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M/s Rungta Mines Ltd, M/s Rungta Sons Pvt Ltd, M/s Sail, M/s Kamal Jeet Sing Ahluwalia, M/s Odisha Mining Corporation Ltd Versus Commissioner of Central Excise, Customs And Service Tax, BBSR-II

Manufacture - application of processes of crushing, grinding, washing, grading etc. to Iron Ores - whether the processes of crushing, grinding, screening, grading etc. resulted into 'manufacture' as defined under Sec2(f)(i) of CEA,1944 as no new commercial commodity came into existence as a result of such process? - Held that:- It is relevant to adopt the meaning of concentration and Levy of royalty under the Mines and Minerals(Regulation and Development Act),1957 and the Rules made thereunder t .....

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oration Ltd. (2008 (2) TMI 3 - Supreme Court of India) that for classification of the manufactured goods, HSN is a safe guide. Therefore, since the processes undertaken by the appellant on 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 Iron Ore concentrate is dutiable. There is .....

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ontent assigning different sub-headings. Therefore, in absence of an increase in the Fe content by benefication or any other 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 processes of crushing, grinding, screening and washing and grading of iron ore, converts it .....

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a, Spl Counsel & Shri K Chowdhury, Supdt (AR) & Shri A Roy, Supdt (AR) ORDER Per Dr. D M Misra These appeals are filed against respective orders passed by the Commissioner of Central Excise, Bhubaneswar-II. Since the questions of law involved in all these appeals are common with marginal variation of facts, hence all these appeals are taken up together for disposal. 2. Stating the facts, in Ex.Ap. No.75367/14 the appellant M/s Rungta Mines Ltd. are engaged in mining of iron ore at their .....

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at by the aforesaid processes ores are converted into concentrate, as per chapter note 4 Chapter 26 of CETA,1985 inserted w.e.f. 1.3.2011, hence the said processes amount to manufacture, two show cause cum demand notices were issued for the period from March, 2011 to September, 2012 demanding duty of ₹ 206,32,99,768/-. On adjudication, the demands were confirmed and penalty of equivalent amount had been imposed. 3. In Appeal No.Ex.Ap.71397/13 the appellant M/s Rungta Sons Pvt. Ltd. are eng .....

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nt M/s. SAIL, a Govt. of India Enterprises, engaged in mining activities amongst other places at its Barsua Iron Ore Mines. The mining activity include drilling and blast of rocks containing iron ore. The blasted rock is subjected to tracing operation comprising washing and sizing. Iron ore extracted from the said mines is solely and exclusively used as iron ore on their integrated steel plants. Four show cause cum demand notices were issued for the period from March, 2011 to December, 2012 dema .....

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s are collected with the help of excavators and then brought to the crushing/screening plant where the said boulders are crushed into sizes of 5-18 mm and 10.30 mm and 10-40 mm and thereafter it is screened to segregate the iron ore of desired sizes i.e. 5-10 mm, 10-30 mm and 10-40 mm. In a nutshell, the appellants are engaged in only crushing and screening of the ROM in the plant installed in the leasehold premises. In the process of said crushing and screening iron ore fines are also generated .....

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es of iron ore which are marketed are 10-100 mm, 10-40 mm and 10 mm for the material period. Seven periodical demand notices were issued for recovery of duty amounting to ₹ 117,38,20,898/- for the period from March, 2011 to September, 2014. On adjudication, the demands were confirmed with imposition of equivalent penalty on the Appellant. 7. Shri Kartik Kurmy, ld.Adv. appearing for M/s. Rungta Mines Ltd. and M/s.Rungta Sons (P) Ltd. has submitted that the appellant are engaged in mining an .....

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oncentrate is nil. Explaining the process ld.Adv. has submitted that on blasting first Run of Mines (ROM) are obtained which then transported to crushing and screening plant inside the mining area where the same are crushed and screened to required sizes. It is further submitted that in the process of crushing and screening, iron ore fines are also generated which are sold without carrying out any further processes. 7.1. It is his contention that the appellant do not carry out any beneficiation .....

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carried out with low grade iron ore (having 35% to 45% Fe content) for removal of foreign matters with a view to enrich it up to 60% to 65% of the Fe content for its use in further metallurgical operations or for economic transport. By application of the process of beneficiation the Fe contents in the iron Ore cannot be increased/upgraded beyond 65%. The rest of the gangue matters beyond 65% is removed by smelting for steel making in the form of slag. 7.2. Narrating the process of benefication, .....

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ailing the impugned order, the ld.Adv. has submitted that there is no conversion of ores into concentrates. Referring to chapter note 2 under chapter 26 he has submitted that 'ores' has been defined therein, but concentrates are not defined under the CETA,1985; the HSN explanatory notes defines concentrates. He has submitted that the Hon'ble Apex Court has laid down that in absence of any statutory definition, HSN explanatory notes can be referred to as a safe guide of CCE v. Phil Co .....

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t is sine qua non for determination of whether the process is concentration or not. 7.5. Referring to the clarification dated 25.1.2012 issued by Ministry of Mines, Govt. of India, he has submitted that in the said letter it has been clarified that no special treatment is involved in crushing and screening of run of mines (ROM) to lumps and fines and lumps and fines are naturally occurring forms of ore. The process of crushing and screening of ore to different sizes of lumps and fines without fu .....

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352, the Tribunal held that without special treatment of the ores it will remain as ores only. Referring to the decision of Hon'ble Supreme Court in National Mineral Development Corporation Ltd. v. State of M.P. (2004) 6 SCC 281, he has submitted that the process of beneficiation consists of grinding, magnetic separation, froth floatation which are carried out in large concentration plants for concentration of ores. It is his contention that in the case of Hyderabad Industries Ltd. v. UOI - .....

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543(SC), UOI v. Garware Nylons Ltd. - 1996 (87) ELT 12(SC), Hindustan Ferodo Ltd. v. CCE - 1997 (89) ELT 16(SC). 7.7 Advancing an alternative argument he has submitted that the appellant are entitled to the exemption Notification No.63/95-CE dated 16.3.1995 as the said process was carried out within the mines of the appellant. 8. Shri R.K.Chowdhury, ld.adv. for M/s.SAIL has submitted that the iron ore are subjected to normal processes, namely crushing, grinding, screening, washing etc. for prep .....

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er subjecting the ore to any chemical change nor adopting any chemical process to eliminate any unwanted metal from the ore. Referring to the decision of the Hon'ble Supreme Court in Mineral & Metals Trading Corporation of India Vs. UOI 1983 (13) ELT 1542(SC) = 1983 (13) ELT 1542(SC) he has submitted that unless the ore is roasted or treated with any chemical it cannot be considered as processes. The said decision was followed in Indian Hard Metals(P) Ltd. Vs. UOI 1978 (2) ELT J 667 (667 .....

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nct commodities known to market and are subjected to different rate of royalty which indicates that the appellants are not manufacturer of concentrates. Further, he has referred to the clarification issued by the Ministry of Minerals by its circular dated 25.1.2012 wherein it is stated that unless the beneficiation process is carried out it cannot be construed as a manufacturer of concentrates. He has submitted that the meaning of concentration has not been explained in the HSN, but it has been .....

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ed the appeal filed by the Revenue against the Order of the Tribunal. He has further submitted that alternatively the Appellant are eligible to the benefit of Notification No.63/95 CE dt. 16.03.1995. 9. Shri Manas Mahapatra, ld.Sr.Adv. appearing for M/s.Kamal Jeet Singh Ahluwalia interpreting the HSN explanatory note submitted that for the purpose of ores to be termed as concentrate, two steps are involved. Firstly, a part or all of the foreign matters needs to be removed by a special treatment. .....

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omical transport' used in the HSN notes shall not be applicable in the case of appellant for the reason that the ore extracted by the appellant is in a very huge size which is not transportable. Hence, it is crushed to various sizes to make it transportable, therefore ores are being crushed for the purpose to make the same transportable. So the question of economic transportation does not arise. He has submitted that the appellant are involved in the process of crushing and screening only an .....

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een granted to the appellant by the state authorities. The iron or is excavated/mined from the earth. After removing iron ore lumps from earth, the lumps are so huge that it cannot be transported by any means of transportation. So, the lumps are broken down to make it transportable and while doing so there is no change in the quantity or grade of the iron ore. He has submitted that the issue is covered by the decision of the Hon'ble Supreme Court in the case of CCE v. SAIL. Further he has su .....

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on04/2006 CE dated 01.3.2006 as amended by Notification dated 17.3.2012. Further he has submitted the appellant is not required to pay duty on excisable goods which are absolutely exempted under section 5A(1A) of the Central Excise Act, 1944. 10. Shri K.K.Acharya, learned Advocate for the Appellant submitted that two issues are involved for determination in their case, namely whether processes of crushing, screening of iron ore lumps amounts to manufacture and the resultant graded iron be treate .....

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26.17 was only exempted and by implication the exemption granted to concentrates was considered to be withdrawn. Thereafter another Notification bearing No.12/2012-CE dated 17.03.2012 continuing with the same effect of exemption of ores from whole of duty. 10.1 The learned Advocate submitted that several show cause notices were issued to the appellant after 23.07.1996 alleging that the crushing, grinding and screening resulted into manufacture of 'concentrates' and accordingly exigible t .....

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ating Commissioner following the said precedent and order of the Hon'ble Supreme Court dropped demand notices for the period upto February, 2011. 10.2. He submits that the present demands were confirmed on the basis of Chapter Note 4 of Chapter 26 of CETA, 1985 inserted w.e.f. 01.03.2011. He has argued that a cumulative reading of Board's Circular dated 17.02.2012, Chapter Note 4 to Chapter 26 of CETA,1985, HSN Explanatory Notes, clarification issued by the Ministry of Mines, it would be .....

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ntion that there is no allegation that the appellant has subjected the mined ore to any of the special treatment such as milling, hydraulic separation, magnetic separation, floatation and concentrate thickening, hence the order is being contrary to the clarification of Board, bad in law. In support, he has referred to the decision of Hon'ble Supreme Court in the case of Dhiren Chemical Industries vs. CCE, Vadodara - 2002 (139) ELT 3 (SC) and 2002 (143) ELT 9 (SC). 10.3 Further, he has submit .....

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pheld by the Hon'ble Supreme Court rejecting Revenue's Appeal saying that processes of crushing and screening to the mined ore cannot be treated as a process of conversion of 'ore' to 'concentrate' so as to tantamount to manufacture. It is his contention that insertion of chapter note 4 to 2 chapter 26 has no relevance whatsoever to its activities in as much as the appellant never subjected the mined ore to any processes with the view to remove any part or all of the fore .....

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m. 11. Shri S.C.Jana, ld.Spl.Counsel appearing for the Revenue rebutting the arguments advanced on behalf of M/s Rungta Mines Ltd. & M/s.Rungta Sons. Pvt.Ltd. submitted that as per chapter note 4 of chapter 26 of CETA any process of converting ores into concentrates shall amount to manufacture; process of concentration of ores even though not mentioned in CETA, 1985 are elaborated in detail in the HSN notes. It is his contention that as per HSN notes, even physical or physico-chemical proces .....

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d with HSN notes, the processes of crushing and screening conducted on the ores has definitely led to the manufacture of concentrates from ores, even if such processes have been conducted only for the purpose of economic transportation of the ores. 11.2. Further, reiterating the orders of the adjudicating authority submitted that after insertion of chapter note 4 to chapter 26, now there is no confusion on the issue of levy of duty on 'concentrates'. In its Circular dated 17.2.2012 issue .....

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refore, it can be understood from the said clarification that to convert ores into concentration of the processes, necessarily for all the process of beneficiation need not be carried out; even if few processes mentioned in the HSN notes, like crushing and screening are carried out, so as to meet the requirement of ores to be used for subsequent metallurgical operations or with a view to economical transport. It is his contention that this twin requirements need to be satisfied before charging d .....

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. 01.3.2011, but while considering the argument whether conversion of Ores to concentrate results into a new commodity. It is his submission that before 01.3.2011, no legal friction was created to call the conversion of ores into concentrates a process of manufacture, therefore, there was no scope for any discussion as to whether concentrates are new products arising from ores similarly by process of concentration, as such conversion has been statutorily recognized as a manufacturing process. 11 .....

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erification of necessary facts. 12. The ld.AR Shri K.Chowdhury for the Respondent, rebutting the arguments advanced by the Appellant M/s. Kamaljeet Singh Ahluwalia, submitted that the appellant mines iron ores. The iron ore found in rocks in the form of Hematite or Magnetite. In the process of mining, rocks are drilled and blasted and Run of Mines(ROM) consisting of large size iron ore called boulders is obtained. At this stage, the iron ores are neither suitable for metallurgical operations nor .....

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of the chapter note 4 inserted to chapter 26 of CETA, 1985 w.e.f. 01.03.2011 laying down that the process of conversion of ores into concentrates would amount to manufacture. Also, the Board has clarified by issuing Circular dated 17.02.2012 that resultant product becomes concentrates as per HSN notes and accordingly liable to duty. He has contended that even though the appellant admits that crushing and screening are special treatments within the meaning of HSN notes in the reply to the show c .....

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which have had part or all of the foreign matters removed by special treatments either because such foreign matter might hamper the subsequent metallurgical operations or with a view to economical transport. Responding to the appellant's argument that process of concentrates requires special treatment, like crushing, grinding, screening, magnetic separation, gravimetric separation and agglomeration etc. whereas the appellants undertook only crushing and screening only, therefore, the resulta .....

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gn matters with a view to rendering the ore suitable for metallurgical operations or economical transportation is/are concentration process(es). Crushing and screening are enumerated processes and by employing these processes the ore become suitable for metallurgical purposes or economical transportation, therefore excisable goods. It is his contention that judgements which were passed earlier to 01.03.2011 holding that conversion of ores into concentrates does not result into manufacture cannot .....

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the judgement of this Tribunal in the case of Commissioner of Customs and Central Excise, JSR. & BBSR-II vs. SAIL - 2003 (154) ELT 65(Tri.-Kol), no doubt observed that crushing and grinding do not amount to manufacture but no where the Tribunal has held that crushing and grinding do not convert ores into concentrates. 14. The ld.AR Shri A.Roy, appearing for the Revenue in response to the arguments advanced on behalf of M/s SAIL more or less subscribed to the stand taken by the revenue in oth .....

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espective Appellants and representatives of the Revenue at length and perused the records. 15.1 The principal issue needs to be addressed in these appeals is: whether processes of crushing, grinding, screening and in some cases washing of 'iron ores' result into 'iron ore concentrates' and becomes 'manufacture' in view of chapter note 4 to chapter 26 of CETA,1985 inserted w.e.f 01.03.2011,accordingly leviable to duty under tariff sub-heading 26011150 of CETA, 1985. 15.2 T .....

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clarifications issued by the Ministry of Mines and 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 mined Ores, satisfy the meaning of concentrate prescribed in the HSN, accordingly chargeable to duty. 15.3 Before examining the .....

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es, other than roasted iron pyrites: 2601 11 -Non-agglomerated: 2611 11 10 -Iron ore lumps (60% Fe or more) kg. 16% 2611 11 20 -Iron ore lumps (below 60% Fe, including Black iron ore containing up to 10% Mn) kg. 16% 2601 11 30 -Iron ore fines (62% Fe or more) kg. 16% 2601 11 40 -Iron ore fines (below 62% Fe) kg. 16% 2601 11 50 -Iron ore concentrates kg. 16% 2601 11 90 -Other kg. 16% 2601 12 - Agglomerated: 2601 12 10 -Iron ore pellets kg. 16% 2601 12 90 -Other kg. 16% 2601 20 00 - Roasted iron p .....

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t;manufacture". 15.6 It is the Revenue's argument that application of the processes of crushing, grinding, screening and washing to ores 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 opposed by the Appellants submitting that the processes of crushing, grinding, screening of ores would not make the resultant as 'concentrates' unless so .....

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Ltd. vs. CCE and CCE vs. SAIL (supra). Before proceeding to analyse and apply the ratio of the said judgments, it is relevant to keep in mind the guidelines laid down by the Hon'ble Supreme Court in this regard. Striking a note of caution against indiscriminate application of the case laws as precedent in a given case their Lordships in the case of Collector of C.Ex.,Calcutta Vs. Alnoori Tobacco Products 2004 (170) ELT 135(SC) observed as: "11. Courts should not place reliance on decisi .....

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ry for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed: "The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J as though they were part of an Act of Parliament and ap .....

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eserved 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 .....

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of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.'' *** *** *** "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 15.8 In Indian Rare .....

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eliminated, the remaining 20% are brought to the Mineral Separation Plant by pumping the slurry through pipe. There the individual minerals are separated by processes like drying, electro-static separation, magnetic separation and gravity separations. The final recovery of minerals is less than 10% of the sand dredged from the sea of shore. The department sought to levy duty on these minerals considering the process of extraction of such minerals amounts to manufacture as defined under Section .....

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it occurs on the sea shore cannot be called mineral ores. Such sand is also not bought and sold as mineral ores. The processes carried out by the appellants lead to separation of valuable rare mineral sands from the ordinary sand. The processes are physical and mechanical in nature. No special processes including rosting or chemical treatment is carried out. The processes do not bring about any upgradation or augmentation of purity in the mineral sands separated from ordinary sand. It is also o .....

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dustries 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 Co .....

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d along with ordinary sand on the sea beach. No upgradation or augmentation of their purity takes place. The chemical structure of the ore remained the same. The processes are not any special treatments which would take the ores out of the stage of plain and simple ores. 10. From what has been stated above, it is clear that no manufacturing is involved in the present case justifying demand of excise duty. The impugned order which has confirmed excise duty demand is set aside and the appeal filed .....

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SAIL. The facts involved in the present case in relation to Appeal No. EA-71306/13 filed by M/s.SAIL are more or less similar, therefore, not repeated. This Tribunal referring to the HSN Explanatory Notes, following its earlier decision in Indian Rare Earth Ltd.'s case and other materials recorded as:- "6. We have considered the submissions of both the sides. Heading 26.01 of the Central Excise Tariff applies to "Iron Ore and concentrates, including roasted iron by rites." Th .....

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rtaken by them do not convert iron ore into iron ore concentrates as no special treatments are undertaken by them nor Fe content 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 .....

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rmation; 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 existence or whether the identity of the original commodity ceases to exist; Secondly, whether the commodity which was already in e .....

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inal product are distinctly different from that of the blasted ore. The Revenue then applying the Explanatory Notes of HSN has come to the conclusion that iron ore has become a new commodity known as "iron ore concentrates" which is no more exempted from payment of duty as Notification No. 19/88-C.E., dated 1-3-88 has been rescinded by Notification No. 19/96-C.E., dated 23-7-1996. We find ourselves unable to agree with the Revenue that on account of the processes undertaken by the Resp .....

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ctive name, character or use. The use of iron ore as mined or iron ore after the process undertaken by the respondents remains same that is to be used in metallurgical industry for the extraction of metals. In Indian Rare Earths case, supra, the Appellants were removing gangue materials from the sand. It has been held by this Tribunal that "at the end of the processes, the mineral sands do not undergo any transformation. They remain the same condition in which they remained along with ordin .....

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gence 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 a .....

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ntention that even after insertion of Chapter Note 4 to Chapter 26 since the processes employed to ore do not result into concentrate, therefore, the said Chapter Note 4 is not applicable to their case. 15.12.The Revenue on the other hand argued that the Tribunal has not recorded any finding nor required also in these two cases that with application of such processes to ore, whether the Ore is converted into concentrate or other wise, but the question and finding centered around the issue whethe .....

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Etc. v. Union of India - 1995 (78) ELT 641 on the meaning and concept of "manufacture". Recording reasons at para 9 this Tribunal has held that the principle of law laid down in these two decisions is clear to come to the conclusion that the basic operations carried out to produce usable ore would not amount to manufacture as no new product having distinct name use and character emerged. Proceeding further this Tribunal observed that physical and mechanical process carried out to sepa .....

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on and observation has been recorded by this Tribunal in M/s. SAIL's case. The Tribunal referring to the Tariff Heading 26.01 as was in force prior to 2005-06 observed that in order to accept the processes of crushing, grinding, screening of ores be called as 'manufacture', it is necessary that the resultant product should be a new commercial commodity having distinct name character and use, different from the one on which the processes were employed and referred to the classic judge .....

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e. 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, t .....

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amounting to manufacture . This follows from the issues raised before this Tribunal for determination, and to resolve the issues, the principle of law referred to and followed by the Tribunal. There is no doubt of the fact that in both these cases this Tribunal has been confronted with the sole question whether the processes employed on the Ores would result into manufacture within the meaning and scope of the definition of section 2(f)(i) of Central Excise Act, 1944. Consequently, the Tribunal .....

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es not carry weight and accordingly does not impress us. Consequently, it is necessary to examine the issues raised in the present appeals de hors the observations made in the aforesaid decisions of this Tribunal. 15.16 In order to find an answer, whether application of processes of crushing, grinding, washing, grading etc. to Iron Ores results into 'Iron Ore concentrate' it is necessary to understand the meaning of the words, namely, ores , concentrates, benefication and the beneficatio .....

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e been submitted to processes not normal to the metallurgical industry." 15.18 The word "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 sel .....

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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 the chemical composition of the basic compound which furnishes the desired metal. The physical or physico-chemical operations include crushing, grinding, magnetic separation, gr .....

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ion(minExi) See Mineral processing. Mineral processing(Min Exi). Crushing, grinding,sizing classification or separation of oreinto waste and value by chemical,electrical,magnetic,gravity and physicochemical methods. First stage Extraction Metallurgy. "beneficiation [MET] Improving the chemical or physical properties of an ore so that metal can be recovered at a profit. Also known as mineral dressing." 15.19 And the Beneficiation Methods, narrated under Technical Resource Document(Extra .....

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on provided by members of the American Iron Ore Association indicates that milling and magnetic separation are the most common methods used. Gravity concentration is seldom used at existing U.S. facilities. Floatation is primarily used to upgrade concentrates from magnetic separation by reducing the silica content of the concentrate." 15.20 After introduction of the chapter note 4 to chapter 26, the Board has issued Circular bearing No.332/1/2012-TRU dated 17.02.2012. In the said Circular a .....

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er the HSN. It is Revenue's argument that when the ores are subjected to physical, physico-chemical or chemical operations which are normal to the preparation of the ores for extraction of the metal then the resultant is concentrate. It is their further argument that the physical or physico-chemical operations mentioned in the said explanation of concentrates under the HSN include, crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading agglomeration o .....

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he letter issued by the Ministry of Mines dated 25.01.2012. The Ministry of Mines in the said letter "has opined as follows:- "3. In this regard it is informed that the term "Concentrate" applies to ores which have had part or all the foreign matter removed by special treatments including gravitational, magnetic and other special techniques, whereas there is no special treatment involved in crushing and screening of Run-of-Mine (ROM) to Lumps and Fines. Specifically, the grad .....

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here, iron ore lumps or fines produced by crushing and screening do not classify as a "concentrate"for levy of excise duty. 15.23 Relying on the said opinion of the Ministry of Mines, the Ld. Advocates for the Appellants argued that the special treatment referred to in the HSN definitely indicates to the process of beneficiation. It is their plea that the process of crushing and screening of ores to a definite size without any beneficiation of the ore would not result into producing co .....

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hapter 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 .....

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s laid down that the physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening etc. which are normal to the preparation of the ores for the extraction of metals. While explaining the meaning of concentration, it is also mentioned that ores are seldom marketed before preparation for subsequent metallurgical operations. Hence, the Ores are to be subjected to special treatment. The Revenue had argued that all the processes .....

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ess of crushing, grinding, washing, grading with the particular size, the treated Ores are not made fit to be used directly for metallurgical operations. In our opinion, there is no necessity to examine whether by employing such processes, the Fe every content of the Ores has improved or the relevancy of all the processes categorised under the benefication method, become necessary for ores of having Fe content 40% or 60%. Neither, in our opinion, it is relevant to adopt the meaning of concentrat .....

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he Hon'ble Supreme Court in a catena of cases including in the case of Commissioner of Customs & Central Excise, Goa vs. Phill Corporation Ltd. 2008 (223) ELT 9(SC) that for classification of the manufactured goods, HSN is a safe guide. Therefore, since the processes undertaken by the appellant on 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( .....

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f 'manufacture'. 15.26 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 decis .....

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t also those processes as are specified in relation to any goods in the section or chapter notes of the Schedule to the Central Excise Tariff Act, 1985 are also brought within the ambit of the definition. ............" 15.27 In the case of O.K Play (India) Ltd. Vs. Commissioner of C.Ex.,New Delhi 2005 (180) ELT 291(SC), the question came up before the Hon'ble Supreme Court was whether powdering of Low Density polyethylene(LDPE) and High Density polyethylene granules(HDPE) into moulding .....

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ended to levy excise duty on activities that do not result in any new commodity. In other words, if a process is declared as amounting to "manufacture" in the section or chapter notes, it would come within the definition of "manufacture" under Section 2(f) and such process would become liable to excise duty. The effect of this definition is that excise duty can be levied on activities which do not result in the production of a new commodity or where the raw material does not .....

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g anything contained in Note 3 to this Chapter, heading Nos. 39.01 to 39.14 shall also include primary forms obtained from conversion of another primary form, falling under the same heading, and such-conversion shall amount to "manufacture"." 13. Reading Note 6(b), it is clear that blocks and powders are two different "primary forms" and if the block is pulverized into powder, the activity would amount to "manufacture" in terms of Clause (ii) of Section 2(f). B .....

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td. 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 Addi .....

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General that the judgment of the Delhi Cloth and General Mills (supra) was rendered on 12-10-1962 much before enactment of the deeming provisions of Section 2(f)(ii). In these circumstances, this judgment can be of no avail to the respondent assessee. 27. The learned Additional Solicitor General further submitted that the learned tribunal in the impugned judgment has not at all considered the effect of section 2(f)(ii) of Chapter Note 3 of Chapter 20. He also contended that the Sales Tax judgmen .....

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judgments cited at the Bar. The Central Excise Tariff Act is broadly based on the system of classification from the International Convention called the Brussels' Convention on the Harmonised Commodity Description and Coding System (Harmonised System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human hair etc.) and as such the mention of an item has got nothing to do whether it is manufactured and taxable or n .....

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n have to be made under Chapter 20. 30. The legal position has been clearly crystallized in S.D. Fine Chemicals Pvt. Ltd. (supra) and other 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 spi .....

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he 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 gets knocked off with the amendment carried out in the year 2011 with the insertion of Note 4. Note 4 now categorically mentions that the process of convertin .....

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sequences 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 .....

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ods to render the product marketable to the consumer." (b) The purpose of treating concentrate as manufactured product out of ores is to make concentrates as liable for excise duty. Otherwise, there was no reason to deem the process of converting ores into concentrates as manufacture. 29. Once the aforesaid legal repercussions are taken note of, as a fortiori, it becomes obvious that Notification No. 4/2006-C.E. which exempts only ores would not include within itself 'concentrates' .....

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ection 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 s .....

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ad us to hold that in those cases when Note 4 applies and Ores becomes a different product, it ceases to be Ores. 31. We, thus, are of the opinion that in the impugned judgment, the Tribunal has rightly arrived at the conclusion that by virtue of Note 4, concentrate has to be necessarily treated as different from ores which is deemed as manufactured product after Molybdenum Ores underwent the process of roasting. Once we keep in mind that conversion of ores into concentrate is considered as manu .....

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re 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." 15.30 A cumulative reading of the ratios of the above judgements, the chapter note 4 of chapter 26 and the relevant tariff entry, makes the legislative intention and object clear that the processes which on application on ores held by the .....

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and washing of Ores would not fall under the definition of manufacture, in our opinion, is the result of misunderstanding and incorrect interpretation of the relevant tariff entry, the chapter note 4 and clause (ii) of Sec.2(f) of CEA,1944. In view of the judgements of this Tribunal if on application of processes on Ores its Fe content increases and its use, commercial identity and character is different from the ore then the resultant would be considered as manufactured and accordingly dutiable .....

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red opinion application of processes of crushing, grinding, screening and washing and grading of iron ore, converts it into iron ore concentrates and accordingly in view of the chapter note 4 of chapter 26 becomes manufacture and leviable to Excise duty. 15.31 The other issue raised by all the appellants, except the Appellant M/s Odisha Mining Corporation is that since the processes on ores have been carried out in the premises declared as mines, and they are governed under the Mines Act, theref .....

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