TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 532
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....ereinafter referred to as the appellants/importers), are in appeal against OIA dt.31.08.2016, vide Appeal No. C/31110/2016. 2. The appellants are, inter alia, importers of Manganese ores. While importing the same, the department denied them the exemption from payment of CVD in terms of S.No.4 of Notification No.04/2006-CE dt.01.03.2006 on the ground that the imported goods were not 'Manganese ores' as the said goods have undergone washing, removal of waste, sizing, etc., and therefore, they are 'Manganese Ore Concentrate' and accordingly, not covered under the said exemption notification. After due assessment of Bills of Entries (BEs), the Original Adjudicating Authorities have confirmed the demands by denying the exemption under S.No.4 of Notification No.04/2006-CE. On appeal before the Commissioners (Appeals), the orders passed by the Original Adjudicating Authorities have been upheld and the appeals filed by the appellants were dismissed. The main ground taken by the appellants before the Adjudicating authorities and the Commissioners (Appeals) is that mere cleaning, washing and removal of mud, earth and sizing does not amount to concentration and the process is normal to the....
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....ted goods were subjected to any special treatment and the only allegation is that the imported goods were subjected to washing, removal of waste, sizing, etc., which admittedly are not considered as special treatment, as clarified by CBIC vide circular dt.17.01.2012. 5. They have relied on HSN explanatory notes to Chapter 26, which provides the meaning of the term 'ore' and 'concentrate'. The relevant portion is as under. "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). Ores are seldom marketed before 'preparation' for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores. For the purposes of headings 26.01 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. Processes to which products of headings 26.01 to....
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.... foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'." 7. The above circular was issued pursuant to introduction of Chapter Note 4 to Chapter 26 and it clearly clarifies that no special treatment is involved in crushing and screening of ore and the said circular is binding on the department, as held by Hon'ble Supreme Court in the case of Paper Products Vs CCE [1999 (112) ELT 765 (SC)]. Further, taking into account the said circular, the Coordinate Benches in series of decisions extended benefit of exemption in cases where ores are subjected to only washing, crushing and screening processes and it was also held that these processes will not be considered as special treatment and the imported goods will be considered as ores only and not concentrate. They have relied on the following judgments. a) Andhra Ferro Alloys Vs Visakhapatnam-Cus [2017 (8) TMI 89 - CESTAT Hyderabad] b) Sharp Ferro Alloys Vs CCT, Visakhapatnam-GST [Final Order No. A/30299/2024 dt.09.05.2024] c) CC Vs Mahendra Kumar Darewala [2016 (340) ELT 277 (Tri-Mum)] d) Universal Electrical Industries Vs CCE [1994 (70) ELT 279 (Tri) -....
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....s dt.23.03.2012, wherein, it was clarified that concentrate suffers Central Excise duty being a manufactured product. Similarly, they have also submitted that interest cannot be demanded relying on the judgment of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd Vs UOI [2022 (10) TMI 212 (Bom)], wherein, it was held that in the absence of specific provisions for levying of interest or penalty due to delayed payment of tax, the same cannot be levied/charged unless the statute makes a substantive provision in this behalf. This judgment was affirmed by the Hon'ble Supreme Court at [2023 (8) TMI 135 (SC)]. They have also relied on the order of Coordinate Bench in the case of Acer India Vs CC [2024-VIL-503-CESTAT-CHE-CU]. Further, the interest cannot be demanded when the BEs have been provisionally assessed. In this regard, they have relied on the following judgments. a) AS Syndicate (Warehousing) Vs CC [2011 (267) ELT 469] b) CC Vs Exotic Fashions [2010 (262) ELT 651] 10. On the other hand, learned ARs have mostly submitted that benefit of exemption notification has been rightly denied to the importers/appellants as the Manganese ores imported by th....
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....centrate. D. Whether the ratio of certain judgments, cited by the appellants, covering identical goods can be relied upon or otherwise in the face of other compelling and relevant judgments cited by the department. 15. Before we proceed further, we need to take into account the admitted facts common to all these appeals. It is an admitted fact that post 01.03.2011, the samples of the imported goods were not specifically subjected to any test by the department; that admittedly certain processes were undertaken on the ore as excavated in the mines abroad (called Run of-Mine ore i.e., ROM ore, as referred in metallurgical industry) before being exported to the appellants like washing, removal of waste, sizing, etc. It is also not disputed that Chapter Note 4 to Chapter 26 is valid in view of the provisions of section 2(f)(ii) of Central Excise Act, 1944 for treating certain processes as amounting to manufacture. It is also not in dispute that the notification specifically exempts 'ore'. With these admitted positions, we now proceed to highlight some of the statutory provisions before we take up the factual aspect of the case. The explanations given in the HSN in respect of....
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....ses of sulphating, chloridating, etc). The chemical processes are aimed at eliminating the unwanted matter (e.g., dissolution). Concentrates of ores obtained by treatments, other than calcinating or roasting, which alter the chemical composition or crystallographic structure of the base 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. 16. Therefore, what is to be understood is whether the processes undertaken on the ore in the present factual matrix resulted in emergence of concentrate or otherwise keeping in view the statutory provisions and Explanatory Notes or otherwise. While Chapter note provides that the process of conversion from ore to concentrate shall amount to manufacture, it does not given any idea as to what would be the processes involved in such conversion. In order to understand that, recourse has to be taken to the explanation given in the HSN. Moreover, reading of the explanation would indicate that the term 'ore' applies to metalliferous minera....
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....r impurities/unwanted materials, etc., and to supply ore of specified concentration only. In this context, the term 'special treatment' has to be understood as any treatment, which is undertaken to remove such foreign materials, by whatever means so as to meet the given objectives i.e., suitability for intended metallurgical use and economic transportation. It is not in dispute that the aforesaid activities and processes undertaken were intended for removal of foreign materials from ROM ore. The objective for such removal was also to make it compatible for metallurgical processes for which it has been imported by the appellants and incidentally, it also helped in reducing the shipping cost, as such foreign material would have led to higher shipping cost. 18. Learned Advocates have tried to distinguish that such activities cannot be brought under the ambit of special treatment keeping in view the Board's clarification as well as some of the judgments cited by them. We will come back to that aspect a little later in this order. We note that the processes to which such product i.e., ROM ore, can be subjected include physical, physico-chemical or chemical operations, provided they a....
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.... was also observed that in such case, the importers had filed test report of the exporter and there was no expert evidence adduced by the department to rebut the chemical analysis report. In the case of Amba River Coke Vs CC (supra), the Coordinate Bench held that if no special treatment has been undertaken on the ore, so as to remove a part or whole of the foreign matter, it would not be considered as concentrate. This view has essentially emerged from the CBEC circular dt.23.03.2012, wherein, inter alia, it was noted that HSN explanatory notes do not specify as to what would constitute to be a special treatment by which the foreign matter is removed from the ore but after consultation with the Ministry of Mines, it was clarified that crushing, screening and mere preparatory processes do not constitute special treatment contemplated in the explanatory notes by which, part or all of foreign matters are removed. In the case of Vishwa Glass & Ceramics Vs CC (supra), a sample was drawn and subjected to test, as per which, it was held to be Boron ore and hence, considered as eligible for exemption. 20. On the other hand, Revenue has highlighted the Hon'ble Supreme Court's decision i....
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....is inherent in treating the process as 'manufacture' inasmuch as manufacture results in a different commodity from the earlier one. Section 2(f) defines this term as under : "manufacture" includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer." b) The purpose of treating concentrate as manufactured product out of ores is to make concentrates as liable for excise duty. Otherwise, there was no reason to deem the process of converting ores into concentrates as manufacture. 29. Once the aforesaid legal repercussions are taken note of, as a fortiori, it becomes obvious that ....
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....as been considered only in terms of Board's circular dt.17.01.2012. However, on crucial analysis and plain reading of explanatory note, it is obvious that any activity, which is carried out on the ROM ore with an intent to remove foreign matters, either partially or fully, so as to make it useful for metallurgical purposes or for economic transport, the said process itself would amount to conversion and therefore, the said activities, per se, will have to be considered as amounting to conversion and therefore resulting into deemed emergence of new excisable goods i.e., ore concentrate. We also find that the circular of CBIC is based on a clarification issued by the Ministry of Mines, where certain processes of crushing and screening were treated as mere preparatory processes and were not treated as special treatments as contemplated in the explanatory notes. We find that while the circulars are binding on the department, however, if it is patently against the obvious stated provisions then it need not be followed. That apart, in the present appeals, it is not only a question of crushing and screening, etc., but washing is also involved for removal of foreign material partly or full....
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....e similar processes when imported would also be not entitled to CVD exemption. We also find force in the citations of the learned AR in the case of Beach Minerals Company Vs CC, Tuticorin [2023 (9) CENTAX 148 (TriMad)]. In this case, it was the case of the department that the appellants have not undertaken any beneficiation process to make the mined sand into processed/upgraded Ilmenite. The Tribunal relied on the definition of the word 'beneficiation' under Rule 3(d) of Mineral Conservation and Development Rules, 1988, as under. "12. The major objection but forward by the Department is that the appellants have not undertaken any beneficiation process to make the mined sand into processed/upgraded Ilmenite. The appellant has produced the flow chart showing the various processes undertaken before the goods are exported. It may be true that the mine sand has not undergone any chemical treatment or roasting. It has to be seen that the said flow chart has been approved by the Mining Department as well as the Atomic Energy. Further in the Tariff heading reproduced above, the word "beneficiation" has not been explained. Rule 3(d) of Mineral Conservation and Development Rules, 19....
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....d ore should be high % of TiO2 which is 'Synthetic Rutile'. We find that the classification of 'Rutile' is separately classified under CH 2614 00 31. Therefore, the department's contention for classifying under Chapter 2614 00 10 is not based on valid reasons and relying another firm's website details cannot be taken as authentic evidence. It might be the process undertaken by the said company. 12. The Hon'ble Supreme Court in the case of Tata Steel & Others v. UOI (supra) while discussing the entitlement of refund of royalty on the Mines & Minerals has discussed the 'beneficiation' and the benefits. The relevant paragraphs of Apex Court is reproduced as under :- "26. The question that, therefore, arises is what is the consequence of beneficiation? Very briefly, the consequence of beneficiation or coal is upgrading or improving its quality from ROM coal. In the Convenience Volume handed over to us, with reference to beneficiation or coal, it is stated by Tata Steel as follows : The crushed raw coal (ROM) has ash percentage varying from 22% to 40% and moisture of 3% to 5%. For use in Blast furnace for steel making, we require clean coal of uniform quality ....
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.... wet beneficiation, the summation of beneficiated coal product quantity is higher than fed ROM coal quantity." The Apex Court in the above decision clearly spelt out that beneficiation processes are only related to physical separation. The ratio of the Apex Court decision though it was held with respect to coal, the same squarely is applicable to the present case as the principle of beneficiation is same. Further the Hon'ble High Court of Patna in the case of Indian Aluminium Co. Ltd. and Anr. v. State of Bihar & Ors. (supra) while deciding the constitutional validity of collection of fees on ores under Mines & Minerals Act, 1980 relied the definition of beneficiation given under MCD Rules, 1988. Further, we find that the Board's circular dated 17-2-2012 had clarified chapter note of Chapter 2601 - 2617 and by beneficiation process the end product of ore is concentrate or upgraded ore. The extract of circular is reproduced as under :- " * * * From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have clarified that no special treatment is involved in ....
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....propriate export duty and not under 2614 00 10 of CTH. 13. Accordingly, the impugned order is set aside and the appeal is allowed with consequential benefit." 26. Thereafter, the Tribunal held that goods, which were upgraded/ processed Ilmenite are classifiable under 2614 00 20 and set aside the Revenue appeal. Therefore, in this case also, simple physical process of segregating or washing certain foreign materials have been treated as leading to upgradation of quality, etc., and keeping in view the definition of 'beneficiation' process, it was held that resulting product is beneficiated product. 27. There are some other incidental grounds taken by appellants that no testing was conducted or expert opinion relied upon to arrive at the conclusion that such activities led to conversion of ore into concentrate. We find that while prior to insertion of deeming provision, the tests were being conducted to distinguish between concentrate and ore for deciding whether they are eligible for exemption or otherwise. However, post this insertion of Chapter Note, in view of the deeming provision, there was no necessity to conduct any test as long as it is established and admitted....
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.... that Manganese ore can have different Manganese content, either naturally occurring or by way of subjecting it to certain process to arrive at desired percentage. The lowest percentage for Manganese ore and concentrate had been accepted at 20%. Thus, any improvement in the content itself, where there is clearly admitted fact that it has undergone certain process, would indicate that there has been an improvement in the quality. Therefore, on this count also, it can be said that the subject processes undertaken on ROM ore has resulted into emergence of concentrate, which is distinct excisable goods in view of deeming provisions. 29. Insofar as their submission of non-applicability of interest in the facts of the case is concerned, citing certain judgments, supra, we find that statutory provisions are quite clear and when there is delay in payment of duty due, applicable interest is required to be paid. It is to be noted that in the instant case the Bills of Entries, after provisional assessment, were finally assessed denying exemption benefit. In this regard, the Hon'ble Supreme Court Larger Bench in the case of Steel Authority of India Ltd Vs CCE, Raipur [2019-TIOL-204-SC-CX-LB....