TMI Blog2022 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... global website of Vale International have categorically asserted that the mined ore at Carajas, Para, Brazil underwent two preparatory processes mainly crushing and screening at Carajas, Para, Brazil, before shipment of the same. It is evident from the aforesaid pictorial representation of the stage-wise extraction process of Iron Ores, that there are total of 11 stages involved from the extraction of the ore from the Carajas Mine to its shipment from Brazil. These sequential stages are titled in the pictorial representation as Infrastructure, Extraction, Transport, Crushing, Conveyor Belt, Screening, Stockyard, Recovery, Loading, Rotary car dumpers and Shipment. Out of these 11 stages, only 2 stages deal with physically preparing the ore for shipment, which are crushing and screening. In the process of crushing, the ore which has been mined and is in the shape of a boulder/uneven blocks of upto 15 meters, is crushed using a primary crusher into smaller size - The pictorial representation records that Vale has 17 production lines at its screening site, where the crushed ore is sorted basis the size of the crushed ore. It needs to be noticed that both, the show cause notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na to silica ratio would always be greater than 1 in case of natural ores. The appellant had, in the reply, demonstrated that naturally occurring high grade iron ores, even in India at the Bacheli and Bailadila of NMDC have the alumina to silica ratio less than 1. The impugned order as also the evidence relied in support of the same have not disputed this position. The report of Dr. Rathod could not, therefore, have been relied upon to hold that what had been imported by the appellant was Iron ore that had been concentrated. The contents of the letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer in the Indian Bureau of Mines are contrary to the opinion of the Ministry of Mines, as communicated of the Circular dated 17.02.2012. The process of crushing and screening undertaken on the Iron Ore after they have been mined at Carajas, Brazil and subsequent blending at Oman with 5-10% iron ore concentrate would result in classification of the goods imported under CTI 2601 11 31 as Iron Ore fines and would consequently be entitled to the benefit of exemption from payment of CVD under the notification dated 17.03.2012. Appeal allowed. - CUSTOMS APPEAL NO. 85365 OF 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .0 50.0 25.0 4. Along with the commercial invoice and the packing list, the supplier also provided a Certificate of Analysis to the appellant. A specimen Certificate of Analysis dated 26.12.2014, which sets out the chemical composition and the physical specification of Iron ore Carajas Sohar, is as under: I) Chemical Composition (on Dry Basis) Fe SiO2 Al2O3 P MN LOI 64.77 PCT 2.30 PCT 1.27 PCT 0.025 PCT 0.45 PCT 2.37 PCT II) Physical Specification (on Wet Basis): 12.5 MM 5MM 0.5 MM 6.3 MM 4.8 PCT 17.5 PCT 59.1 PCT 13.6 PCT 5. The appellant classified the iron ore fines under CTI 2601 11 31 and claimed exemption from payment of CVD in terms of the notification dated 17.03.2012, which grants complete exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % SiO 2 = 2.0% Al 2 O 3 = 2.1% Manganese = 0.18% It is other than agglomerated Iron Ore and Iron Ore fines. Remnant may be collected within 7 days. 8. In the course of the finalization of assessments, the Superintendent of Customs (Preventive), by a letter dated 28.10.2014, called upon the appellant to explain as to whether the goods imported were iron ore fines or the same were iron ore pellets, as from the website of Vale International, SA, Oman it appeared that they were manufacturers of iron ore pellets. The appellant, by letter dated 04.12.2014, pointed out that the consignment of iron ore fines had been imported from Oman Plant of Vale International. The said iron ore fines were nomenclated by Vale International as Iron ore Carajas Sohar and the same were formed by blending two products imported from Vale International Brazil namely, Iron ore Carajas and Iron Ore concentrate. Along with the said reply, a clarification dated 10.11.2014 received from the supplier was also attached. The Department sent a letter dated 31.12.2014 asking the appellant to furnish the details of the blending operations carried out by the supplier of Iron ore Carajas Sohar at Oman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ron Ore at Carajas, Para, Brazil. It was evident from the website that the mined ore atleast underwent two preparation processes namely, crushing and screening to make them suitable as sinter and pellet feed. The website shows that the screening process at Carajas, Para, Brazil employs as many as 17 production lines. Crushing and Screening are two of the inclusive special processes, listed in the HSN Explanatory Notes for production of Iron Ore concentrate; (iii) The ore after being crushed and screened is shipped by Vale International SA, Switzerland from Brazil to their other facility at Oman, where blending is undertaken to produce Iron Ore Carajas Sohar; (iv) The said Iron Ore Carajas Sohar is an outcome of the process of blending or grading after having already undergone crushing and 17 cycle screening process at Carajas, Para, Brazil; and (v) It is evident from the webpage of Vale that washing of ore is undertaken at Carajas, Para, Brazil mines, so as to remove the impurities of mu, slag, gangue and other impurities. 12. The appellant filed a reply dated 16.09.2016 to the show cause notice and submitted that the CBIC had by Circular dated 17.2.2012, after co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these ores were mined from different mines in Carajas, not necessarily having similarly high iron content. It was for this reason that to meet the requirements of the needs of the two noticees, the processed and prepared iron ore carajas was further blended in the Vale facilities at Sohar in Oman with pallet fine feed tubarao, in the ratio of 90:10 to enable supply of iron ore carajas sohar to them. The blending process was carried on the iron ore carajas, after the mined ore at Carajas underwent the processes of crushing, grinding, milling, screening, scrubbing, froth floatation, concentration, thickening, drying, and dewatering etcetera using their own technology and processes, including dry beneficiation processes Tale at its ore processing facilities of Vale. 239. The HSN explanations defined and explained these needs and requirements explaining the distinction between the ore and ore concentrates and the physico and physico chemical processes requisites therefor. Its plain litera explained that ore per se could not be used for further metallurgical operations because of gangue deficiencies. The removal of these deficiencies, resulting in, consequent, upon concentration of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected to the processes of crushing and screening cannot be said to have been concentrated, as the said processes do not result in removal of part or whole of the foreign matter; (v) Both, the show cause notices and the impugned order, have in passing, contended that processes, beyond crushing and screening, have been undertaken on the Iron Ore at Carajas, Para, Brazil. However, there is not even an iota of evidence to even suggest, let alone prove, that further or other processing had taken place at Carajas, Para, Brazil. The burden to prove that processes beyond crushing and screening had been carried out was on the Revenue, which it failed to establish; and (vi) The Principal Commissioner, has in paragraph 119 and 120 of the impugned order, held that Vale was using water for removal of impurities, which fact was evident from the pictorial representation hosted on their official website and was corroborated by the ANA-IBRAM s 2013 report. This incorrect finding has been arrived at by incorrect extrapolation of the pictorial representation in the impugned order. The show cause notice had not made any reference to the aforesaid pictorial extract from the website. 15. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as available to the imported goods in question. 18. The second issue that arises for consideration is whether the burden was on the appellant to establish its entitlement to exemption under the notification dated 17.3.2012 or the said burden had shifted on the Department, since the benefit of the exemption had been extended not only at the time of clearance of the imported goods but also at the time of finalisation of the provisional assessment. 19. It would be seen that the main controversy that has arisen for determination in this appeal is as to whether the product that has been imported by the appellant is Iron Ore (fines) or Iron Ore (concentrate). Concentrate has neither been defined in the Notes to Chapter 26 of the Tariff Act nor in the notification dated 17.03.201. HSN also does not provide a separate classification for ore that is concentrated or otherwise. In fact, it is only in Chapter Note 4 to the Central Excise Tariff Act, 1985 that a distinction is sought to be drawn between ore and concentrate and it is as follows: In relation to products of this chapter, the process of converting ore into concentrates shall amount to manufacture . The Explanatory Notes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore as amounting to manufacture would not in any way change the definition of Ore or Concentrate for the purpose of classification. This has been reiterated in a number of judgments and also vide Board Circular No.696/12/2003, CX dated 26-2-2003 [2003 (152) E.L.T. T44]. 3. In view of Chapter Note 4 to Chapter 26 of CETA, 1985 inserted vide Finance Act 2011, Ores and Concentrates are two distinct products. Thus, Concentrates suffer Central Excise duty being a manufactured product. The implication for imported Concentrates is that the benefit of exemption of additional duty of Customs leviable under Section 3 of Customs Tariff Act, 1975 in terms of a notification that applies only to Ores is no longer available to Concentrates, even if Concentrates and Ores fall under the same tariff heading. 4. Thus, it is concluded in the Conference that the benefit of exemption notification under Sr. No. 4 of the Notification 4/2006-CE., dated 1-3-2006 will be available only to imported Ores and not to imported Concentrates. (emphasis supplied) 21. The show cause notice, in paragraph 18, has explained that foreign matter like alumina and silica contained in the ore, being the gan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concentrate and concentrate plant are defined as under: 'Concentrate plant' (Min.Ext). Concentrator mill, reduction works, washing, cleaning plant. Buildings and installations in which ore is processed by physical, chemical and/or electrical methods to retain its valuable constituents and discard as tailings those of no commercial interest. 'Concentrate' (Min.Ext.). The products of concentration operations in which a relatively high content of mineral has been obtained and which are ready for treatment by chemical methods. 24. It is, thus, evident from the HSN Explanatory Notes as also from the judgment of the Supreme Court and the dictionary meanings relied upon therein, that iron ore concentrate refers to an ore that has been subjected to special processes for removal of all or part of the foreign matter i.e. gangue contained in the ore, with which it naturally occurs. 25. The HSN Explanatory Notes do not specify what would construe to be special treatments by which the foreign matter is removed from the ore. However, the CBIC, after consulting the Ministry of Mines, has clarified this aspect by a Circular dated 17.02.2012 and the relevant porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending disputes, if any, may be decided accordingly. 26. The aforesaid Circular clarifies that crushing and screening are mere preparatory processes and do not constitute the special treatment contemplated in the Explanatory Notes, by which part or all of the foreign matter is removed. In other words, it has been clarified that ores that have been merely subjected to the processes of crushing and screening, cannot be said to have been concentrated, as the said processes do not result in removal of part or whole of the foreign matter. It has been explained that crushing and screening followed with processes such as milling, hydraulic separation, magnetic separation, floatation and concentrate thickening have to be undertaken for ores to be converted into concentrate. In other words, the process of milling with hydraulic separation, magnetic separation, processes of concentrate thickening are, inter alia, the special processes and special treatments contemplated in the Explanatory Notes which result in removal of part or whole of the foreign matter. 27. In the instant case, both the show cause notice as also the impugned order, after extracting the pictorial representation fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Iron Ore Carajas is 90-95% and that of Iron Ore concentrate is 5-10%, is a concentrate or not. The process of blending/mixing undertaken at Oman is a physical process where iron ore fines from the Carajas mines are mixed with iron ore concentrates from the Southeastern System in the ratio of 90-95% of iron ore fines from Carajas and 5-10% of Iron Ore concentrate. In this process, there is no removal of part or whole of the foreign matter and, therefore, the same cannot be said to be a special treatment resulting in the ore becoming a concentrate. This apart, the blend of iron ore fines (90-95%) with iron ore concentrate (5-10%) would, by applying Note 3(b) to the General Rules of Interpretation to the Import Tariff, be classified as iron ore fines, as the essential character to the mixture is derived from the iron ore fines. The processes to which the imported iron ore fines have been subjected to, such as crushing, screening, and physical blending/ mixing, are not processes by which gangue is separated from the mineral ore. It is only when the process of crushing and screening are followed with the process of milling and thereafter hydraulic separation, magnetic separation, float ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, VJTI and a letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer, Indian Bureau of Mines, Ministry of Mines. 33. This contention of learned special counsel for the Department cannot also be accepted for the reason that the CBIC has itself in the Circular dated 17.02.2012 clarified that crushing and screening are mere preparatory processes and do not tantamount to concentrating an ore, as there is no special treatment involved in the same and that it is only through the additional process of milling, hydraulic separation, magnetic separation, floatation and concentrate thickening that a part or whole of the foreign matter is removed, so as to concentrate an ore. Even the process of blending does not result in removal in any of part or whole of the foreign matter, so as to tantamount to concentrating the ore. The report dated 06.05.2016 of Dr. Rathod cannot be relied upon. Iron ore, being a naturally occurring product, the composition thereof as also the composition of the gangue associated with the same varies from mine to mine, location to location, region to region. There can be no basis to impute any certainty that alumina to silica ratio would always be greate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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