TaxTMI 
TaxTMI 
2022 (6) TMI 217
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....ot be entitled to avail the benefit of exemption from payment of Countervailing Duty [CVD] on the product under section 3(1) of the Tariff Act in terms of serial no. 56 of the Table contained in the notification no. 12/2010-CE dated 17.03.2012 [the notification dated 17.03.2012]. The Principal Commissioner has, accordingly, determined the demand of differential CVD of Rs. 69,32,07,587/- and since the said amount was deposited by the appellant, it was appropriated. The Principal Commissioner has also directed for payment of interest and has also imposed fine and penalty. 2. The appellant is engaged in the manufacture of iron ore pellets. One of the raw materials required for the same is iron ore fines. 3. The dispute in the instant appeal relates to 18 consignments of iron ore fines imported by the appellant from Vale International SA, Switzerland, which had described the goods as Iron ore Carajas Sohar (iron ore fines). The specifications contracted, as set out in one of the purchase order dated 24.09.2014, are as follows: Fe SiO2 Al2O3 P Mn Moisture +6.3mm +1mm -0.15mm Product 64.00 3.40 1.90 0.060 0.750 8.5 18.0 ....
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....or testing. Testing was undertaken to carry out a complete analysis of Fe, SiO2, Al2O3, P, Mn, LOI, moisture percentage. The Test Report reads as follows: "The Sample is in the form of moist brown colour powder and small friable lumps of irregular shape and size. It is mainly composed of Iron Oxide with small amount of silica, Aluminum and Manganese. Moisture = 4.5% Iron Content (as such) = 61.6%, Fe2O3 = 88.0% Loss on Ignition = 6.0% SiO2 = 2.0% Al2O3 = 2.1% Manganese = 0.18% It is other than agglomerated Iron Ore and Iron Ore fines. Remnant may be collected within 7 days." 8. In the course of the finalization of assessments, the Superintendent of Customs (Preventive), by a letter dated 28.10.2014, called upon the appellant to explain as to whether the goods imported were iron ore fines or the same were iron ore pellets, as from the website of Vale International, SA, Oman it appeared that they were manufacturers of iron ore pellets. The appellant, by letter dated 04.12.2014, pointed out that the consignment of iron ore fines had been imported from Oman Plant of Vale International. The said iron ore....
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....ow cause notice dated 20.05.2016 was issued stating that the appellant was not entitled for exemption under entry no. 56 of the notification dated 17.03.2012 for the reasons: (i) The ores and concentrates are two distinct excisable goods by virtue of Chapter Note 4 to Chapter 26 of the Tariff Act. This Chapter Note stipulates that the process of converting ores into concentrates shall amount to manufacture; (ii) The global website of Vale records a stage-wise process undertaken on Iron Ore at Carajas, Para, Brazil. It was evident from the website that the mined ore atleast underwent two preparation processes namely, crushing and screening to make them suitable as sinter and pellet feed. The website shows that the screening process at Carajas, Para, Brazil employs as many as 17 production lines. Crushing and Screening are two of the inclusive special processes, listed in the HSN Explanatory Notes for production of Iron Ore concentrate; (iii) The ore after being crushed and screened is shipped by Vale International SA, Switzerland from Brazil to their other facility at Oman, where blending is undertaken to produce Iron Ore Carajas Sohar; (iv) The s....
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....had to have a high iron content, low presence of impurities, close particle size etcetera. To obtain such sinter and pallet feeds; the mined ore needed to be a processed or prepared iron ore. It is for this reason that the two noticees mainly imported iron ore carajas sohar, which had these characteristics. The Carajas mines may have produced iron ore with high iron concentration; but, geology and geographical and customer considerations necessitated processing and preparing of such mined ore. It was also a fact that these ores were mined from different mines in Carajas, not necessarily having similarly high iron content. It was for this reason that to meet the requirements of the needs of the two noticees, the processed and prepared iron ore carajas was further blended in the Vale facilities at Sohar in Oman with pallet fine feed tubarao, in the ratio of 90:10 to enable supply of iron ore carajas sohar to them. The blending process was carried on the iron ore carajas, after the mined ore at Carajas underwent the processes of crushing, grinding, milling, screening, scrubbing, froth floatation, concentration, thickening, drying, and dewatering etcetera using their own technology and....
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.... SCC 281], by referring to the dictionary/ technical material, held that concentrate consists of enriched ore segregated from waste in a concentration plant; (iv) The CBIC has, after consulting the concerned Ministry of Mines, by Circular dated 17.02.2012, clarified that crushing and screening are mere preparatory processes and do not constitute the special treatment envisaged in the Explanatory Notes, by which part or all of the foreign matter is removed. In other words, it has been clarified that ores that have been merely subjected to the processes of crushing and screening cannot be said to have been concentrated, as the said processes do not result in removal of part or whole of the foreign matter; (v) Both, the show cause notices and the impugned order, have in passing, contended that processes, beyond crushing and screening, have been undertaken on the Iron Ore at Carajas, Para, Brazil. However, there is not even an iota of evidence to even suggest, let alone prove, that further or other processing had taken place at Carajas, Para, Brazil. The burden to prove that processes beyond crushing and screening had been carried out was on the Revenue, which it fail....
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....ial counsel appearing for the Department have been considered. 17. The first issue that arises for determination in this appeal is whether the process of crushing and screening undertaken on the Iron Ore after it was mined at Carajas, Para, Brazil and its subsequent blending at Oman with 5-10% iron ore concentrate, would result in the goods imported being classifiable under CTI 2601 11 50 as Iron Ore concentrate, as against CTI 2601 11 31 for Iron Ore fines, and consequently whether the benefit of the exemption from payment of CVD at Serial. No. 56 of notification was available to the imported goods in question. 18. The second issue that arises for consideration is whether the burden was on the appellant to establish its entitlement to exemption under the notification dated 17.3.2012 or the said burden had shifted on the Department, since the benefit of the exemption had been extended not only at the time of clearance of the imported goods but also at the time of finalisation of the provisional assessment. 19. It would be seen that the main controversy that has arisen for determination in this appeal is as to whether the product that has been imported by the appellant is I....
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.... "The term 'ore' applies to metalliferous minerals associated with the substances in which they occur and with which they are extracted from the mine; it also applies to native metals in their gangue (e.g. metalliferous sands"). "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". It was also seen that the recent changes in the Central Excise Tariff treating the concentration of ore as amounting to manufacture would not in any way change the definition of Ore or Concentrate for the purpose of classification. This has been reiterated in a number of judgments and also vide Board Circular No.696/12/2003, CX dated 26-2-2003 [2003 (152) E.L.T. T44]. 3. In view of Chapter Note 4 to Chapter 26 of CETA, 1985 inserted vide Finance Act 2011, Ores and Concentrates are two distinct products. Thus, Concentrates suffer Central Excise duty being a manufactured product. The implication for imported Concentrates is that the benefit of exemption of additional duty of....
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....o separate ore or metal from its containing rock or earth. The concentration of ores always proceeds by steps or stages. Thus the ore must be crushed before the mineral can be separated, and certain preliminary steps, such as sizing and classifying, must precede the final operations, which produce the finished concentrates. Ricketts, I. c. Can. Enriched ore after removal of waste in beneficiation mill. Hoffman. d. The clean product recovered in froth flotation. B.S. 3552, 1962. e. To intensify in strength or to purify by the removal of valueless or unneeded constituents; condense; intensify. Standard, 1964. (III) Chambers Science and Technology Dictionary 'concentrate' and 'concentrate plant' are defined as under: 'Concentrate plant' (Min.Ext). Concentrator mill, reduction works, washing, cleaning plant. Buildings and installations in which ore is processed by physical, chemical and/or electrical methods to retain its valuable constituents and discard as tailings those of no commercial interest. 'Concentrate' (Min.Ext.). The products of concentration operations in which a relatively high content of mineral has been obtained and wh....
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....also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation & Concentrate thickening have to be undertaken for ores to be converted into concentrate. 3. Hence, it is clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN Notes, that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'. 4. The above position may be brought to the notice of Commissioners under your charge so that pending disputes, if any, may be decided accordingly." 26. The aforesaid Circular clarifies that crushing and screening are mere preparatory processes and do not constitute the special treatment contemplated in the Explanatory Notes, by which part or all of the foreign matter is removed. In other words, it has been clarified that ores that have been merely subjected to the processes of crushing and screening, cannot be said to have been concentrated, as the sai....
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.... to be noticed that both, the show cause notice and the impugned order, have in passing, contended that processes, beyond crushing and screening, have been undertaken on the Iron Ore at Carajas, Para, Brazil. However, no evidence has been led to even suggest, let alone prove, that other processing had taken place at Carajas, Para, Brazil. The burden to prove that processes beyond crushing and screening had been carried out was on the Revenue, but it failed to establish. It is, therefore, not possible to accept the said contention of the Revenue. 29. What needs to be now examined is whether Iron Ore Carajas Sohar supplied from Oman, which is a blend of Iron Ore Carajas and Iron Ore concentrate, in which the proportion of Iron Ore Carajas is 90-95% and that of Iron Ore concentrate is 5-10%, is a concentrate or not. The process of blending/mixing undertaken at Oman is a physical process where iron ore fines from the Carajas mines are mixed with iron ore concentrates from the Southeastern System in the ratio of 90-95% of iron ore fines from Carajas and 5-10% of Iron Ore concentrate. In this process, there is no removal of part or whole of the foreign matter and, therefore, the same ....
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....ng activities were undertaken at Carajas, Para, Brazil and that neither of the two would result in separation of part or whole of the foreign matter, which is a pre-requisite for concentrating the ore. This apart, the show cause notice has not made any reference to the aforesaid pictorial extract from the website. 32. Learned special counsel for the Department also contended that the imported iron ore was not the one that was naturally extracted, but an ore which was subjected to processes crushing, screening, blending. to make it fit for direct use in pellet making. In support of this contention, the learned special counsel for the Department relied upon the Technical Analysis report dated 06.05.2016 by Professor Rathod, VJTI and a letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer, Indian Bureau of Mines, Ministry of Mines. 33. This contention of learned special counsel for the Department cannot also be accepted for the reason that the CBIC has itself in the Circular dated 17.02.2012 clarified that crushing and screening are mere preparatory processes and do not tantamount to concentrating an ore, as there is no special treatment involved in the same and tha....