TaxTMI 
TaxTMI 
2019 (4) TMI 1679
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....ine powder and packed in bags for sale'. 2.1. Revenue initiated an investigation in November 2009 and issued a show cause notice alleging that the activity undertaken by the Appellants amounts to manufacture; the addition of water converts the Manganese Dioxide (MNO2) into Manganese Oxide (MNO); there is a change in the chemical structure; Manganese Oxide no longer remains as ore but becomes a different commodity namely Manganese Oxide classifiable under Chapter Heading 28209000. The appellants paid an amount of Rs. 30,92,313/-. 3. The appellant submits that vide their letter dated September 12, 2002, they sought a clarification from the Central Excise department regarding the excisability of the Manganese Oxide obtained by them. Department, vide letter dated 22nd October 2002, clarified that the Manganese Oxide remains as ore and hence non-excisable and there was no need for obtain registration. 3.1. The appellant submits that the show cause notice alleges that there is a specific mis-statement in appellant's letter dated 12.9.2002 to the effect that in the process of refining, there is no physical addition of any chemical; MnO is obtained by a chemical reduction process; th....
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....eby one oxygen atom is reduced to obtain MnO. As stated supra, this operation is perfectly permissible operation and will not take ore out of Chapter 26 and thus MnO is an ore eligible for exemption under Notification no. 6/2002-CE and hence the proposal to demand central excise duty is baseless. They relied upon following cases. (i). Crane Betel Nut Powder works Vs CCE 2007(210) ELT 171(SC) (ii). Kenzo International Vs CCE 2017(7) GSTL 325(T) (iii). Hindalco Industries Ltd Vs CCE 2009(245) ELT 271 (T) (iv). 20 Microns Ltd Vs CCE 2006(199) ELT 41 (T) 3.4. The Appellants submit that the notice is hit by limitation. The letter dated 12.9.2002 has to be read in its entirety and not in isolation. They had clearly stated that red hot ore is quenched with water. The fact that water was used was clearly mentioned in the letter. When the Appellants mentioned in their letter that no chemical was added, the Appellants meant that no chemical other than that mentioned in the letter was added. The Appellants did not mislead the central excise department. In any case, if there was any doubt in the mind of the central excise department, it was always open to the department to call f....
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....he department has reiterated the findings of OIO and submitted written submissions as follows. 4.1. The appellants procure Manganese ore from the mines of M/S MOIL and crush in a Pulverizer. If the Manganese (Mn) content was less than 40%, it is washed with water and then heated up to 800 degree centigrade; manganese ores are converted into manganese oxide lumps which are powdered and packed into the bags of 50 kg for sale. This item manganese Oxide (MnO) is formed only on chemical reaction between water and manganese ore in controlled atmosphere at the temperature of 100 degree centigrade. Thus the MnO produced/manufactured is the new distinct, identifiable and marketable product, totally different from manganese ore, classifiable under specific CETH 28209000 emerges. Therefore, the process amounts to manufacture. 4.2. The chemical reactions required to produce manganese oxide, as given in Wikipedia, are as follows. (i) MnO can be prepared by the reduction of any higher oxide with hydrogen MnO2+H2 --- MnO +H20 (ii) commercially it is prepared by reduction of MnO2 with hydrogen, CO or Methane MnO2 + CO --MnO +CO2 (iii) MnO can he prepared by heating MnCo3 in vacuum MnCo3-....
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....sue No.1 we find that the appellants procure Manganese Ore from mines of MOIL and undertake the following processes. 'Manganese ore is heated in a coal fired furnace till it becomes red hot; the material is quenched with water and taken out from the furnace for sun drying; it is pulverized to a fine powder and packed in bags for sale'. The appellants contend that the process is a simple process and is not one of those by virtue of which the product is taken beyond the Chapter 26. The appellants argued that the physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, flotation, screening, grading agglomeration of powders (e.g., by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small quantities of binders), drying calcinations, roasting to oxide, reduce or magnetise the ore, etc. (but not roasting for the purpose of sulphating chlorinating etc.)." 5.1. We find that a reference at this stage to the relevant chapter notes of Chapter 26.Chapter Note 2 to Chapter 26 specifies that "For the purposes of headings 26.01 to 26.17, the term "ores" means minerals of mineralogical species ....
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....esses are aimed at eliminating the unwanted matter (e.g., dissolution). Concentrates of ores obtained by treatments, other than calcining or roasting, which alter the chemical composition or crystallographic structure of the basic ore are excluded (generally Chapter 28). Also excluded are more or less pure products obtained by repeated physical changes (fractional crystallisation, sublimation, etc.), even if there has been no change in the chemical composition of the basic ore. Concentrates of ores obtained by treatments, other than calcining or roasting, which alter the chemical composition or crystallographic structure of the basic ore are excluded (generally Chapter 28). Also excluded are more or less pure products obtained by repeated physical changes (fractional crystallisation, sublimation, etc.), even if there has been no change in the chemical composition of the basic ore. 5.3. A plain reading of the Section note gives to understand that for items to fall under headings 2601 to 2617 they need to be minerals and should not have undergone processes which are not normal to metallurgical industry. The show cause notice accepts that fact that the appellants procure the ore....
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.... occurs in nature as rare mineral Manganese site. However it is not forthcoming either from the show cause notice or from the OIO whether any expert opinion has been obtained to ascertain. (i). Whether the processes undertaken by the Appellants are not common to metallurgy in refining the ore or extraction? (ii). Who are the buyers of said manganese oxide and what is it used for further. In order to ascertain whether the metallurgical process still are remain to make the said MnO usable. The learned Authorised Representative from the Department sought to rely upon the case of Mukesh Kumar (Supra) wherein it was held that such case issues be decided on the basis of technical opinion instead of any general opinion. However the department has proceeded to decide the case only on the basis of general opinion supported by only Wikipedia. As submitted by Learned Counsel of the Appellants Supreme Court held, in Acer India (Supra), that Wikipedia is an online encyclopedia and the opinion which can be modified by any person and as such it is not reliable. The department could have approached any technical person for opinion on the subject before coming to a conclusion. It appears that e....