2002 (4) TMI 429 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of explosives used in copper mines for exemption under Notification No. 191/87 as amended by Notification No. 63/91.
2. Interpretation of the term "used in the manufacture of copper concentrates" in the context of the notification.
3. Application of legal precedents and principles in determining the scope of the notification.

Issue-wise Detailed Analysis:

1. Eligibility of Explosives for Exemption:
The central issue in the case was whether the explosives used by the respondent in copper mines qualify for exemption under Notification No. 191/87, as amended by Notification No. 63/91. The respondent claimed that the explosives were used to extract copper ore, which is then converted into copper concentrates and finally into copper. The Assistant Collector initially denied the exemption, arguing that the explosives were not used in the manufacture of copper concentrates. However, the Collector (Appeals) allowed the exemption, interpreting the notification to include the use of explosives in the mining process as part of the manufacturing process for copper concentrates.

2. Interpretation of "Used in the Manufacture of Copper Concentrates":
The notification grants exemption to goods under Chapters 28, 29, 36, and 38 of the Central Excise Tariff Act, 1985, used in the manufacture of copper or zinc or lead concentrates. The explosives in question fall under Chapter 36. The Revenue argued that the manufacture of copper concentrates is distinct from the mining of copper ore and that the explosives are not used directly in the manufacturing process. The Collector (Appeals) disagreed, stating that the explosives are integral to the process of obtaining copper ore, which is then processed into copper concentrates. The Collector emphasized that denying the exemption would render the notification redundant and contrary to legislative intent.

3. Application of Legal Precedents and Principles:
The Tribunal considered several legal precedents to interpret the notification. The Supreme Court's decision in Collector of Customs, Bombay v. United Electrical Industries Ltd. was cited to support the principle that notifications should be interpreted to give true import and meaning, not to make them purposeless. The Tribunal also referenced the Supreme Court's judgments in Indian Farmers Fertilizers Cooperative Ltd. v. CCE and Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, which supported the view that integrated processes, including mining and manufacturing, should be considered as a whole for the purpose of exemptions.

Separate Judgments by Judges:

Member (Technical):
The Member (Technical) concluded that the true import and meaning of the notification was to grant exemption to explosives used in mining, as mining is integral to the manufacture of copper concentrates. This interpretation aligns with the legislative intent and ensures the notification is not rendered purposeless.

Member (Judicial):
The Member (Judicial) disagreed, citing a previous Tribunal decision in M/s. IDL Industries Ltd. and the Supreme Court's decision in Associated Cement Co. Ltd. v. CCE. The Member (Judicial) argued that mining and manufacturing are distinct processes and that the explosives used in mining do not qualify for the exemption under the notification.

President's Final Decision:
The President, Justice K.K. Usha, sided with the Member (Technical), emphasizing that the mining process is integrally linked with the manufacture of copper concentrates. The President referenced the Supreme Court's decision in Jaypee Rewa Cement v. CCE, which supported the view that inputs used in the manufacture of intermediate products are eligible for exemptions. Consequently, the President concluded that the explosives used in mining are eligible for the exemption under Notification No. 191/87 as amended by Notification No. 63/91.

Final Order:
In view of the majority opinion, the appeal filed by the Revenue was rejected, and the order of the Collector (Appeals) was confirmed. The explosives used in the copper mines by the respondent were held to be eligible for exemption under the relevant notification.