AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 1529
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.....2015/ 04.08.2015 19.02.2016/ 22.02.2016 Date of Order in Appeal No.96/2015 30.07.2015/ 31.07.2015 No.27/2015 13.05.2015/ 17.05.2015 No.108/2016 23.09.2016/ 26.09.2016 Classification claimed by the Assessee 2615 10 00 2615 10 00 2615 10 00 Department's Classification 2615 10 00 2615 10 00 2615 10 00 Differential amount of duty demanded Rs.70,03,648/- Rs.26,29,412/- Rs.23,30,498/- Penalty under Section 11(a) of the Customs Act, 1962. Rs.15,000/- NIL NIL 2. Briefly stated the facts of the case are that on the basis of intelligence, investigation was initiated against the appellant by the DRI by recording statements and conducting test on the sample of imported goods viz. 'Zircon Sand' alleging that the Appellant had wrongly claimed/availed benefit of Notification No.4/2006-CE dated 01.03.2006 classifiable under CTH 2615 10 00 as 'Ores'. On conclusion of the investigation, show-cause notice was issued on 23.03.2012 proposing recovery of the differential Additional Customs duty (CVD) with interest and proposal for penalty. Assessment of subsequent import of 'Zircon Sand' claiming the benefit of said Not....
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....ore, the impugned order is not maintainable. 5. Per contra, the learned Authorised Representative (AR) for the Revenue has submitted that the appellant had imported Zircon Sand which is concentrate and classified the same as ores to avail wrongly the benefit of Notification No.4/2006-CE dated 01.03.2006. He submits that both concentrate and ores fall under the same Tariff Heading. The DRI officers had noticed the mis-declaration of the impugned goods i.e., zircon sand and found that zircon sand was not an ore but was concentrate; hence, the benefit of Notification No.4/2006-CE dated 01.03.2006 is not admissible. Further verification of the documents and statements obtained during the course of investigation, it was noticed that imported zircon sand was processed from ore and impurities were removed, the Chemical Examiner test of CRCL, Vadodara confirmed the contents were Zirconium Oxide (ZrO2) is 64.6% by weight and Zircon Silicon Dioxide (ZrSiO2) is 96.1% by weight and the imported item was Zircon Concentrate. Further, he has submitted that manufacturing process given in the official website of M/s. Iluka Resources, Australia, one of the world's major producers of Zircon makes ....
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....ertain the admissibility of the benefit of Additional Duty of Customs (CVD) under Notification No.4/2006-CE dated 01.03.2006. 9. The relevant Notification 04/2006 CE dated 01.3.2006 is reproduced as below: Notification No.4/2006-CE dated 01.03.2006 Exemption and effective rate of duty for specified goods of Chapters 25 to 49 In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding en....
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....l amount to "manufacture"." 16. The meaning of concentrate has not been provided under Chapter 26. Therefore, to understand its scope it is essential to refer to the HSN Explanatory Notes, relevant to Chapter 26 and Heading 2615. CHAPTER 26 ORES, SLAG AND ASH Chapter Notes. GENERAL Headings 26.01 to 26.17 are limited to metallic ores and concentrates which: (A) Are of mineralogical species actually used in the metallurgical industry for the extraction of the metals of Section XIV or XV, of mercury or of the metals of heading 28.44, even if they are intended for non-metallurgical purposes, and (B) Have not been submitted to processes not normal to the metallurgical industry. The term "ores" 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 headi....
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....r without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. Further, what the physical or physcio-chemical operations comprise of has been explained stating that these include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading, agglomeration of powders, etc. Similarly, the chemical process aimed at eliminating the unwanted matter is also considered to convert the ore into concentrate. Therefore, it can safely be inferred that that ores which are extracted from mines when subjected to the aforesaid processes becomes 'concentrate'. 18. Further, we find that since both ores and concentrates are falling under the same Tariff Heading of the Central Excise Tariff Act,1985, Note 4 to Chapter 26 has been added providing an artificial definition of 'manufacture', that is, converting 'ores' into 'concentrate' as amounting to manufacture. The artificial/fictional meaning of 'manufacture' has to be given due weightage, being statutorily defined in contrast to the common parlance test where such processes cannot be held to result into 'manufacture' within the scope of t....
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.... Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Dutiability of "iron ore" and "iron ore concentrates" - Clarification regarding. A reference has been received from Bhuwaneswar Zone seeking clarification on the issue of whether "Iron ore lumps and fines" are dutiable as "concentrates" when subjected to crushing, screening, sizing or washing etc. 2. In Budget 2011, a Note was inserted in Chapter 26 of the First Schedule to the Central Excise Tariff to deem the process of converting "Ores" into "Concentrates" as a process amounting to manufacture. Both ores and concentrates are classifiable under Chapter 26 and while the term 'Ore' is defined in Note 2 of the said chapter, the term 'concentrate' is not. HSN Explanatory Note spell out the scope of the term "Concentrate" as under : "For the purposes of Headings 2601-2617, 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 may hamper subsequent metallurgical operations or with a view to economical transpor....
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....) whether the term 'Ore' includes Concentrate, and (b) Whether insertion of Chapter Note 4 in the Chapter 26 will have any impact on the admissibility of notification benefit to Concentrates, was examined. The Conference noted the HS definitions of Ore and Concentrate are as follows : "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 ....
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....s has not examined the meaning of 'ores' and 'concentrate' as explained in the HSN Notes vis-à-vis Circulars issued from time to time. 23. It has been held by the Hon'ble Supreme Court in a series of cases that HSN Chapter Note 4 to Chapter 26 are guides to classification of the imported goods under Customs Tariff Act and cannot be brushed aside. Their Lordships in the case of Thermax Ltd. Vs. CCE, Pune-I: 2022 (382) ELT 442(SC) observed as follows: "6. The definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. This is because in the Statement of Objects and Reasons of the Bill leading to enactment of Central Excise Tariff Act, 1985, it was clearly stated that the pattern of tariff classification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of Central Excise duty. The tariff so suggested for the levy under the Indian Tariff Act is based on an internatio....
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....ature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, override the clear indication of the meaning of an identical expression in the same context in the HSN. In the HSN, block board is included within the meaning of the expression "similar laminated wood" in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian tariff of a different intention." 7. Commenting on the importance of taking guidance from HSN Classification and how a taxing statute should be construed in consonance with their commonly accepted meanings in the trade and popular sense, Justice Sanjiv Khanna in D.L. Steels (supra) also so correctly observed as follows :- "9. The Harmonised System of Nomenclature9, developed by the World Customs Organisation, ha....
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...., which is the sense attributed to it by those people who are conversant with the subject matter that the statute is dealing with. This principle should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker. However, the above rule is subject to certain exceptions, for example, when there is an artificial definition or special meaning attached to the word in a statute, then the ordinary sense approach would not be applicable." 24. Therefore, what imported by the Appellant was Zirconium Ore concentrate, hence the department is justified in denying the benefit of exemption Notification No.4/2006-CE dated 01.03.2006 to the imported goods. 25. Interpretation of an exemption Notification as laid down by the Hon'ble Supreme Court in Commissioner of Cus. (Import), Mumbai vs. Dilip Kumar & Company: 2018 (361) ELT 577 (SC) has to be strictly interpreted and in case of any ambiguity, be decided in favour of the Revenue. Their Lordships observed as: "28. With the above under....
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....d only to those subjects/assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and that the claimants satisfy all the conditions precedent for availing exemption. Presumably for this reason the Bench which decided Surendra Cotton Oil Mills case (supra) observed that there exists unsatisfactory state of law and the Bench which referred the matter initially, seriously doubted the conclusion in Sun Export Case (supra) that the ambiguity in an exemption notification should be interpreted in favour of the assessee. 41. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. ....
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.... that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled." On the face of ambiguous situation i.e., whether the composition of the ore be the decisive factor or the meaning of ore and concentrate based on the HSN Notes, Chapter Notes, Circular and the deemed definition of manufacture be criteria in distinguishing ore from concentrate, applying the aforesaid ratio, the benefit of the Notification 04/2006 CE dt.01.3.2006 also cannot be extended to the Appellant. 26. Further, we do not find merit in the submission of the learned advocate for the appellant that rejection of their request for cross-examination of the Chemical examiner by the adjudicating authority would make the impugned order bad in law. We find that in the Chemical Examiner's report, the compos....