TMI Blog2003 (1) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... is that as soon as the final product (i.e.) Iron Ore Pellets emerge from the furnace, the pellets in red hot condition are passed over a conveyor system to the open stockyard which is situated far away; even before they reach the stockyard the weight of the dry pellets is ascertained by an automatic weighing system by means of a weightometer fixed to the conveyor belt and the weight so ascertained is accurately recorded in the RG-1 account and duly accounted for. The pellets recorded at this stage do not contain any water/moisture. Immediately after the weight is recorded by the weightometer, water is sprinkled on the pellets to reduce dust and escape of other fine particulate into the atmosphere in compliance with the statutory requirements of the pollution control board and stored in the open are exposed to vagaries of atmosphere and during the monsoon are fully drenched and soaked in rainwater. Water required to be sprinkled while transferring the pellets to the ship over a conveyor and after loading into the ship to comply with the requirement of the Pollution Control Board. 4. (a) The appellant commenced trial production during November 1996 and initially all the dispatch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust 98 1,30,352.000 - 1,16,411.530 September 98 1,43,295.000 - 68,817.000 October 98 31,880.000 - - November 98 1,68,321.000 - - December 98 1,04,662.000 - - January 99 1,54,068.000 - - February 99 1,67,756.170 - 63,715.130 March 99 37,524.000 - - April 99 1,94,794.000 - - May 99 23,179.000 - - June 99 1,987.000 - 61,033.530 July 99 81,712.000 - - August 99 52,234.000 - - September 99 1,62,874.000 - - TOTAL 32,78,673.300 45,412.514 6,39,943.540 October 99 1,09,146.000 20,776.420 33,343.540 November 99 47,089.000 - 1,09,354.130 December 99 1,73,163.000 - 64,772.400 January, 2000 2,23,756.000 - - February, 2000 1,56,125.000 - 87,303.150 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhapatnam and shown on the bills of lading were considered as receipted quantity in the records of the appellants plant at Hazira. This was considered to be evidence enough that no moisture content was deductable from the goods despatched. The Revenue s contention is that a sample survey also had reported that no moisture was deducted by other manufacturers in the trade supplying such pellets. The appellants herein had suppressed the facts of clearing the pellets in the guise of moisture by adopting an unusual practice which was not followed by them earlier and also by the other manufacturers and thus the appellants have cleared certain quantities of pellets in the guise of moisture on which duty was payable and this was a wilful evasion of duty payment attracting the contraventions of the provisions of Rules 9(1), 52A, 53, 173G, 173F and 226 of the Central Excise Rules. The Commissioner has come to a finding : - (i) The reasons advanced for non-deduction of moisture prior to 11-8-97 when they shifted to duty payment on dry weight were lacking conviction, in as much as the appellants, a major corporate entity would be not unaware of application of international norms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant records or other documents, which confirm the departmental allegation of excess clearance. (viii) Sample survey conducted by the Department indicate that no moisture was deducted by any other manufacturer in the trade supplying Iron Ore pellets including some other suppliers to their plant at Hazira and the appellants had failed to furnish evidence of dry weight basis supply. (ix) At Hazira plant, the appellants were receiving pellets from Vikram Ispat, Raigad, Maharashtra and M/s. Mandovi Pellets Limited, Goa and copies of these invoices show there is no such practice of deduction of moisture . (b) the appellants have admitted that the Iron-Ore pellets emerged from the furnace in red hot condition and are passed over a conveyor system to the open stock yard situated far away. Even before they reach the stock yard, the weight of the cooled dry pellets is ascertained by an automatic weighing system fixed to the conveyor belt and the weight so ascertained is accurately recorded in RG-1 Account and duly accounted for. Revenue has not brought out anything on record in the impugned order or in the submissions made before us that this factual position is in any way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmosphere. This was the statutory requirement of the Pollution Control Board. In the case of Delhi Cloth and General Mills Ltd. reported in 1978 (2) E.L.T. (J 121), the Hon ble High Court has held if the use and exchange of goods is regulated by law, unless the relevant roles are not played with, the product cannot become goods and the duty can be imposed only on goods i.e. things which have economic significance i.e. value, utility and exchangeability. Therefore, if goods are required to meet any specific requirement of another lower Boiler test or Drugs Act, then they are required to be entered into RG-1 only after such tests/standards activity/ process conducted as are required to be complied and met. In the present case there is no such finding. The requirement of spray of water appears to be a Transport Requirement and not that of fully manufactured product. Therefore, we cannot find anything amiss in the goods being accounted in the RG-1 on dry weight basis and subsequent removals even though any moist condition being converted to dry weight basis to effect and pay duty thereon. Nothing amiss has been arrived at on this dry weight accounting maintained. (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to manganese ore concentrates is totally incorrect and irrelevant to the issues in the present case. A perusal of the HSN notes under chapter 26 thereof indicates that moistening of the Iron ore is not mentioned as one of the physical or physio-chemical operations permissible to retain the entity for classification under chapter 26.01. Infact the notes under Heading 26.01 read as under : - The Heading also covers iron ores and concentrates with a manganese content of less than 20% calculated on the dry weight (the ores and concentrates being heated to a temperature of 105 to 110 C) (see Explanatory Note to heading 26.02). Depending upon their manganese content, these ores are known either as manganiferous iron ores or as ferruginous manganese ores. The heading excludes finely ground magnetite and other finely ground iron ores for use as pigments (Chapter 32). (Underlining supplied) Therefore, the adjudicator s finding that wet or dry weights are not relevant for Iron ore and concentrates under 26.01 are not upheld by us. (f) As regards Commissioner s finding that the appellant being a corporate entity run by professional management would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e views of the High Court reported in Para 30 of the decision in 1983 (12) E.L.T. 239 (Delhi), wherein the Hon ble High Court held as under : - 30 ..... The question before us is whether sized or unsized yarn would be liable for duty in an integrated process of manufacture. Sizing is relevant to weaving and not to spinning. It is a process necessary for weaving cloth and not to spinning yarn. Therefore, reading the amended rule 49, the utilization of yarn in a continuous process of manufacture immediately before such consumption or transaction would have reference to unsized yarn and not sized yarn. The deemed issue out or removal for purposes of weaving would be issue out or removal of unsized yarn. Once this deemed removal takes place, the unsized yarn is first sized, the process being the first-process in the many processes, which ultimately, results in weaving being completed and cloth being fabricated. Emphasis Supplied In the present case, substituting the words sized or unsized yarns with the words moist or dry pellets and considering the fact that moistening is relevant only for transportation, and not for manufacture of the Iron ore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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