TMI Blog2011 (1) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... , S.K. Gaule, JJ. REPRESENTED BY : Shri H.K. Maingi, Advocate, for the Appellant. Shri A.K. Prasad, JCDR, for the Respondent. [Order per : P.G. Chacko, Member (J)]. These appeals are by Mandovi Pellets (A Division of Chowgule Co. Pvt. Ltd.). The appellant had filed shipping bill No. 49 dated 14-6-2007, shipping bill No. 5017063 dated 6-8-2007 and shipping bill No. 5018017 dated 8-11-2007 for export of different quantities of iron ore pellets at nil rate of export duty. The assessing authority assessed the goods to export duty @ Rs. 300/- per tonne as applicable to iron ores and concentrates, all sorts under Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975. Similar assessments were made on three further exports covered by shipping bills No. 5018722 dated 28-1-2008, No. 5019805 dated 15-5-2008 and No. 5019838 dated 22-5-2008. The appellant paid the amounts of duty under protest. Subsequently, they challenged the assessments before the Commissioner (Appeals). The appellate authority upheld the assessments and rejected the assessee s appeals after holding that the goods exported by them were chargeable to export duty under Heading No. 11 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the iron ore pellets exported by the appellants were manufactured out of limonite ore (hydrated iron oxide) through physico-chemical operations in the pelletisation plant. Both physical and chemical changes took place in the conversion of limonite ore to pellets as proved by technical experts before the civil court in the aforesaid case between the company and the Port Trust. The pellets were, therefore, to be recognised as a commodity distinct and different from the ore. The counsel also relied on the Supreme Court s judgment in Minerals and Metals Trading Corporation of India Ltd. v. Union of India Ors., (1972) 2 SCC 620 = 1983 (13) E.L.T. 1542 (S.C.) wherein it was held that the important test to determine whether a process involving ore amounted to manufacture was to see whether the chemical structure of the ore changed or remained the same. In the cited case, the apex court found that wolfram ore, which was imported by MMTC, was never subjected to any process of roasting or treatment with chemicals for removing impurities. It was held to be wolfram ore concentrate containing 65% WO3, which was of merchantable quality and was commercially known as such. The court further he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel also argued that any description of goods in the First Schedule to the Customs Tariff Act was not to be used for ascertaining the meaning of any description of goods in the Second Schedule to the Act. The First Schedule to the Act occupies the field of imports whereas the Second Schedule occupies the field of exports. The two schedules were enacted for different purposes and, therefore, one cannot be used to interpret the other. In this connection, the learned counsel relied on the Apex Court s judgment in Joint Commissioner of Income Tax, Surat v. Saheli Leasing and Industries Limited - 2010 (253) E.L.T. 705 (S.C.). Finally, the learned counsel submitted that the iron ore pellets were not to be equated to iron ores and concentrates for the purpose of levy of export duty. 4.1 The learned JCDR submitted that it was wrong to say that the provisions of the HSN could not be relied upon in the interpretation of the description of goods in the Second Schedule to the Customs Tariff Act. What is export for India is import for another country and, therefore, the same system of classification has to be followed by both exporting and importing countries. In this connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ore fines into larger lumpy pieces with or without addition of additives. Two types of agglomerated products are commonly produced/ used in the industry, namely, sinter and pellet and the processes are known as sintering and pelletising respectively. Pellets are normally produced in the form of globules from very fine iron ore and mostly used for production of sponge iron in gas-based plants, though they are also used in blast furnaces in some countries. In this manner, the JCDR argued that iron ore pellets were nothing but an agglomerated form of iron ore and hence would be appropriately classified as iron ores and concentrates, all sorts under Heading No. 11 of the Second Schedule to the Customs Tariff Act, In this context, the learned JCDR once again referred to Heading 2601 of the Schedule to the Central Excise Tariff Act, corresponding to Heading 2601 of the First Schedule to the Customs Tariff Act. It was pointed out that Iron Ores and Concentrates of Heading 2601 were divided into non-agglomerated (SH 2601 11) and agglomerated (SH 2601 12) and that iron ore pellets (SH 2601 12 10) were specifically placed under agglomerated (SH 2601 12). Iron ore lumps, iron or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court s judgment dated 31-3-1983 could be relied upon in interpreting Heading No. 11 of the Second Schedule to the Customs Tariff Act. With reference to the expression all sorts figuring in the description of goods under Heading No. 11 ibid, the learned JCDR relied on the Gujarat High Court s decision in Jalal Plastic Industries v. Union of India, 1981 (8) E.L.T. 653 (Guj.) wherein it was held that the expression all sorts used in sub-item (2) of Tariff Item 15A of the Central Excise Tariff was very comprehensive and the same brought within its sweep each and every article made of plastic. Sub- item (2) of Tariff Item 15A read thus : Articles made of plastics, all sorts, including tubes, rods, sheets, ..... In the same context, the learned JCDR also relied on Kirloskar Electric Co. Ltd. v. Collector of Central Excise, Bangalore, 1986 (26) E.L.T. 381 (Tribunal), wherein the same expression all sorts used in the description of goods under Item 30 (Electric Motors, all sorts) of the Central Excise Tariff was interpreted to mean a group entry covering all types of electric motors. The learned JCDR thus defended the view taken by the Commissioner (Appeals) in this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Import Tariff and the Indian Trade Classification (ITC) and sought to establish that there were two types of groundnut kernel viz. an edible type and another type used for extraction of oil; that these were two different trade commodities having different characteristics; that the exported goods was the edible type appropriately to be described as processed peanuts and that the entry in the Export Tariff should be confined to the oil-yielding type of groundnut kernel. The department argued that groundnut kernel under the Export Tariff had the widest connotation and should include the roasted, blanched, fried groundnut kernel also. The Supreme Court accepted this argument and held as under : But the fact is that, though the raw groundnut kernel has undergone a drying, roasting and frying process, its identity as groundnut is not lost. Even in the market to which it is exported and where it is marketed, it is purchased only as groundnuts (or peanuts, as they are called in the U.S.A.). May be there are two different commodities but both are known only as groundnuts . The argument that the scope of the entry should be restricted because of the two-fold classification existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (iron ores and concentrates, including roasted iron pyrites) in the First Schedule to the CTA. (ii) The expression all sorts used in Heading No. 11 of the Second Schedule to the CTA indicates the widest coverage of iron ores and concentrates under that heading. Therefore, all goods falling under all sub-headings of Heading 2601 (iron ores and concentrates) of the First Schedule to the CTA must be within the ambit of Heading No. 11 ibid. The interpretation given to the expression all sorts by the High Court in Jalal Plastic Industries case and by the Tribunal in Kirloskar Electric Co. case is of substantial support to this view. (iii) The following is an excerpt from the First Schedule to the CTA : Tariff Item Description of goods (1) (2) 2601 - Iron ores and concentrates, including roasted iron pyrites - Iron Ores and concentrates, other than roasted iron pyrites : 2601 11 -- Non-agglomerated : 2601 11 10 --- Iron ore lumps (60% Fe or more) 2601 11 20 --- Iron ore lumps (below 60% Fe, including black iron ore containing up to 10% Mn) 2601 11 30 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agglomerated (by igniting at lower temperatures causing only interfacial fusion) into lumpy pieces (with or without addition of additives like limestone, dolomite, etc.) before charging in the furnace. Pellet is just one of the two types of agglomerated products, the other one being sinter . Normally, very fine iron ore is palletised and relatively coarser fine iron ore is sintered. Pellets are in the form of globules whereas sinter is a clinker-like aggregate. The literature nowhere says that pelletisation of iron ore will change its chemical composition. It only brings about a physical change to facilitate the charging of the ore into the blast furnace as part of metallurgical operations for extraction of elemental iron (Fe). According to technical literature, the common iron ores are (1) Haematite (Fe23) containing 70% Fe; (2) Magnetite (Fe304) containing 72% Fe; (3) Limonite (Fe2O3 + H2O) containing 50 - 60 % Fe and (4) Siderite (FeCO3) containing 48%) Fe. The pellets exported by the appellant are said to have been made from limonite which is, chemically, ferric oxide in hydrated form. The appellant has not proved that pelletisation of limonite fines brings about change of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that decision is binding only on the contracting parties. It is not binding on the Indian Customs authorities. Secondly, the said decision was taken by considering, various circumstances which prevailed in 1958-59 and by ascertaining the intention of the contracting parties. It is nobody s case that the same circumstances prevailed in 2007-08 after almost half a century or that the intention of Chowgule Co. survived the tenure of the contract. Thirdly, the meaning of iron ore in commercial parlance appears to have changed over the decades and, in 1975, Parliament, while enacting the Custom Tariff Act, brought lumps, fines and pellets of iron ores within the meaning of iron ores vide Heading No. 2601 of the First Schedule read with Heading No. 11 of the Second Schedule to the Act. In this connection, it may be noted that, in the context of interpreting the term milk in powder form for purposes of the Bombay Sales Tax Act, 1959, the High Court in the case of Commissioner of Sales Tax v. Agarwal Co., 1983 (12) E.L.T. 116 (Bom.) considered the effect of technological developments on interpretation of terms used in fiscal legislation. Here s an excerpt from para (7) of its j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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