TaxTMI 
TaxTMI 
2025 (12) TMI 1327
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.... ".........2. The Existing entries in the 'Note" of Chapter 26 of Schedule 2 of ITC (HS) Classification of Export and Import Items 2018 are substituted as under: "NOTE: 1. Export of Rare Earth compounds classified as Beach Sand Minerals (BSM), namely [Ilmenite, Rutile, Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium)], shall be regulated in terms of Sl. No. 98A of Chapter 26 Schedule 2 of ITC (HS) Classification. 2. Other minerals under code 2617 are freely exportable, except those which have been notified as prescribed substances and controlled under Atomic Energy Act, 1962".: 3. A new entry at Sl. No. 98A is inserted in Chapter 26 of Schedule 2 of ITC (HS) Classification of Export & Import Items 2018 as follows :- S. No. Tariff item HS Code Unit Item description Export Policy Policy Condition 98A 2508 5031 2508 5032 2508 5039 2612 1000 2612 2000 2614 0010 2614 0020 2614 0031 2614 0039 26140090 2615 1000 2513 2030 Kg Beach Sand Minerals [Ilmenite, Rutile, Leucoxene (Titanium bearing mineral)....
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....22 wherein the Adjudicating Authority held that the goods are 'Natural Garnet' and confirmed classification of the subject goods under CTH 2513 2030, confiscated the goods which were provisionally exported vide two shipping bills dated 18.01.2019 and imposed redemption fine of Rs. 2,00,000/- in lieu of confiscation besides imposition of penalty of Rs. 50,000/- on the appellant each under Section 114(i) and 114AA of the Customs Act, 1962. 1.3 Aggrieved with above order, the appellant filed appeal before the Commissioner (Appeals) who vide impugned order, upheld the order of the Additional Commissioner and rejected the appeal filed by the appellant. Hence, this appeal before this Tribunal. 2. The appellant mentioned that their appeal before Commissioner (Appeals) as well as reply dated 31.12.2021 to the Show Cause Notice may be treated as part and parcel of this appeal. In addition, they took the following grounds:- (a) Findings in para 5 of the impugned Order-in-Appeal are incorrect because test reports can be challenged only during adjudication. The appellant has made no confession during investigation as no statement was recorded before issue of Show Cause Notice. T....
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.... India under the Mines and Minerals (Development and Regulation) Act, 1957 specifically mentions in entry No. 12 therein 'Beach Sand Minerals that is, economic heavy minerals found in the Teri or Beach Sands which is Leucoxene, Garnet, Monocyte, Zircon and Sillimanite. Therefore, rocks and lumps procured by them from Rajasthan which is not a coastal state, for making natural abrasives, cannot fall under the category of Beach Sand Minerals falling within the scope of DGFT notification. (iv) Above notification clearly shows that the item provided for canalized export through DGFT notification is based on description of the items in statutory notification. It has been held by Hon'ble Madras High Court in the case of State of Tamilnadu Vs. Kasiraja Nadar - 1980 SCC Online Mad 392 that word "namely" occurring in a notification should be given restricted meaning. (v) It has been held in the following cases that DGFT is the final authority for interpretation of ITC and Foreign Trade policy. PTC Industries Limited vs. UOI - 2009 SCC Online All 2138 Lokash Chemical Works Vs. CC - 1981 (8) ELT 235 (Bom.) and Richardson Hindustan Limited vs. UO....
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....ort of natural abrasives to show that they had always classified the said goods under CTH 2513 2090 for export and have never changed the classification. 3. Learned AR mentioned that the appellant has raised two grounds- One that the DGFT notification has canalized the natural garnet found in Beach Sand Mineral, while their product is made after crushing rocks found in Rajasthan. Construction of the notification has also been relied on to submit that only the BSM has been restricted. In second ground, they have relied upon a reply to parliamentary question to prove that only BSM is canalized 3.1 On first ground - Garnet itself is not a radioactive material. It is simply a silicate having chemical composition X3Y4(SiO4)3. X site is usually occupied by divalent cations, and Y site is generally occupied by trivalent cations. Rare Earth Elements can be incorporated in the crystal structure of garnet, and these REEs are the reason why garnet is canalized and its export is regulated. REEs have critical importance in Atomic Energy, Defence, and Space Sector, and therefore, the export of the garnet is regulated since they can contain REES. Mining of garnet can also lead to a security....
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....after their exports. We find that reliance on fact that circular was issued later may not make much of difference to the merits of the case, as the same was to emphasize the nature of the goods which were covered under DGFT Notification No. 26/2015-20 dated 21.08.2018. We find that issue of export of garnet was considered in details by this Tribunal in the case of Tirupati Enterprises which vide Final Order No. 10561/2025 dated 15.07.2025 decided that the items exported are rightly classifiable under Chapter Heading 25132030 which as per notification issued by the DGFT is under the prohibited category. We proceed to examine whether the case is otherwise sustainable on the basis of whole gamut of evidence which has been produced by the department. While doing so, we have duly considered all the materials placed, objections raised and grounds taken by the appellants, in making their submissions, including the case laws which are on record. 4.1 We find that Notification No. 26/2015-20 dated 21.08.2018 which had inserted at Sr. No. 98A in Chapter 26 of Schedule 2 of ITC (HS) Classification of Export and Import Items, 2018, the item 'Garnet' classifiable under CTH 2513 2030 a....
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.... 4.4 Intention of the DGFT notification becomes more clear for the following reasons, firstly, this notification has not canalized only "Beach Sand Mineral", which term has been used in generic sense while a specific term "Garnet" has been used along with its CTH in the notification. Therefore, the term Beach Sand Mineral in our view, does not mean minerals mined on beach only. Secondly, this notification has not connected the Garnet with any specific geography as purpose is to discourage exploitation of Rare Earth Compounds since it may increase the density of Monazite in the remaining area called tailings. Monazite is a radioactive mineral containing radioactive elements Uranium and Thorium. Since its density increases after mining of Garnet (and other rare earth compounds mentioned in the Notification), it becomes a security hazard. Its depletion is also discouraged since REEs have become very precious due to modern technological requirements. We reproduce relevant portion of a recent research paper published in Journal of Geochemical Exploration, Vol. 274 in Feb, 2025. Heavy mineral sands (HMS) represent an alternative major resource of Rare Earth Elements (REE) depos....
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....notime from 0.03% to 3.5%. Over 90% of REE-HMS deposits are <66million years old. Only 8 % are older, with 6% from the Mesozoic and 2% from the Paleozoic era. 40% of large REE-HMS deposits formed during the Neogene, Paleogene, and Cretaceous are inland from modern coastlines. REE-HMS deposits come from rocks found in high-grade metamorphic belts, orogenic belts, and cratons. Tropical humid areas with well-developed river systems are crucial for facilitating transport mechanisms. Most deposits are within 25 degrees north and south of the Equator and have a positive correlation with river systems and coastal areas. REE-HMS deposits globally show patterns: (i) concentration along modern coastlines; (ii) clustering within 100 km radius; (iii) areas devoid of known. HMS deposits between clusters; (iv) inland presence of REE-HMS deposits, often hundreds of kilometers from coastlines; (v) prevalence of alluvial deposits inland, eolian near coasts; (vi) largest deposits localised on modern shorelines, except where they align with paleo shoreline. Approximately, 40% of the largest REE-HMS are currently exposed. 4.5 Applicant ....
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....ch and in inland places. It works as a natural abrasive. The claim of the appellant that since it is manufactured in Rajasthan, it cannot be garnet has no basis after the CRCL report which is not under dispute. On the contrary, Indian Minerals Year Book, 2022 published by Ministry of Mines makes it very clear that Garnet is also found in Rajasthan. The relevant para of Chapter 13 of the Year Book is quoted as under:- RESERVES/RESOURCES In India, garnet deposits suitable for use in Abrasive Industry occur in Andhra Pradesh, Chhattisgarh, Jharkhand, Kerala, Odisha, Rajasthan, Tamil Nadu and Telangana. Gem variety of garnet occurs in Ajmer, Bhilwara, Jhunjhunu, Sikar and Tonk districts, Rajasthan; Nellore and Srikakulam districts, Andhra Pradesh; Khammam district, Telangana and Coimbatore, Ramanathapuram, Tirunelveli, Kanyakumari, Tiruchirappalli and Tiruvarur districts, Tamil Nadu. Garnet is found to occur in beach sands along with ilmenite, rutile, sillimanite, etc. in the States of Kerala, Odisha and Tamil Nadu. 4.8 In view of above geographical location does not have direct correlation to the Rare Earth Element. Their density may vary from coast to inland plac....