TMI Blog2018 (4) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... ant by itself will not make the resultant product as iron ore concentrate”. The impugned goods being ‘Ores’ are eligible for the exemption from CVD in terms of Notification No. 4/2006- CE dt. 01.03.2006 (Sr. No.4) as superseded by Notification No. 12/2012 – CE dt. 17.03.2012 (serial No.56) - the demand is not sustainable on merits. Time limitation - Held that: - the issue invloved itself has been of interpretation of activity undertaken in respect of impugned goods, HSN notes and chapter notes - non payment of CVD cannot be attributed to any malafide intention on part of Appellant - the demand is barred by limitation of time and are not sustainable. Appeal allowed - decided in favor of appellant. - C/87486/2015 - A/85815 / 2018 - Dated:- 22-3-2018 - SHRI RAMESH NAIR, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) Appearance Shri Prithviraj Choudhary, Advocate for Appellant Ms. P.V. Shekhar, Jt. Commr. (A.R) for respondent Per : Ramesh Nair Brief facts of the case are that Appellant M/s Malu Electrodes Pvt. Ltd are engaged in manufacture and export of welding electrodes and other allied products. They availed benefit of exemption of addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded/ suffixed the word ore with Rutile before the Customs Authority for availing the exemption. In view of above allegation it was proposed to confiscate the Leuxocene sand falling under CTH 26140039 valued at ₹ 46,72,58,290/- in terms of Section 111 (m) of the Customs Act. However since the goods were not available for confiscation it was proposed to impose fine in terms of Section 125 of the Customs Act, 1962. It was also proposed to confiscate the 143.5 Mts of seized sand valued at ₹ 1,19,24,419/- in terms of Section 111 (m) of the Act and to impose fine under section 125 as the goods were released provisionally. A differential duty of 5,76,37,224/- was proposed to be demanded and recovered in terms of Section 28 of the Act alongwith interest; Penalties was proposed under Section 112 (a) or 114 A and 114A of the Act and to encash the Bank Guarantees towards duty liabilities and penalties and fines. The adjudicating authority vide impugned order dt. 28.08.2015 issued on 03.09.2015 confirmed the demands and imposed penalties against the Appellant. Hence the present appeal. 2. The Ld. Advocate Shri Prithviraj Choudhary appearing for the Appellant submits that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 which is not correct and in no manner can be said to have laid down criteria for determining whether a process is one of concentration or not. That the issue is settled and cannot be changed by a circular. He relies upon the test report of India Bureau of Mines (IBM), Nagpur conducted in respect of sample drawn by the Assistant Commissioner of Customs, Nhava Sheva which indicated that the goods are naturally occurring Rutile Ore Leuxocene sand. He submits that the test report of IIT, Powai cannot be relied upon as it has been prepared without appreciation of factual matrix of the case. He submits that the report nowhere answer the specific query posted by the DRI and is thus inconsequential. That if seen the report itself clearly indicates that concentration if any has to be done based on physical properties and there has been no change or alteration in the chemical composition of the sample. He submits that in case of Classic Microtech 2012 (285) ELT 418 (TRI) the tribunal accepted the report of IBM and clearly recognized IBM as an expert in relation to opinion on the subject matter of mineral ores and same cannot be lightly brushed aside as held by the Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the CETA to state that the process of converting ores into concentrate shall amount to manufacture. That in terms of Section 2 (f) of the Central Excise Act any process of which is specified in relation to any goods in the Section or chapter notes of the First schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounts to manufacture . That by virtue of above amendment if the imported goods are concentrate the importer is required to pay additional duty. The process undertaken by the supplier M/s Illuka Resources Ltd., Australia of Wet concentration produces a high concentration high grade mineral concentrate, maximizing the content of valuable mineral sand whilst minimizing the amount of non valuable mineral (gangue). Attrition is carried out on heavy mineral concentrate to clean the mineral surface. Secondary concentration removes the fine quartz and non valuable heavy mineral to achieve heavy mineral content. Dry mill processing involves number of dry processing stage to separate the valuable minerals. The above process clearly establishes that the imported goods have been subjected to various processes by virtue of which most of the foreign matters have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncentrate and not ores as the process undertaken by the supplier amounts to manufacture of Concentrates. Allegation has been made against Appellant that the Wet Concentration process, Attrition and Secondary concentration and Dry Mill processing amounts to manufacture of concentrates. We find that the supplier M/s Iluka Resources Ltd , Australia has described the goods as Rutile/ HYTI91 Leucoxene Sand/ Leucoxene Sand in import documents whereas in Bill of Entry filed by the Appellant the goods were described as Rutile Ore/ Rutile Ore Leucoxene/ Sand in Bill of Entry. On perusal of facts we find that the naturally Rutile/ Leucoxene is an ore found in sea sand alongwith other raw material and out of the same after segregation of sand the imported goods were derived . The chapter Note 2 to chapter 26 of the Central Excise tariff read as under : 2. For the purposes of headings 2601 to 2617, the term ores means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury, of the metals of heading 2844 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. Headings 2601 to 2617 do not, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y minerals which exists in its natural form alongwith other substances, which is either extracted or mined, will qualify as ores, but also minerals in their ganuage state will also be classifiable as Ores. It further transpires from the above Notes to the HSN that for Ores to transform into concentrates , special chemical treatment/ processes have to be carried out which alters the basic chemical composition of the mineral itself, and mere physical or physiochemical processes aimed at extracting or segregating the mineral from the natural substances would not tantamount to concentrating the ores . Thus if the chemical composition of the mineral has not been altered while undertaking any physical processes as the facts of the present case shows the goods would not fall under the category of concentrate . The revenue has relied upon the test report of IIT, Powai to hold that the goods in question are Concentrate and not Ores . On perusal of the test report of IIT, Powai we find that during investigation the following questions were asked to the said institute : (i) Whether the facts pointed out by the supplier pertaining to the processes to which the beach sand h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport of IIT, Powai as supporting the claim of the revenue. The Ld. Counsel has also drawn our attention to the report of Indian Bureau of Mining which is the apex body so as far as standards in Mining Industry is considered. The Custom authorities at the time of importation of goods at three different times and different consignments has sent the samples for testing to Indian Bureau of Mining which has reported that the samples are naturally occurring Rutile Ore/ Leucoxene Sand . The report also contains the details of the metal content of the ore. The adjudicating authority has contended that the report does not support the case of Appellant as it treats Rutile and Leucoxene on same footings. We find that it has to be appreciated that both Rutile and Leucoxene are Ores and hence their classification would be same. We find that in the test report of IBM the Titanium content is more than 90% which shows that it matches with the Indian Standard IS 4104 - 1967 of Rutile Ore to be containing the 90% of Titanium. Thus the IBM Report gets corroborated with the criteria of Indian Standards. In case of CLASSIC MICROTECH PVT. LTD. Vs. COMMISSIONER OF CUS., AHMEDABAD 2012 (285) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the technical opinion would be the guiding factor in deciding the classification of goods as whether the goods are Ore or Concentrate and the same can be decided only by the Experts. In case of Indian Rare Earth Ltd. find that more than eight institutes of National repute has reported that the goods are Ores and such reports were not taken not consideration, hence we are not inclined to go into the ratio of said judgment as without ascertaining the characteristics of the goods in question they cannot be automatically termed as Concentrate merely on the basis of chapter Note 4 supra. In the present case the process carried out by the supplier are not special treatments as it is normal to extraction of Ores. Also when read in context of Chapter Note 2, we find that in the present case the Ores were not put to any process not normal to the metallurgical industry and even the supplier has classified the goods in category of Sand only. It is coupled with the fact that on three consignments of imports at three different point of times the samples were sent to Indian Bureau of Mines (IBM) who has reported that the goods are Naturally occurring Rutile Ore/ Leuxocence Sand. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of concentrates. The process carried out were only physical and mechanical separation process and after such process the separated mineral sand has the same form and properties which it exist before undertaking such process. When the goods has been bought and sold as Sand and even the same is known as sand in the commercial parlance which has not been disputed by the revenue, the goods would stand covered by the term Ore . From facts it is clear that Sand at Sea shore cannot be termed as Mineral ore . The supplier undertook the process of separation of mineral sand from the ordinary sand by physical and mechanical processes and no chemical or roasting of sand took place. The process did not bring upgradation of purity in the segregated sands and as the import documents show the goods in question has remained Sand only. In terms of chapter Note 2 supra, the Ores which have been submitted to the process not normal to metallurgical industry are excluded from category of Ores whereas in the present case no such special treatment has been shown to have been carried out. In view of the fact that the process undertaken by the supplier of goods and in view of the report of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the principle of law is clear that basic operations carried out to produce usable ore would not amount to manufacture of a new product. In the instant case, the appellants are carrying out certain physical and mechanical processes to separate mineral sands from ordinary sea shore sand. At the end of the processes, the mineral sands do not undergo 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 order which has confirmed excise duty demand is set aside and the appeal filed by M/s. Indian Rare Earths Ltd. is allowed, with consequential relief, if any. Applying the ratio of the above Tribunal s order which has been upheld by the Apex Court as affirmed in 2012 (283) ELT A112 (SC). In our view the process involved in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 271 (S.C.) (iii) Steel Authority of India - 2002-TIOL-499-CESTATKOL affirmed by Apex Court - 2012 (283) E.L.T. A112 (S.C.) (iv) Indian Rare Earth Ltd. - 2002-TIOL-485-CESTATKOL affirmed by Apex Court - 2009 (241) E.L.T. A70 (S.C.) (v) Super Engineering - 1996 (82) E.L.T. 539 (TRI) 7. We thus find that the ratio of the above Tribunal order is absolutely applicable to the ratio of present case. The Revenue has also relied upon the Tribunal s order in case of V.V. Minerals Vs. Commissioner 2016 TIOL 141 CESTAT MAD and Trimax Sands Pvt. Ltd. vs. Commissioner 2018 TIOL 164 CESTAT-HYD to contend that in line with IIT, Powai report the process undertaken by the supplier if of beneficiation of the ore and thus the benefit of notification in question is not admissible to them. We find that in terms of chapter note 4, it the conversion of Ores into concentrates amounts to manufacture and it does not go into the process of beneficiation. Also the issue involved in both of those cases relates to classification of Illemnite beneficiated based on specific wordings of the tariff. Hence the ratio of the above both judgments is not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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