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M/s. Jindal Steel & Power Limited Versus Union of India & Another

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 available from the petition that the Commissioner of Central Excise had fixed .....

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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-cut provision under Section 35-B to file appeal. It is available from .....

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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 within a period of two weeks from today and in the event of filing appeal .....

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e, 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 Sections-11AA and 11AC of the Act, respectively, read with Rule 25 of the .....

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tems. 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, i.e., fines below the size of 5 mm and lumps within the size of 5 mm .....

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einafter 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 find out whether it amounts to manufacture. 4. The petitioner carries ou .....

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ported 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 process of converting Ores into concentrates amounts to manufacture a .....

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tioner 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 ₹ 78,46,63,365/- for the period from March 2011 to January 2012 on the ground tha .....

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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 ₹ 42,45,70,233/- for the period of February 2012 to March 2014 and an amount of & .....

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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 interest under Section 11AB/AA of the Act without considering the argum .....

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e 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 petitioner abandoned the said prayers to declare such circulars as unconstit .....

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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 so as to make it fit for economical transportation and subsequent use i .....

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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 emerge as to render the ores as they emerge from mines to a stage capab .....

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nes 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 & Service Tax, Rourkela has rightly confirmed the demand made against the .....

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er. 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 Commissioner has failed to rely on the portion of the said Circular wh .....

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nt 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 him under CETA of 1985 there is no definition of term Concentrates but t .....

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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 the ore is not being subjected to any special treatment. So, it is subm .....

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ction 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 26011140 for Fe content of 62% or more and below 62% respectively), and I .....

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ubstance. 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 Tax 1992 (61) E.L.T. 560 (MP); Collector of C. Ex., v. Mahavir Mineral .....

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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. It is submitted that in case of appeal under Section 35-B the compuls .....

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earned 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 by the learned counsel for the petitioner to set aside the order of t .....

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mical 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 was issued making demand to pay such amount by the petitioner. She fur .....

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oner 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 meant for preparing the sizes of the Iron ore but not the concentrates .....

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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 dutiable is undoubtedly correct order. 15. It is submitted by the lea .....

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ed 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 concentrates automatically falls outside the purview of the notificatio .....

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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 payment of Central Excise Duty, the impugned order asking for payment of de .....

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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 concerned Circular of the CBEC as ultra vires, there remains only prayer to .....

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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 that in this writ petition there are several contentions raised relatin .....

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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 Central Excise] as an adjudicating authority; (b) an order passed by th .....

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ointed 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 another, or during the course of processing of the goods in a warehouse .....

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e 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 relation to the rate of duty of excise or to the value of goods for purpos .....

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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 that this Court in Sonic Electrochem (P) Ltd. v. State of Orissa and .....

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nd 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 the principle of law. On the other hand, the learned counsel for the op .....

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