TaxTMI 
TaxTMI 
2026 (3) TMI 1601
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.... equal to the duty under Section 114A of the Act. 1.2 M/s. Sri Ragavendra Minerals, Nagercoil (hereinafter referred to as 'the appellant') is engaged in the import and trading of mineral products such as rutile ore/rutile sand. During the relevant period, the appellant imported consignments from overseas suppliers including Northern Bio-Six SDN BHD, Malaysia; Gold Medal Consortium Pvt. Ltd., Sri Lanka; and Iluka Resources Ltd., Australia. The goods were declared in the Bills of Entry as Rutile Ore / Rutile Sand / Titanium Ore (Rutile 92) under Chapter Heading 2614 and exemption from CVD was claimed on the footing that the goods were "ores", which were exempt from Central Excise duty and consequently from Additional Duty of Customs. The imports were assessed and cleared by Customs on payment of Basic Customs Duty and other applicable levies, while extending the benefit of exemption from CVD. 1.3 Subsequently, investigations were initiated by the Directorate of Revenue Intelligence and a Show Cause Notice dated 21.12.2015 was issued alleging that the imported goods were not ores but "titanium concentrates", that the appellant had mis-declared the description of the goods to ava....
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.... ore and allowed clearance. It was contended that once Customs has tested and accepted the goods as ore, it is not open to the Department to subsequently re-characterise the same goods as concentrates without fresh or contrary technical evidence. 2.4 The appellant also relied on reports issued by Indian Rare Earths Ltd., Kollam, a Government of India undertaking and a recognised authority in the field of mineral sands. Subsequent imports of identical goods were tested by IREL and the test reports categorically stated that the major minerals present were rutile and leucoxene, which are ores of titanium in natural form. It was submitted that these expert reports directly support the appellant's case and demolish the allegation that the goods were concentrates. 2.5 The Ld. Counsel has referred to the HSN Explanatory Notes to Chapter 26 and submitted that the Notes clearly recognise that ores may undergo certain physical or mechanical processes such as crushing, grinding, screening, washing and gravity separation without losing their character as ores. Concentrates, as per HSN, are ores from which foreign matter has been removed by special treatments. It was contended that no suc....
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....ores" or as "concentrates" within the meaning of Chapter 26 of the Customs Tariff. The resolution of this issue necessarily turns on a correct interpretation of the Chapter Notes to Chapter 26 read with the HSN Explanatory Notes, and their application to the facts established on record. 7.2 We note that Chapter 26 of the First Schedule to the Customs Tariff Act covers "Ores, Slag and Ash". Chapter Note 2 to Chapter 26 provides that, for the purposes of headings 2601 to 2617, the term "ores" means minerals of mineralogical species actually used in the metallurgical industry for the extraction of metals, even if they are intended for non-metallurgical purposes. The same note further clarifies that headings 2601 to 2617 do not include minerals which have been submitted to processes not normal to the metallurgical industry. 7.3 Chapter Note 4, which was inserted with effect from 01.03.2011, provides that in relation to the products of Chapter 26, the process of converting ores into concentrates shall amount to manufacture. This note does not, by itself, deem every ore to be a concentrate; it only declares that where a process of conversion into concentrate takes place, such proce....
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....e such alteration occurs, the resulting products may even fall outside Chapter 26. 7.8 Applying the above statutory and explanatory framework to the facts of the present case, we find that the Department has failed to establish that the rutile imported by the Appellant was subjected to any process amounting to "conversion of ores into concentrates" as contemplated by Chapter Note 4 of the Customs Tariff Act. 7.9 The evidence on record shows that the goods imported by the appellant were described in the Bills of Entry, commercial invoices, certificates of origin and load-port test certificates as rutile ore, rutile sand or titanium ore (rutile 92). These documents were examined by Customs at the time of import. More importantly, in respect of at least one consignment, Customs authorities themselves drew samples and sent them to the Chemical Examiner of the Custom House Laboratory with a specific query as to whether the goods were natural rutile ore or concentrates. Based on the Chemical Examiner's report, the goods were accepted as rutile ore and cleared. This departmental test directly supports the appellant's claim that the goods were ores. 7.10 On the other hand, the Dep....
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....ravity separation without losing their character as ores. Concentration, on the other hand, requires special treatment such as roasting or chemical beneficiation which alters the chemical composition or crystallographic structure of the ore. 7.15 In the present case, there is no evidence of roasting, leaching, acid treatment or chemical beneficiation. Mere high TiO₂ content cannot be determinative, as naturally occurring rutile is known to have high titanium dioxide content even in its ore form. 7.16 We find that the reliance placed by the Department on Star Industries v. Commissioner of Customs (Import), Raigad is misplaced. In that case, the ore had admittedly undergone roasting, a chemical process altering the chemical composition and crystallographic nature of the product. The ratio of that judgment rests squarely on the existence of such chemical treatment. The Hon'ble Supreme Court did not hold that high metal content or trade description per se converts an ore into a concentrate." 7.17 In the present case, no such process has been established. The factual foundation necessary to apply Star Industries is absent. The judgment, far from supporting the Revenue, re....
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....ave the characteristics of rutile. The TiO2 content was reported at 91.6%, which closely corresponds to the load-port analysis certificate showing TiO2 content of 92.6%. Significantly, the test report does not state, even remotely, that the goods are concentrates or that they have undergone any special or chemical treatment. Thus, the only departmental test conducted during the relevant period supports the appellant's declaration and not the Department's allegation. 8.3 As regards the remaining four Bills of Entry, it is not in dispute that the consignments were accompanied by load-port analysis certificates issued by the suppliers, and no samples were drawn by the Department at the time of clearance. The Department has not alleged that these load-port certificates are fabricated or unreliable, nor has it produced any contrary test report in respect of these consignments. In the absence of any such evidence, the mere fact that samples were not drawn cannot be used against the appellant, particularly when the Department had full opportunity to do so at the time of assessment. 8.4 On the face of the record, we find no material to support the allegation of misdeclaration. There ....
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.... of duty, wrong classification or incorrect claim of exemption, by itself, is insufficient. The Court further held that when all relevant facts are disclosed in statutory documents and are within the knowledge of the Department, invocation of the extended period on the basis of a subsequent change of opinion is impermissible. 8.7 In the present case, the appellant declared the goods in the Bills of Entry based on supplier's documents and test certificates, which were scrutinised by Customs at time of assessment. In one instance, the goods were even subjected to chemical testing by the Department itself and accepted as ore. In such circumstances, no element of wilful misstatement or suppression can be attributed to the appellant. 8.8 Consequently, the demand raised beyond the normal period of limitation is clearly time-barred. Even otherwise, once we have held on to merits that the goods are correctly declared and classifiable as ores, the very foundation for the demand collapses. 8.9 The finding on limitation and misdeclaration has a direct bearing on the proposals for confiscation and penalty. Confiscation under Section 111(m) presupposes a finding that the goods are liab....