TaxTMI 
TaxTMI 
2026 (2) TMI 1348
X X X X Extracts X X X X
X X X X Extracts X X X X
.... against OIA dt.24.09.2013 in Appeal No.C/28483/2013 & M/s Raghuvir Ferro Alloys Pvt Ltd (hereinafter referred to as the appellant) are in appeal against common OIA dt.10.11.2014, in Appeal Nos. C/20283/2015 & C/20284/2015, whereby, the Commissioner (Appeals) have rejected the appeals filed by the appellants and denied them the benefit of exemption from payment of CVD in terms of S.No.04/2006-CE dt.01.03.2006 on the ground that imported goods are not 'Manganese Ores' as the said goods have undergone washing, removal of waste and sizing and therefore, are 'Manganese Concentrates'. 2. The brief facts of the case are that the appellants imported 'Manganese Ore' lumps by classifying the same under Tariff item 2602 00 10. The appellants claimed clearance of the said goods without payment of CVD in terms of exemption Notification No.04/2006-CE dt.01.03.2006. The Bills of Entry were provisionally assessed in terms of section 18 of the Customs Act, 1962 and the exemption was denied by the department contending that the goods had undergone washing, sizing and screening, which amounted to concentration and hence manufacture in terms of Chapter Note 4 to Chapter 26 and that since exemption....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtion 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 26.17 may have been submitted include physical, physio-chemical or chemical operations provided they are normal to the preparation of the ores for extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. The physi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the name, character and use of the product after application of process and further a two-fold tests for determining as to what amounts to manufacture evolved. First, whether by the said process a different commercial commodity comes into existence or whether the identity of original commodity ceases to exist. Secondly, whether the commodity which was already in existence will serve no purpose or will be of no commercial use but for the said process. Once the aforesaid twin test is satisfied vis-à-vis, the process shall amount to manufacture. Reliance is placed on the following case laws. a) UOI Vs JG Glass Industries [1998 (97) ELT 5 (SC)] b) Empire Industries Ltd Vs UOI [2002-TIOL-27-SC-CX-LB] 7. Thus, she has submitted that crushing and screening as a process does not amount to manufacture under the natural meaning. Reliance is placed on the following decisions. a) CCE Vs Tata Iron & Steel Co Ltd [2003 (154) ELT 343 (SC)] b) Crane Betel Nut Powder Works Vs CCE [2007 (210) ELT 171 (SC)] c) State of Maharashtra Vs Mahalaxmi Stores [2003 (152) ELT 30 (SC)] d) Iswar Grinding Mills Vs CCE [2000 (117) ELT 743 (Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, a process of 'beneficiation' of preparation has to be carried out either to enrich the ore content by way of removal of foreign or unwanted elements, or to enrich metal content in the ore. Those processes can be physical, physio-chemical, etc., and includes processes like crushing, grinding, magnetic separation, screening, grading, etc. In view of the clearcut deeming provisions, there is no need to conduct any test or analysis of the product in question. Thus, the onus of proving the eligibility for availing exemption under a notification lies with the importer as held in various judicial forums. 10. Heard both sides and perused the records. 11. In this case, admittedly, the ore has been supplied in terms of contract and certain specifications stipulated by the appellants. It is not an ore in the form, which has emerged in the mine i.e., Run of Mine (ROM) Ore. There is also a clear finding of the adjudicating authority based on evidence on record that process of screening and sizing, etc., has been carried out on ROM ore before it is shipped to the appellants. Even crushing of ore and removal of overburden i.e., stone etc., has taken place. The issue is whether these are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Notification No. 4/2006-C.E. which exempts only ores would not include within itself 'concentrates' also because of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ading 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 fully. Therefore, what might have been clarified in the context of iron ore, need not be true for all types of or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the citations of the learned AR in the case of Beach Minerals Company Vs CC, Tuticorin [2023 (9) CENTAX 148 (Tri-Mad)]. 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, 1988 defines "beneficiation". The said rule reads as under: "4.5 Mineral Conservation and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sification 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 at low ash %. So, Beneficiation of ROM raw coal is done to reduce the ash content....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the crushing and screening of ore and the end-product can be termed as a concentr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 that certain activities were undertaken on ROM ore before it was shi....