TMI Blog2016 (4) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court of India) that for classification of the manufactured goods, HSN is a safe guide. Therefore, since the processes undertaken by the appellant like washing, magnetic separation, gravity separation to remove unwanted matters on sand ores, and the resultant satisfies the meaning of ‘concentrate’ as explained in the HSN, hence in our considered opinion, it should be considered as ‘manufacture’ as per Sec.2(f)(ii) of CEA,1944 in view of the chapter note 2 of Chapter 26 of CETA,1985 and the resultant ‘Ore concentrate’ is dutiable. There is a significant difference between clause(i) and clause(ii) of the definition of ‘manufacture’ laid down under sec.2(f) of CEA,1944. The processes which are considered not manufacture in the ordinary sense under clause (i), if mentioned in the relevant Section or chapters of CETA,1985 as amounting to manufacture, such processes will fall under the definition of ‘manufacture’. Thus the processes carried out on sand Ores result into conversion of ores to concentrate accordingly manufacture under clause (ii) of section 2(f) read with Chapter Note 4 to chapter 26 of CETA,1985 . The eligibility of benefit of exemption notification 63/ 95 CE dt.16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me demand was confirmed and recovery of interest under Section 11AB/11AA of Central Excise Act, 1944 has been directed. Hence, the present Appeal. 3.1 Ld.Advocate Shri P.Paranjpe appearing for the Appellant submitted that for the period prior to 01.3.2011, this Tribunal by order dated 27.9.2011 in their own case reported at 2002(139)ELT 352(Tri.-Kol) had held that the processes/activity carried out by the Appellant did not amount to manufacture and the ore sand used as raw materials by the Appellant remained ore (of minerals) and did not bring into existence any concentrates. He submits that since then there has been no change in the process of mineral separation by the Appellant. He has contended that the ratio laid down in the said case was followed by this Tribunal in the case of Classic Microtech (P) Ltd. vs. CCE, Ahmedabad reported in 2012 (285) ELT 418(Tri-Ahd.) and the benefit of exemption no.4/2006-CE exempting the ores from central excise duty was granted to the imported zirconium sands considering the same as ore. He submits that the decision in the case of Classic Microtech (P) Ltd. was followed by the Commissioner of Customs, Pune (in case of Ruby Ceramics (P) Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that the reliance on chapter note 4 of chapter 26 of CETA is misplaced as the basic raw material for the appellants is beach sand covered under chapter sub-heading 25059000 of CETA. It is their submission that since Note 4 is inserted to chapter 26, the same will not be applicable when admittedly the raw material processed by the Appellant is covered by Chapter 25. 3.5 It is further submitted that the various test reports and the technical opinions suggests that mineral separated from sand beach are ores as under:- (i) Report dated 25.3.2003 of the National Institute of Technology, Rourkela, and Report dated 2.7.1997 of the department of Atomic Energy, Hyderabad, describes the separated minerals as naturally occurring ores. (ii) The test Report dated 21/22.10.2002 Regional Research Laboratory(CSIR) described the samples to be concentrate. However, on re-examination vide report dated 17.2.2003 they confirm that minerals separated from sand beach have not undergone any crystallographic transformation or chemical changes and appears to be obtained from the raw beach sands by the physical methods of separation. (iii) Opinion of CSIR Institute of Miner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uartz, traces of albite, almandite, hornblende, ilmenite, monazite, rutile, sillimanite and zircon. As regards the various minerals separated from the raw sand, it reported then to be ilmenite(with traces of rutile and hematite), rutile, zircon, sillimanite and minute traces of zircon and garnet (almandite). 3.6 The ld. Advocate has submitted that various test reports and the technical opinions indicate that minerals separated from the beach sand are ores and not concentrates. Referring to the meaning of ore prescribed in Note 2 to Chapter 26 of CETA, 1985 and the meaning of concentrate in the HSN Explanatory Notes, it is his contention that the process that carried out does not result into removing part or all the foreign materials present in the ore. The processes carried out by them only results improving the content of the particular ore in a given quantity of sand. The actual gain of the ore will continue to posses some quality as prior to processing by the appellant which establishes the fact that no concentrates of the ores takes place. 3.7 It is further submitted that as per HSN, in order to qualify as concentrates, part or all of the foreign metals in the ore need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to classify them under chapter 26 as ores of minerals is not sustainable. These two minerals do not fulfill the requirement for classifying as ores as defined in note 2 of chapter 26 of CETA as they are not used in the metallurgical industry for extraction of metal. While garnet is used as an abbressive mineral in sand blasting, water jet cutting etc., Silliminite is used for making refractories, ceramic wool etc. 3.13 Without prejudice to the submissions on merits as above, the appellants submit that under Notification No.63 of 1995 dated 16.3.1995 as amended, all goods other than following under heading 2701, 2702, 2703, 2704 and 2706 are exempted from excise duty when manufactured in a mine. It is submitted that the activity that appellants carried out is indeed in a mine as certified by Govt.of India, Ministry of Labour, Director General of Mines Safety and a certificate dated 28.8.2014 from the Secretary to the Ministry of Labour and Employment, Govt.of India has been produced before this Bench to the said effect. The Ld. Advocate submitted that the said certificate could not be produced before the Ld. Adjudicating authority. 4.1 The ld.Spl.Counsel for Revenue submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural sand form the sea bed/beach and obtain sand slurry. It is the ores conglomerate of various metallurgical product of ore like Ileminite, Sillimenite, Rutile, Zircon and Garnet along with other rock particles like quartz, feldspar, pyroxene, shells fragments (Organic matters) and sline. He submits that the ld.adjudicating authority has observed that the ordinary beach sands contain all these ores/minerals along with other particles and it confirm the definition of ores as per the tariff read with HSN clarificatory notes. The minerals supported their sand beach ore concentrates. 4.6As regards Tribunal s decision in their own case, the ld.Spl.Counsel submits that it relates to the period prior to the introduction of chapter note 4 to chapter 26 w.e.f. 01.3.2011 and therefore the said decision will not hold good after 01.3.2011 when the conversion of ores to ore concentrates has been defined as manufacture. He submitted that the judgement of Classic Microtech (supra), is no more good law in view of the recent decision of Honble Supreme Court in the case of Star Industries Vs. Commissioner of Customs(Imports),Raigad 2015 (324) ELT 656(SC). 4.7 In response to the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultant is not liable to duty. To support their contention, they have referred to the judgements of this Tribunal in their own case and M/s SAIL s case(supra), the meaning of concentrate as per the HSN , and the clarifications issued by the Central Board of Excise and Customs. The Revenue s contention on the other hand is that after insertion of chapter note 4 to chapter 26 a legal fiction has been created, whereby conversion of ores into concentrates becomes manufacture and the processes carried out by the appellant s on the Ore sand, satisfy the meaning of concentrate prescribed in the HSN, accordingly chargeable to duty. 5.3 The contention of the Revenue is that w.e.f. 01.03.2011, the chapter note 4 has been added to chapter 26 which reads as follows:- 4.In relation to products of this Chapter, the process of converting ores into concentrates shall amount to manufacture. 5.4 It is the Revenue s argument that application of various processes to ore sand converts it into concentrates and becomes manufacture w.e.f 01.3.2011, which activities were earlier held by this Tribunal as not amounting to manufacture. It is vehemently argued on behalf of the Appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire qualification in new circumstances. Megarry, J in (1971) 1 WLR 1062 observed: One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament. And, in Herrington v. British Railways Board [1972 (2) WLR 537] Lord Morris said : There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case. 13.Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 14.The following words of Lord Denning in the matter of applying precedents have become locus classicus : Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from ordinary sand. It is also on record that the resultant mineral sands are bought and sold as ores only and not as concentrates of ores. It is clear from note 2 of Chapter 26 of the Central Excise Tariff that only ores which have been submitted to processes, not normal to the metallurgical industries are excluded from ores. Thus, ores which have been subjected to special treatment go out of the scope of ores. No such special treatment is carried out in the present case. 9.The Apex Court has held in the case of Hyderabad Industries and Ors. v. Union of India Ors. that no manufacture of a new or distinct commodity takes place on account of the processes of separation of naturally occurring asbestos from asbestos rocks. In the earlier case of Minerals Metals Trading Corporation of India Ltd., the Apex Court held that the separating of wolfram ore concentrate from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test according to the Apex Court is that the chemical structure of the ore should remain the same. Thus, the principle of law is clear that basic operations carried out to produce usable ore would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntent increases after the processes undertaken by them. The learned Advocate for the Respondents has emphatically contended that the activities of crushing, grinding, screening and washing do not amount to manufacture of any goods attracting levy of Central Excise duty. It is settled law that the activity or process in order to amount to manufacture must lead to emergence of a new commercial product, different from the one with which the process started. In the landmark judgment in the case of U.O.I. v. Delhi Cloth General Mills, 1977 (1) E.L.T. (J 199) (S.C.), the Apex Court has held that manufacture is generally understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance. The Court has held that... something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. The Supreme Court has laid down a two fold test for determining whether the process is that of manufacture in J.G. Glass Industries Ltd. v. U.O.I., 1998 (97) E.L.T. 5 (S.C.) as under : First, whether by the said process a different commercial commodity comes into ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the case of Super Engineering Co. 1996 (82) E.L.T. 539 wherein the Tribunal has held that the process of pulverizing, washing and cleaning of brass/ash does not result into emergence of a new marketable commodity with a separate, distinct name having separate physical, chemical composition or characteristic. Similar views were expressed in the case of Seth Liladhar Biyani Sons v. CCE Jaipur, 2001 (129) E.L.T. 423 (T) relied upon by the learned Advocate. In view of this we hold that the processes undertaken by the Respondents do not result in the manufacture of a different commercial commodity. Hence no Central Excise duty is leviable. Accordingly, all the appeals are rejected. 5.9 It is vehemently argued on behalf of the Appellants that the processes narrated in the said decision of this Tribunal remained unchanged and the Tribunal considering such processes has held that Ores subjecting to process of crushing, grinding, screening and washing with a view to remove foreign materials would not result into concentrate, therefore, no manufacturing process involved and accordingly, duty is not leviable on resultant concentrate. It is their further contention that even afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed and referred to the classic judgement on manufacture i.e. UOI vs. Delhi Cloth and General Mills - 1977 (1) ELT J-199. Thereafter, applying the test laid down in the said judgement of the Hon ble Supreme Court, this Tribunal concluded that the process undertaken by M/s.SAIL to remove extraneous unwanted material from the ore and as such is devoid of gangue which adheres to the blasted ores and rejected the contention of the Revenue that the constituent of the final product are distinctly different from that of the blasted ore. Further, it is observed that on account of the processes undertaken by M/s.SAIL, no new and different article has emerged on which Central Excise duty could be levied and collected. Referring to the meaning of concentrate as in HSN this Tribunal observed that mere removal of foreign matters would not bring into existence a new and different article having a distinctive name, character or use. The use of iron ore as mined or after the process undertaken by M/s.SAIL remains the same, that is, to be used in metallurgical industry for the extraction of metals and finally they observed that the process undertaken by M/s.SAIL do not result of manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concentrates has not been defined under the CETA, but its meaning has been explained in the HSN Explanatory notes along with term ores as:- 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 the present heading, 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. Processes to which products of this heading may have been submitted include physical, physico-chemical or chemical operations, provided that they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcinations, roasting or firing (with or without agglomeration), such operations must not alter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter, so as to make it fit for metallurgical operation or economical for transport, would result into concentrates. 5.20 The appellant on the other hand strenuously argued that the process undertaken by them only improves the content of particular ores in a given quantity of sand, hence the resultant cannot be called as ore concentrates. 5.21 In the backdrop of above rival arguments, it is necessary to consider the implication of the new Chapter Note 4 which has been inserted in Chapter 26 w.e.f. 01.03.2011. In the said Chapter Note, it has been laid down that process of converting ores into concentrates shall amount to manufacture. The meaning of ores has been laid down in Chapter 2 of the said Chapter 26. The term concentrate is applicable to ores which are made free from impurities through the application of certain processes by which part or all of the foreign matters are removed for the reason that such foreign matter might hamper subsequent metallurgical operations or such foreign matter would not help in economical transport. 5.22 In our view, the processes carried out by the Appellant are also included in explaining the term concentration under HSN. It is lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture in the ordinary sense under clause (i), if mentioned in the relevant Section or chapters of CETA,1985 as amounting to manufacture, such processes will fall under the definition of manufacture . 5.23 Needless to emphasize, the Hon ble Apex Court in S.D. Fines Chemical s case 1995 (77) ELT 49 has laid down that if a process is declared as amounting to manufacture under the relevant Chapter Notes or Tariff Heading then applicability of the test of emergence of new and distinct commodity having different use and character after the processes applied to a commodity becomes irrelevant. Their Lordships at para 13 of the order observed as:- 13.The decisions aforesaid make it clear that the? definition of the expression `manufacture under Section 2(f) of the Act is not confined to the natural meaning of the expression `manufacture but is an expansive definition. Certain processes, which may not have otherwise amounted to manufacture, are also brought within the purview of and placed within the ambit of the said definition by the Parliament. Not only processes which are incidental and ancillary to the completion of manufactured product but also those processes as are specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery language of Note 6, conversion from granules into moulding powder would result in manufacture . Therefore, as a consequence of the new definition of manufacture in terms of Section 2(f), the activities which otherwise do not amount to manufacture can now be treated as manufacture and made liable to duty. 5.25 These judgements are later followed in the case of Commissioner of Customs Central Excise, Goa vs. Phill Corporation Ltd. 2008 (223) ELT 9(SC), wherein their Lordships observed as follows:- 25.The learned Additional Solicitor General contended that the deeming provision of Section 2(f) (ii) was squarely raised at all levels of the proceedings. In the show cause notice, Section 2(f) has been invoked. Similarly, in the order in original, the Commissioner has categorically relied upon Chapter Note 3 of Chapter 20 and Section 2(f)(ii) and referred to various documents to strengthen his case. The learned Additional Solicitor General has also submitted that the Constitution Bench judgment of this court in Delhi Cloth and General Mills (supra) is not applicable in the instant case as the deeming provisions of section 2(f)(ii) were not at all enacted during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments of this court that certain processes which may not otherwise amount to manufacture have been deemed to be manufacture by the Parliament under section 2(f)(ii). Relevant portion of this judgment has already been extracted in the preceding paragraphs. 31.In deciding the cases of this nature, the courts have to make serious endeavour to ascertain spirits and intention of the Parliament in enacting these provisions and once the legislative intention is properly gathered, then the bounden duty and obligation of the courts is to decide the cases in consonance with the legislative intention of the Parliament. 5.26 The said Chapter Note 2 to Chapter 26 inserted from 01.03.2011 has been recently considered by the Hon ble Supreme Court in Star Industries Vs Commissioner of Customs(Imports), Raigad 2015 (324) ELT 656, while considering the eligibility of Notification 4/2006, wherein their Lordships observed as:- 28. According to us, it is very clear from the reading of the judgment in Hindustan Gas case that basic and the common thread which runs throughout the decision is that subjecting ore to the process of roasting does not amount to manufacture. This very basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned even after insertion of Chapter Note 4. No doubt, as per Chapter Note 2, 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. As per this note, metals of Section XV would be included in the term ores. However, after the insertion of Chapter Note 4, these two Notes, namely, Note 2 and Note 4 have to be read harmoniously. If we accept the submission of the learned counsel for the assessee predicated on Note 2, then Note 4 even after its conscious inclusion, would be rendered otiose which cannot be countenanced. Therefore, Note 2, when seen along with Note 4, has to govern itself in limited territory. On the basis of deeming fiction created by Note 4, once we arrive at the conclusion that process of roasting of Ore amounts to manufacture and it creates a different product known as Concentrate, for the purpose of exemption notification, which exempts only Ores it is not possible to hold that Concentrate will still be covered by the exemption notification. Therefore, harmonious construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and its use, commercial identity and character is different from the ore, then the resultant would be considered as manufactured and accordingly dutiable. Therefore, in absence of an increase in the purity content by any method, if there cannot be a manufacturing process, the chapter note 4 inserted with effect from 01.3. 2011 defeat the very purposes and becomes otiose. Such a situation, in our opinion, cannot be the intention of the legislature. Therefore, in our considered opinion application of various processes to ore sand, converts it into concentrates and accordingly in view of the chapter note 4 of chapter 26 becomes manufacture and leviable to Excise duty. 5.28 The appellant has submitted that Silliminite and Garnet are directly covered by chapter heading 25085032 and 25132030 of the CETA respectively attracting nil rate of excise duty, We however find that while chapter 25 covers mineral products which are in the crude state or which have been washed, ores of various minerals are covered under chapter 26. We also notice that while chapter 26 excludes the products of chapter 2517 and 2519 no such exclusion is provided in case of chapter 2508 and 2513 and therefore w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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