TMI Blog2015 (10) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and even if there is some doubt, benefit thereof shall not enure to the assessee but would be given to the Revenue. - Decision made in the case of IVRCL Infrastructure & Projects Ltd. v. Commissioner of Customs, Chennai [2015 (4) TMI 562 - SUPREME COURT] followed Contention of Revenue is held correct - Assessee being appellant and exercise of Revenue is neutral; no need to file the appeal arises – Be that as it may, if that is so, it is always open to the assessee to claim such a credit. - Decided against the assessee. - Civil Appeal No. 6088 of 2013 - - - Dated:- 7-10-2015 - A. K. Sikri And Rohinton Fali Nariman, JJ. For the Petitioner : Mr. M. P. Devanath For the Respondent : Mr. B. Krishna Prasad JUDGMENT A. K. Sikri, J. The appellant (hereinafter referred to as the 'assessee') is engaged in the manufacture of Ferro-Alloys falling under Chapter 72 of Central Excise Tariff. One of the inputs for manufacture of Ferro-Alloys is Roasted Molybdenum Ore/Concentrate. The assessee has been regularly importing the aforesaid material i.e. Roasted Molybdenum Ore/Concentrate (hereinafter referred to as the 'Ore Concentrate'). 2. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 05, 2011 were detained for examination on September 14, 2011. Examination of the goods revealed that in respect of B/E No.4567406 dated September 06, 2011, the bags in which the goods were packed contained labels/marking which read as 'Roasted Molybdenum Concentrate'. In respect of B/E No.4551981 dated September 05, 2011, the markings were 'Molybdenum Sulfide (MoS2) Roasted. Samples of the products under importation were drawn and sent for chemical examination to Chemical Examiner, CRCL, Vadodara. On that basis, the goods/consignment was seized on September 26, 2011 under the provisions of Section 110 of the Customs Act, 1962 on the reasonable plea that they are liable to confiscation under Section 111 of the said Act. 5. Statement of Shri Babu Khandelwal, Partner of the assessee-firm was recorded under Section 108 of the Customs Act, wherein, he, inter alia, admitted that the goods under import were Roasted Molybdenum Ore Concentrates which they procured from M/s Glencore, Switzerland and M/s Thompson Creek Metals, USA. He further admitted that natural ores and ore concentrates are distinct commodities in terms of composition and concentrates are value added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 66,61,664/- and ₹ 3,10,73,035/- were confirmed by denying the benefit of CVD exemption along with interest under Section 28AA of the Customs Act. A penalty of equivalent amount was also imposed on the assessee under Section 114A of the said Act. 8. Aforesaid order was challenged by the assessee in the form of an appeal before the Custom Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench. Vide impugned decision dated February 08, 2013, the CESTAT has concurred with the opinion of the adjudicating authority on the merits of the case. However, partial relief is granted only to the effect that confiscation of goods under Section 111(d) of the Customs Act was improper and order to that extent is set aside with consequential order of setting aside the imposition of redemption fine under Section 125 and penalty under Section 112(a)/114A of the Customs Act. The outcome of the appeal is summed up in para 8, which reads as under: 8. To sum up, we uphold the duty demand and interest thereon under the provisions of Sections 28 of the Customs Act along with interest thereon under Section 28AA. However, we set aside the confiscation of the goods under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the following effect: 2. 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 mercury, of the metals of heading 2844 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. Headings 2601 to 2617 do not, however, include minerals which have been submitted to processes not normal to the metallurgical industry. 11. There was an amendment in the said Chapter in the year 2011, whereby, inter alia, Chapter Note 4 was added, which reads as under: 4. In relation to products of this Chapter, the process of converting ores into concentrates shall amount to manufacture . 12. Description of Tariff Item 2601, however, remained the same. We would, however, like to refer to sub-item 2613 which was also on the identical terms as in the original Chapter 26, which reads as under: Tariff Item Description of goods Unit Rate of duty 2613 Molybdenum ores and concentrates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption notification, the imported goods would be subjected to Nil rate of CVD. 16. The Tribunal in Hindustan Gas case held that roasting of an ore, to obtain concentrate, does not amount to manufacture, especially because of the reason that roasting is a process by which impurities in the ore are removed and the recoverable content of metal oxide is enhanced. The Tribunal also held that the product in question attracted 'Nil' duty as it was covered by exemption notification because of the reason that Ore and Concentrate are one and the same and hence entitled to the exemption. While answering the two questions in the aforesaid manner, the Tribunal explained the process of Concentrate. For this purpose, it referred to Kirk-Othmer's Encyclopedia of Chemical Technology, Vol. 16, Page 315, Concentrate and Ore are defined as under: Concentrate is an action to intensify in strength or purity by the removal of valueless or unneeded constituents, i.e. separation of ore or metal from its containing rock or earth. The concentration of ores always proceeds by steps or stages. Liberation of mineral values is often the initial step. Concentrate also means a product of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centrates of ores would also be exempted. Sl. No.10 of Notification No. 5/98-CE grants unconditional exemption to ores falling under Heading 26.01 to 26.17. Applying the decision of the Supreme Court in MMTC's case, the expression 'ores' in the notification will include 'concentrates' also. The mention of ores and concentrates separately in Heading 26.03 does not go against the above arguments. Even when an entry does not mention concentrate but refer only to ore, the Supreme Court in MMTC case holding that concentrate will be classified as ores will therefore, applying same principle while construing the word 'ore' appearing in the Notification No. 5/98 will call for coverage of the concentrate. It is clear from the judgment of Supreme Court in MMTC's case, that 'ore' is genus and 'concentrate' a species. Therefore, separate mention of 'ore' and 'concentrate' in Heading 26.03 ipsofacto will not imply they are different. Therefore, term 'ore' covered by Notification No. 5/98 can apply to 'concentrate' also. 19. Thereafter, it specifically referred to Note 2 of Chapter 26 and held that said Note al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, was emphatic in his submission that now conversion of ore into concentrate was treated as manufacture and, therefore, the concentrate could not be treated as same product as ore and it had transformed into an altogether different product. On that basis, he proceeded to build up his case by submitting that Tariff Item 2601 which describes the goods as 'iron ores and concentrates, including roasted iron pyrite' clearly treated the two items differently i.e. iron ore on the one hand and concentrate on the other. He also submitted that Tariff Item 2613 to which this product specifically related also gives the description as 'Molybdenum Ores and Concentrates' which would again mean that Molybdenum Ore was different from concentrate and two were distinct items. In the same hue, his further submission was that exemption notification 4/2006 exempted only 'ores' and did not exempt 'concentrate'. He argued that when the Tariff Entry 2613 mentioned ores and concentrates but the exemption notification exempted only 'ores' with conspicuous absence of concentrate, such an exemption notification was to be given strict interpretation and even if two v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remier Glynrhonwy Slate Co. (1928) 1 KB 561, p. 568, Nasiruddin v. State Transport Appellate Tribunal, AIR 1976 SC 331 p. 338 : (1975) 2 scc 671; Municipal Corporation of Delhi v. Tek Chand Bhatia, supra; State (Delhi Administration v. Puran Mal (1985) 2 SCC 589 : AIR 1985 SC 741. And as pointed out by LORD HALSBURY, the reading of 'or' as 'and' is not to be resorted to, unless some other part of the same statute or the clear intention of it requires that to be done. (Mersey Docks and Harbour Board v. Henderson Bros. (1888) 13 AC 595 (HL) p. 603. See further, Puran Singh v. State of M.P., AIR 1965 SC 1583 p. 1584, (para 5); Municipal Corporation of Delhi v. Tek Chand Bhatia, supra. But if the literal reading of the words is less favourable to the subject provided that the intention of the legislature is otherwise quite clear. [A.G. v. Beauchamp (1920) 1 KB 650; R. v. Oakes (1959) 2 All ER 92] In the case before us, the expression used is ores and concentrates and the tariff itself has provided separate sub-headings for these items, wherever it so wanted. Thus the legislative intent is very clear, that is to treat 'ores' and 'concen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id even after the addition of Chapter Note 4. 25. We have thoughtfully considered the respective arguments of counsel for both the parties. 26. Before we discuss these arguments and arrive at a particular conclusion, we would like to recapitulate the salient features of the case about which there is no dispute: (a) The assessee is seeking benefit of Notification No.4/2006-CE and relies upon Sl. No.4 thereof which totally exempts goods described therein from payment of excise duty. The goods which are otherwise excisable are, thus, exempted from payment of duty. Description of these goods in Sl. No.4 is 'Ores'. (b) The goods imported by the assessee fall in Chapter 26 of Central Excise Tariff Act. Particular Tariff Item is 2613 against which the description of goods given under the said Tariff Item is 'Molybdenum Ores and Concentrate'. (c) The goods imported by the assessee were not Molybdenum Ores in original form as mined. They had admittedly undergone the process of roasting and after the roasting, they are known as 'concentrates'. Even the assessee has described these goods as 'Roasted Molybdenum Ore Concentrate.' (d) Chapter Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is created treating the process of converting ores into concentrates as manufacture. Once this is treated as manufacture, all the consequences thereof, as intended for creating such a legal friction, would automatically follow. Following shall be the inevitable implications: (a) It is to be treated that Molybdenum Ore is different from concentrate. That is inherent in treating the process as 'manufacture' inasmuch as manufacture results in a different commodity from the earlier one. Section 2(f) defines this term as under: manufacture includes any process,- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion of ores into concentrate is considered as manufacture and, therefore, becomes liable for central excise levy, exemption Notification No. 4/2006-CE is to be interpreted in this light as the Legislature has intended to treat ores and concentrates as two distinct items and Notification No. 4/2006-CE exempts only 'ores', concentrates automatically falls outside the purview of said notification. It is rightly argued by the learned senior counsel for the Revenue that exemption notifications are to be construed strictly and even if there is some doubt, benefit thereof shall not enure to the assessee but would be given to the Revenue. This principle of strict construction of exemption notification is now deeply ingrained in various judgments of this Court taking this view consistently. 32. In M/s. Navopan India Ltd., Hyderabad v. Collector of Central Excise and another 1994 (73) ELT 769 (SC), this principle of interpretation of an exemption notification was summarised in the following words: We are, however, of the opinion that, on principle, the decision of the Court in Mangalore Chemicals -and in Union of India v. Wood Papers, referred to therein -represents t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irtue of this rule), presented unassembled or dis-assembled. It is clear that such note will have no application to an exemption notification which is issued under Section 25 of the Customs Act. Therefore, the fact that an unassembled plant which is incomplete but which has the essential character of a complete plant is not the test to be applied in the present case. On the other hand, the applicable test would be what has been laid down in a catena of decisions. Two such decisions will suffice. In Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd. (2005) 13 SCC 789 = 2005 (189) E.L.T. 401 (S.C.), this Court held: 34. The principles as regards construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning where for the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning. Similarly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ingredients which go into the making of the like indigenous article. This provision corresponds to section 2A of the existing Act, and is necessary to safeguard the interests of the manufacturers in India. Apart from the plain language of the Customs Tariff Act, 1975 even the notes to clauses show the legislative intent of providing for a charging section in the Tariff Act, 1975 for enabling the levy of additional duty to be equal to the amount of excise duty leviable on a like article if produced or manufactured in India. Even though the impost under Section 3 is not called a countervailing duty, there can be little doubt that this levy under Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or future manufacturers of the like articles in India. (emphasis supplied) This object of levy has to be kept in mind while interpreting notification No. 4/2006-CE for the purposes of levy of CVD on concentrates. If the domestic manufacturer of concentrates is liable to pay excise duty on conversion of 'ores' into 'concentrates' in terms of Note 4 to Chapter 26, can his interests be sub-served when concentr ..... 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