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2016 (4) TMI 602 - CESTAT KOLKATA

2016 (4) TMI 602 - CESTAT KOLKATA - 2016 (338) E.L.T. 454 (Tri. - Kolkata) - 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 .....

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g in the case of Commissioner of Customs & Central Excise, Goa vs. Phill Corporation 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 .....

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en introduced with effect from 2005-06 classifying ores having different Fe content 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 cr .....

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it Shah, Adv. & Shri K K Acharya, Advs For the Respondents : Shri S C Jana, 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 th .....

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ning plant where the iron ores of different sizes are segregated. Alleging that 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 .....

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posed. 4. In the Appeal No.EA-71306/13 facts of the case are that the Appellant 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 dema .....

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f rocks wherefrom Run Of Mines (ROM) is obtained. The boulders of bigger sizes 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 .....

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hatroad and brought to Bali Parbat and Daitari Railway Side. The screened sizes 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.R .....

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id returns, which are accepted by the mining authorities, the production of concentrate 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 .....

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treatment for enrichment of the ore. He has contended that concentration is 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 s .....

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(Vol.3) published by US Environmental Protection Agency (Aug.1994). 7.3. Assailing 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 definitio .....

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xplanatory notes, upgradation of ferrous content that too by special treatment 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 c .....

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is contention that in the case of Indian Rare Earths v. CCE - 2002 (139) ELT 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. .....

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39;ble Supreme Court in the case of Board of Trustees v. CCE - 2007 (215) ELT 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 .....

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the unwanted matter i.e. dissolution. He has submitted that M/s.SAIL is neither 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 decisi .....

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1956 provides that iron ore lumps, iron ore fines and concentrates are distinct 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 .....

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he has submitted that the Hon'ble Supreme Court in their own case dismissed 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 p .....

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thout prejudice to the said argument he has submitted that the word 'economical 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 tha .....

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ontrary. 9.1. He has further submitted that license for mining activity has been 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 o .....

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ned in the mining activities are exempted in view of the exemption Notification04/2006 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 .....

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.1996 was issued where under ores classified under chapter headings 26.01 to 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 r .....

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#39;ble Supreme Court by its order dated 17.09.2014. Consequently the adjudicating 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 .....

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tes only when a part or all the foreign matter removed". It is his contention 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 - .....

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s that in view of the judgement of this Tribunal in SAIL's case (supra) upheld 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 m .....

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e treated as manufacture and Central Excise duty should be recovered from them. 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 h .....

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e appellant is devoid of merit, when chapter note 4 of chapter 26 of CETA read 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 .....

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bsequent metallurgical operations or with a view to economical transport. Therefore, 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 .....

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en passed not in the context of chapter note 4 of chapter 26 introduced w.e.f. 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 s .....

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he has no objection in remanding the case to the adjudicating authority for verification 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 th .....

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ultant ores become concentrates falling under tariff item No.26011150 in view 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 .....

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concentrates must meet the HSN definition i.e. concentrates applies to ores 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 .....

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s any one or more of the enumerated process(es) undertaken for removing foreign 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 .....

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taken by ld.Advocate for M/s.Orissa Mining Corporation Ltd., submitted that 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 .....

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), Raigad - 2015 (324) ELT 656(SC). 15. Heard the learned Advocates for the respective 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,accordi .....

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M/s SAIL's case(supra), the meaning of concentrate as per the HSN , the 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 pre .....

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es and concentrates, including roasted iron pyrites -Iron ores and concentrates, 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 -I .....

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hapter, the process of converting ores into concentrates shall amount to "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, scree .....

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f law laid down in two judgements of this Tribunal, namely Indian Rare Earth 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) .....

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o interpret words, phrases and provisions of a statute, it may become necessary 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 ipsissim .....

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(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 flexibi .....

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id 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 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 ju .....

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vier minerals are separated. By this process about 80% of the lighter sand is 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 .....

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otal quantity of sand on the sea beach dredged out by the appellants. Sand as 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 augmentat .....

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t 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. I .....

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o any transformation. They remain in the same condition in which they remained 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 o .....

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order. 15.10 The next decision on which heavy reliance was placed is CCE vs. 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 .....

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ent. On the other hand the Respondents have contended that the processes undertaken 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 ac .....

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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 existence or whether the identity of the original comm .....

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. From this it has been claimed by the Revenue that the constituents of the final 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 a .....

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sent matter, bring into existence a new and different article having a distinctive 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 transform .....

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s 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 commercia .....

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dingly, duty is not leviable on resultant concentrate. It is their further contention 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 .....

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on of India - 1983 (13) ELT 1542(SC) and Hyderabad Industries Ltd. & Anr. 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 th .....

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ge of plain and simple ores. 15.14. More or less similar line of interpretation 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 t .....

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ent 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 m .....

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, grading etc. on ores, the resultant is not 'concentrate', hence not 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 definiti .....

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lant that the issue now raised has been decided in the aforesaid two cases does 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 meanin .....

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l purposes. Headings 2601 to 2617 do not, however, include minerals which have 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 appl .....

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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 the chemical composition of the basic compound which furnishes the desired metal. The physical or ph .....

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of Scientific and Technical Terms(6th Edition) is as follows: "benefication(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 An .....

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ests that all these methods have been used to beneficiate iron ore, information 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 issue .....

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h sides heavily relied on the meaning of 'concentrate' prescribed under 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 separ .....

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t cannot be called as concentrates. In support, reliance has been placed on the 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 .....

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cess of crushing and screening is not valid. Till beneficiation of grade is there, 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 .....

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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 m .....

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lso included in explaining the term "concentration" under HSN. It is 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 .....

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s argument nor any contradiction of the fact that after carrying out the process 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 .....

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t),1957 and the Rules made thereunder in view of the principle laid down by the 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 conside .....

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as amounting to manufacture, such processes will fall under the definition of '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 irreleva .....

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ich are incidental and ancillary to the completion of manufactured product but 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 p .....

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all amount to "manufacture". Under Clause (ii), the Legislature intended 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 re .....

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oulding powders), granules, flakes and similar bulk forms. (b) Notwithstanding 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 .....

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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)(i .....

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ise dated 5-2-1986. 26. It was submitted by the learned Additional Solicitor 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) .....

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ard the learned counsel for the parties at length and carefully analysed the 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 .....

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20. In this view of the matter, the classification of the products in question 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 cas .....

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missioner 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 gets knocked off with the amendment carried out in the year 2011 with the inserti .....

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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&q .....

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ation of retail sale price on it or adoption of any other treatment on the goods 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. wh .....

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he 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, wou .....

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otification. Therefore, harmonious construction of Note 2 and Note 4 would lead 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 w .....

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nue 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." 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 .....

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#39; and accordingly the processes of crushing, grinding, screening, grading 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 th .....

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pinion, 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 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 .....

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