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2016 (5) TMI 675 - ORISSA HIGH COURT

2016 (5) TMI 675 - ORISSA HIGH COURT - 2016 (337) E.L.T. 500 (Ori.) - Maintainability - Crushing of iron ore into smaller sizes and separation of different sizes - Revenue contended that there is clear provision under Section 35-B of the Act to file appeal before the CESTAT against the impugned order passed by the Commissioner of Central Excise and this is not a case where the writ petition should lie when there is efficacious remedy available under the statute. - Held that:- it is availabl .....

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lso it appears that against any decision passed by the Commissioner of Central Excise as an adjudicating authority, the appeal lies to Appellate Tribunal. It is already discussed that there are certain facts raised before us are required to be adjudicated in appeal and the same cannot be adjudicated in the writ petition. - We have already observed in this writ petition that further facts are to be adjudicated and same can only be addressed before the appellate court. Moreover, there is clear .....

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Now the same party with same contention has come up to this Court of course due to demand made basing on amendment to Ch.26 w.e.f. 1.3.2011. - Therefore, we refrain from deciding any issue raised before us and are of the considered view that since efficacious remedy by way of filing appeal before the CESTAT is available, the petitioner is directed to challenge the impugned order before the appellate authority under Section 35-B of the Act and raise all such contentions raised before us wit .....

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the Respondent : Mrs. Mrinalini Padhi, Standing Counsel, Central Excise, Service and Customs ORDER Dr. D.P. Choudhury, J. In the captioned writ petition challenge has been made to the order dated 30.11.2015 passed by the opposite party No.2- Commissioner of Customs, Central Excise and Service Tax, Rourkela confirming the duty demand of ₹ 63,73,51,977/- under Section-11A of the Central Excise Act, 1944 (hereinafter called the Act ), along with applicable interest and equal penalty under Sec .....

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is engaged in the business/activity of manufacturing Iron and Steel items. For the purpose of manufacture of the said items, the petitioner also carries out the activity of mining and extraction of Iron Ores from various locations in their own captive mines at Tensa, in the district Sundargarh of the State of Odisha. After extraction of the Iron Ore, the petitioner used to carry out the process of crushing and screening of the Iron Ores in order to reduce the size of the Ores in two categories, .....

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r 26 of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter called CETA, 1985 ) from the payment of Excise Duty. 3. In the Union budget for the year 2011-2012, Chapter Note 4 to Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985 was inserted to state that the process of converting Ores to Concentrates will amount to manufacture and after such insertion the opposite party-Department started investigation into the processes undertaken by the petitioner to fi .....

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Act, 1985 or in the HSN Explanatory Notes. It is stated that ROM transported from mines was first put into Crusher to make the ROM in small pieces of size up to 200 mm. then Screening of the same is made to separate the size up to 5mm. Thereafter the Iron Ore above 5 mm is sent for secondary Crushing and the size becomes 20 mm. But by the Union Budget for the year 2011-2012, Chapter Note 4 was inserted in Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985 by stating that the .....

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But thereafter the correspondence between the Department and the petitioner continued. Petitioner has also disclosed the details of the sized Iron Ores during the relevant period by disclosing the same as value of the total 1,76,863.800 Metric Tons of sized Iron Ore was ₹ 78,46,63,365/-. 5. It is further stated that the Department issued notice to show cause demanding Central Excise duty amounting to ₹ 08,08,20,327/- on the said quantity of sized Iron Ore valued at ₹ 78,46,63, .....

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er replied to the show cause mainly submitting that the petitioner had not undertaken the activity of washing or beneficiation of the Ore in their mines and hence there was no concentration undertaken for which he is not liable to pay any duty on the Ore cleared in their factories. But the Department slapped with two more show cause notices vide C No.V(26)15/Adjn/B-II/89/2014/3699-A dated 25.2.2015 and C No.V (26)15/Adjn/B-II/28/2015/7447A dated 16.4.2015 demanding an amount of ₹ 42,45,70, .....

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ertaken by the petitioner, passed the impugned order on 30.11.2015 by confirming the demand of ₹ 63,73,51,977/- under Section 11A of the Central Excise Act, 1944 along with equal amount of penalty under Section 11 AC of the Central Excise Act read with Rule 25 of the Central Excise Rules, 2002 with an additional penalty of ₹ 5,000/- under Rule 27 of the Central Excise Rules, 2002 for not taking Central Excise Registration. Not only this but also the learned Commissioner charged the i .....

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issued by the Finance Department by including the prayer to declare the Circular No.984/08/2014/CX issued under F.No.390/Budget/1/2012-JC Government of India Ministry of Finance Department of Revenue (Central Board of Excise and Customs), New Delhi dated 16.09.2014 as unconstitutional and ultra vires the Act and further to declare the CESTAT Circular F. No.15/CESTAT/General/2013-14 dated 14.10.2014 as unconstitutional and ultra vires. But during course of argument, learned counsel for the petiti .....

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the clause the process of converting ore to concentrates shall amount to manufacture . The HSN note to the Chapter 26 states for the purpose of Heading 26.01 to 26.17, the term concentrate applies to ores which have had part or all of the foreign matters removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operation or with a view to economic transport . So, the process of crushing, screening, grinding, washing etc. to remove foreign materials s .....

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undertaken by the petitioner are normal to the metallurgical operation for extraction of metals and therefore, nothing but the crushing, screening, grinding, washing etc. are meant to separate the impurities associated with the natural ores. These processes are carried out for transporting the ores from the pit mouth of the mines to the metal extracting plants, otherwise there will be heavy transportation cost. Thus, the concentrates as covered under Chapter 26 of CETA, 1985 are products which e .....

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rs Iron Ore Lumps (below 60% Fe), same being the case with iron ore fines whereas Concentrates are covered under sub-heading 26011150 as the Ferrous content is of relevance for Ores , Concentrates are products emerging in the physical process of metallurgy and herein percentage of Ferrous content is not relevant. As the Explanation is only in respect of Ores , it does not apply to Concentrates . Accordingly, Concentrates are dutiable. So, the learned Commissioner, Central Excise, Customs & S .....

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No.2 has also correctly confirmed the demand made against the petitioner. Hence, it is submitted to dismiss the writ petition and affirm the impugned order of the Commissioner, Central Excise, Customs & Service Tax, Rourkela. SUBMISSIONS 9. Mr. R. Raghavan, learned Senior Advocate for the petitioner submitted that the Commissioner has failed to consider the CBSE Circular No.332/1/2012-TRU dated 17.2.2012 which is binding on him and as such erred in law by passing the impugned order. Learned .....

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rifications are binding on the Department s Officers. But in the instant case the learned Commissioner has failed to follow the circulars of the Department and as such did not obey the decision of the Hon ble Apex Court for which said impugned order is illegal. Learned counsel for the petitioner further submitted that the final product is merely Iron Ore in similar sizes (sized ore) and is not a concentrated as the process of crushing and screening do not amount to Concentration. According to hi .....

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ndustry. As the term concentrate is not defined in the First Schedule to the CETA, 1985 for which HSN Explanatory Notes may be referred to as the said Note defined Concentrates by stating that Concentrates applies to Ores which have had part of all of the foreign matter removed by special treatments. Since the loose materials are required to be removed from Ore by a simple mechanical process of screening and making them to ores, such a process will not amount to any process of Concentration as t .....

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gned order which is otherwise illegal, improper and against the instruction of the Revenue Department. As per Scheme of the Central Excise Tariff also, iron ore Concentrates are different from Iron Ore lumps and iron ore fines which are actually material produced by the petitioner because heading 2601 of the Central Excise Tariff provides different classifications for Iron Ore lumps (26011110 and 26011120 for Fe content of 60% or more and below 60% respectively), Iron Ore fines (26011130 and 260 .....

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e a new substance but do not mean merely to produce some change in a substance. So, the Iron Ore in the ROM even after crushing and screening continues to Iron Ore all of different sizes as compared ores excavated from the Mines and fed into crusher. 11. Mr. R. Raghavan, learned Senior Advocate for the petitioner while distinguishing the complete processes than on crushing and screening cited various decisions, they are (a) Bheraghat Mineral Industries v. Divisional Deputy Commissioner of Sales .....

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rgument of revenue neutrality cannot be accepted as show cause notices have alleged suppression and misstatement and therefore, credit in terms of Rule 9 (1)(b) of the Cenvat Credit Rules, 2004 will not be available. 12. Mr. R. Raghavan, learned Senior Advocate for the petitioner also submitted that provisions of Section 35B of the Act is not applicable in the present case and the order of the Commissioner is passed being violative of Articles 14, 19 (1) (G) and 265 of the Constitution of India. .....

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t no penalty is imposable and no interest is chargeable although the learned Commissioner has erred in law by imposing the penalty and the charge interest on the demand. He cited the decision of the Commissioner of Central Excise, Aurangabad v. Balakrishna Industries; 2006 (201) E.L.T. 325 (S.C.) in support of his contention. It is also submitted that no efficacious alternative remedy is available with the petitioner for which the present writ petition has been filed. So, ultimately it is prayed .....

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ing etc. undertaken by the petitioner make the Iron Ores fit for economical transportation and subsequent use in the metallurgical industries and therefore, in the Union Budget 2011-12 the amendment was brought in Chapter 26 of CET Act, 1985 to the effect that process of converting ore to Concentrates shall amount to manufacture. Since the Iron Ore is the Concentrate product of the petitioner and the petitioner has not registered to pay Central Excise duty thereon, rightly the show cause notice .....

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a view to economical transport. The processes undertaken by the petitioner are normal to the metallurgical operations for extraction of metals. The processes undertaken by the petitioner like crushing, screening, grinding, washing etc. are meant to separate the impurities associated with the natural ores for their transportation from the pit mouth of the mines to the metal extracting plants. So, the contention of the learned counsel for the petitioner that the crushing and screening are simply m .....

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levance for Ores , Concentrates are products emerging in the physical process of metallurgy for which the percentage of ferrous content is not relevant. According to her, the process of crushing and screening of iron ores by petitioner gives rise to Iron Ore concentrate in terms of Chapter Note 4 of Chapter 26 of the First Schedule to Central Excise Tariff Act, 1985 for which such process amounts to manufacture. So, the order passed by the opposite party No.2 making the product of the petitioner .....

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ntrate falling Under Chapter 26011150. So, the contention of the learned Senior Advocate for the petitioner that crushing and screening are not special treatment undertaken by the petitioner is not acceptable so as to avoid to bring it under the HSN Note. She further stated that the exemption Notification No.4/2006-CE dated 1.3.2006 is to be interpreted as the Legislature has intended to treat ores and concentrates as two distinct items and such Notification HSN exempts only ores for which the c .....

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ssioner of Customs (Imports), Raigarh in Civil Appeal No.6088 of 2013 by the Hon ble Apex Court the contention of the petitioner that the entire judgment is Revenue neutral does not stand in the eye of law. The case law relied upon by the petitioner cannot be pressed into the facts and circumstances of this case as they are prior to 1.3.2011 on which date CETA, 1985 was amended and excise duty was levied on Iron Ore concentrate. Since the petitioner has suppressed material facts and evaded payme .....

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oner by filing appeal against the impugned order for which the present writ petition is not maintainable and the Court may reject the writ petition directing the petitioner to file appeal, if so advised, and may raise all such contentions there. 18. Points for consideration:- (i) The first and foremost point is to be decided whether the writ petition is maintainable in view of the pleadings made by both the parties. DISCUSSIONS POINT NO.(i) : 19. After dropping the prayer for declaring the conce .....

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ear provision under Section 35-B of the Act to file appeal before the CESTAT against the impugned order passed by the Commissioner of Central Excise and this is not a case where the writ petition should lie when there is efficacious remedy available under the statute. Learned counsel for the petitioner submitted that even if there is efficacious remedy available under Section 35-B, yet the writ is maintainable. 20. Having considered the contentions of the respective parties, we are of the view t .....

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ween the parties, same can only be decided either by the Commissioner of Central Excise or by the appellate authority but not the same can be entertained in the writ petition. Section 35-B (1) of the Central Excise Act, 1944 states as follows:- 35-B. Appeals to the Appellate Tribunal.- (1) Any person aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order- (a) a decision or order passed by the (Principal Commissioner of Central Excise or Commissioner of C .....

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ise or Commissioner of Central Excise], either before or after the appointed day, under section 35-A, as it stood immediately before that day : [Provided that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in clause (b) if such order relates to, - (a) a case of loss of goods, where the loss occurs in transit from a factory to a warehouse or to another factory, or from one warehouse to a .....

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ty on final products under the provisions of this Act or the rules made thereunder and such order is passed by the Commissioner (Appeals) on or after the date appointed under section 109 of the Finance (No. 2) Act, 1998 :] Provided further that the Appellate Tribunal may, in its discretion, refuse to admit an appeal in respect of an order referred to in clause (b) or clause (c) or clause (d) where - (i) in any disputed case, other than a case where the determination of any question having a rela .....

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d in the above para that there are certain facts raised before us are required to be adjudicated in appeal and the same cannot be adjudicated in the writ petition. Reliance is placed on a decision of this Court in Larsen & Toubro Limited v. State of Orissa and others; 1998 (111) STC 75 (Orissa) where it is held that if petitioner could avail the statutory remedy by filing an appeal, the court would not entertain the writ petition. 21. It is submitted by the learned counsel for the petitioner .....

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Commissioner of Central Excise is due to nonapplication of judicial mind and same is passed mechanically. Since the impugned order was passed violating the principles of natural justice and not in accordance with law, same is only be set aside by the order of this Court passed under Article 226 of the Constitution of India. According to him even if the efficacious remedy is available but the writ jurisdiction will lie in view of the impugned order passed without application of mind and against t .....

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