not obey the decision of the Hon'ble Apex Court for which said impugned order is illegal. Learned counsel for the petitioner further submitted that the final product is merely Iron Ore in similar sizes (sized ore) and is not a concentrated as the process of crushing and screening do not amount to Concentration. According to him under CETA of 1985 there is no definition of term 'Concentrates' but term 'Ores' is defined under Chapter Note 2 of Chapter 26 of the First Schedule to the CETA 1985 stating that for the purpose of headings 2601 to 2617, the term 'Ores' means minerals of mineralogical species actually used in the metallur....
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....zes as compared ores excavated from the Mines and fed into crusher. 11. Mr. R. Raghavan, learned Senior Advocate for the petitioner while distinguishing the complete processes than on crushing and screening cited various decisions, they are (a) Bheraghat Mineral Industries v. Divisional Deputy Commissioner of Sales Tax 1992 (61) E.L.T. 560 (MP); Collector of C. Ex., v. Mahavir Minerals Store Supply Co. 1988 (38) E.L.T. 171 (Tribunal); Commissioner of Central Excise BBSR v. Ispat Chrome Ltd. 2001 (134) E.L.T. 236 (Tri.- Kolkata); Indian Rare Earths Ltd. v. Commissioner of Central Excise, BBSR-I 2002 (139) E.L.T. 352 and Commr. of Cus. and C. Ex., JSR and BBSR12 II v. Steel Authority of India Ltd. 2003 (154) E.L.T. 65 (Tri.- Kolkata). Learned Commissioner has erred in law by observing that the petitioner's argument of revenue neutrality cannot be accepted as show cause notices have alleged suppression and misstatement and therefore, credit in terms of Rule 9 (1)(b) of the Cenvat Credit Rules, 2004 will not be available. 12. Mr. R. Raghavan, learned Senior Advocate for the petitioner also submitted that provisions of Section 35B of the Act is not applicable in the present case and t....
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....1 to 26.17 the term 'Concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. The processes undertaken by the petitioner are normal to the metallurgical operations for extraction of metals. The processes undertaken by the petitioner like crushing, screening, grinding, washing etc. are meant to separate the impurities associated with the natural ores for their transportation from the pit mouth of the mines to the metal extracting plants. So, the contention of the learned counsel for the petitioner that the crushing and screening are simply meant for preparing the sizes of the Iron ore but not the 'concentrates' is not correct. 14. It is submitted by the learned Standing Counsel for the Revenue that the 'Concentrate' have reference to physical rate of strengthening the 'ores in lumps' minus 'mud and gang materials' to a form to be used for metallurgical process and in that scheme no way of metallurgical content is to decide on the classification as per the HSN Note to Chapter 26 of CETA, 1985. It is clear that....
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...., 1985 was amended and excise duty was levied on Iron Ore concentrate. Since the petitioner has suppressed material facts and evaded payment of Central Excise Duty, the impugned order asking for payment of demand along with interest charged with penalty is undoubtedly correct. Since the petitioner has deliberately cleared Iron Ore concentrate without payment of Central Excise duty, also he is liable to pay interest, penalty and additional penalty under the Central Excise Act and Rules made thereunder. 17. Mrs. Padhi, learned Standing Counsel for the Revenue further submitted that there is efficacious remedy available to the petitioner by filing appeal against the impugned order for which the present writ petition is not maintainable and the Court may reject the writ petition directing the petitioner to file appeal, if so advised, and may raise all such contentions there. 18. Points for consideration:- (i) The first and foremost point is to be decided whether the writ petition is maintainable in view of the pleadings made by both the parties. DISCUSSIONS POINT NO.(i) : 19. After dropping the prayer for declaring the concerned Circular of the CBEC as ultra vires, there remains ....
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....by the Board or the [Principal Commissioner of Central Excise or Commissioner of Central Excise], either before or after the appointed day, under section 35-A, as it stood immediately before that day : [Provided that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in clause (b) if such order relates to, - (a) a case of loss of goods, where the loss occurs in transit from a factory to a warehouse or to another factory, or from one warehouse to another, or during the course of processing of the goods in a warehouse or in storage, whether in a factory or in a warehouse; (b) a rebate of duty of excise on goods, exported to any country or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India; (c) goods exported outside India (except to Nepal or Bhutan) without payment of duty; [(d) credit of any duty allowed to be utilized towards payment of excise duty on final products under the provisions of this Act or the rules made thereunder and such order is passed by the Commissioner (App....
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....other hand, the learned counsel for the opposite party No.2 vehemently opposed the contention stating that the Writ Court cannot adjudicate on facts and the impugned order does not suffer from any vires requiring this Court to intervene. 22. In the aforesaid para we have already observed in this writ petition that further facts are to be adjudicated and same can only be addressed before the appellate court. Moreover, there is clear-cut provision under Section 35-B to file appeal. It is available from the contention of the learned counsel for the petitioner that in an earlier occasion when the petitioner manufactured the same product, the petitioner was served notice by the Department in the year 1996 asking to pay duty as same was iron ore concentrate chargeable to duty. Petitioner had also challenged the same before this Court in W.P.(C) Nos.13201 and 13437 of 1996 and this Court vide order dated 30.7.1997 dismissed the writ petition directing the parties to file appeal as the alternative remedy is available. Now the same party with same contention has come up to this Court of course due to demand made by the O.P. No.2 basing on amendment to Ch.26 w.e.f. 1.3.2011. 23. In view of ....