2006 (7) TMI 370 - AT - Customs

Demand - Imported Molybdenum Concentrate - determining the levy of Countervailing duty u/s 3 - HELD THAT - The use of the imported goods is for recovery of metal. Thus, the primary condition of Note 2 of Chapter 26 viz. the imported goods are used for the metals of Section XV, is satisfied. The second condition of Note 2 of Chapter 26 is also satisfied inasmuch as the imported concentrate had not been subjected to process not normal to the metallurgical industry. The department, in fact, has stated in the grounds of appeal that by virtue of Note 2 to Chapter 26, the goods have been classified under Heading 2613.10. Therefore, concentrate in question when it satisfies is covered under term ore as given in Chapter Note 2. The definition of ore mentioned in Note 2 of Chapter 26 will also apply to appearing in Sl. No. 10 of Notification No. 5/98-C.E. Short levy u/s 28 cannot be raised without challenging the assessment in the bill of entry. The Supreme Court in Priya Blue Industries Ltd. v. Commissioner 2004 (9) TMI 105 - SUPREME COURT has held that an importer is not entitled to a refund, if assessment on the Bill of Entry are not challenged. The ratio of the said decision will apply to the present case inasmuch as no differential duty can be demanded from the noticees, without the department challenging the assessment in the Bill of Entry. The Tribunal in the case of Wipro Ltd. v. CC, Chennai 2005 (5) TMI 157 - CESTAT, BANGALORE has held that department cannot demand duty without challenging the assessment made in the Bill of Entry. Appeal rejected.

Issues Involved:
1. Classification of imported molybdenum concentrates under Chapter 26 of the Customs Tariff.
2. Levy of Countervailing Duty (CVD) on the imported goods.
3. Definition and interpretation of "ore" and "concentrate" under relevant legal provisions.
4. Applicability of exemption under Notification No. 5/98-C.E. to the imported concentrates.
5. Validity of short levy demand without challenging the assessment in the Bill of Entry.

Detailed Analysis:

1. Classification of Imported Molybdenum Concentrates:
The respondents imported molybdenum concentrates, claiming classification under Chapter 26 of the Customs Tariff. The goods were described as molybdenum ore "molybdenite" (MoS2), subjected to processes such as concentration and roasting, resulting in molybdic oxide. The classification under Chapter 26 was not contested.

2. Levy of Countervailing Duty (CVD):
The primary dispute was the levy of CVD under Section 3(1) of the Customs Tariff Act, 1975. The Supreme Court's decision in Hyderabad Industries v. UOI clarified that for CVD purposes, it must be presumed that the imported article could be manufactured or produced in India. If the process by which the concentrate is obtained does not amount to manufacture in India, the imported concentrate would not be subjected to CVD. Additionally, if the goods are exempted from excise duty in India, the imported goods would also be subjected to a nil rate of CV duty.

3. Definition and Interpretation of "Ore" and "Concentrate":
According to Kirk-Othmer's Encyclopedia of Chemical Technology, "concentrate" is enriched ore after the removal of waste, and "ore" is a mineral from which a valuable constituent can be recovered profitably. The Supreme Court in Minerals and Metals Trading Corporation of India Ltd. v. UOI held that separating ore from rock is not a manufacturing process, and the chemical structure of the ore remains the same. Similar judgments in Hyderabad Industries v. UOI and CCE v. Tata Iron and Steel Co. Ltd. reinforced that processes like washing, grinding, and screening do not constitute manufacturing.

4. Applicability of Exemption under Notification No. 5/98-C.E.:
The exemption under Sl. No. 10 of Notification No. 5/98-C.E. applies to ores falling under Heading 26.01 to 26.17. The Supreme Court in MMTC v. UOI held that concentrates are covered by the description of "ores" in Tariff Item 26. Therefore, the term "ore" in the notification includes "concentrates." The HSN Explanatory Notes and technical literature also support this interpretation. Note 2 of Chapter 26 defines "ores" as minerals used in the metallurgical industry for metal extraction, and the imported goods met this criterion.

5. Validity of Short Levy Demand:
The Supreme Court in Priya Blue Industries Ltd. v. Commissioner held that an importer is not entitled to a refund if the assessment on the Bill of Entry is not challenged. Similarly, the Tribunal in Wipro Ltd. v. CC, Chennai ruled that the department cannot demand duty without challenging the assessment in the Bill of Entry. Therefore, the short levy demand under Section 28 without challenging the assessment in the Bill of Entry was invalid.

Conclusion:
The Tribunal concluded that no CVD is imposable on the imported molybdenum concentrates as the process of obtaining the concentrate does not amount to manufacture. The exemption under Notification No. 5/98-C.E. applies to the concentrates, and the short levy demand was invalid without challenging the assessment in the Bill of Entry. The appeal was rejected.

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