2007 (4) TMI 38 - AT - Central Excise

Manufacture Appellant contended that there is no process to bring into existence separate goods having separate name and known in market differently than the item which had been brought by magnetic process into their elements Held that the process not amount to manufacture

Summary

Issues:
Classification of goods from Mineral Separation Plant - Ore concentrates or new product under different classification.

Analysis:

1. The primary issue in this case revolves around the classification of goods cleared by the appellant from their Mineral Separation Plant. The dispute is whether these goods should be classified as ore concentrates under CSH 2614 or as a new product for classification under CH 28. The appellant's argument is that the item in question, mineral sand in concentrated ore form, has not undergone any transformation or augmentation of purity. They assert that no new product has emerged as the minerals were merely separated through a magnetic process without any chemical change. The Commissioner (Appeals), however, considered the separation process as manufacturing, leading to the creation of three distinct goods subject to duty.

2. The appellant relied on various legal precedents to support their contention, including judgments like UOI v. Delhi Cloth & General Mills and Dy. Commissioner of Sales Tax v. Pio Food Packers. Despite citing these cases, the Commissioner (Appeals) did not provide reasoning for rejecting them. The appellant's stance was that the separation of Illmenite, Rutile, and Zircon in their factory did not result in the creation of new goods, and therefore, should not be classified differently. They also argued against the denial of benefits under Notification 4/97-C.E., emphasizing that the separation process did not lead to a chemical change, similar to the Indian Rare Earths Ltd. case.

3. The appellant's counsel referenced the judgment in Indian Rare Earths Ltd. v. CCE, BBSR-I to support their position. This case highlighted that physical and mechanical processes for separating minerals did not constitute manufacturing if no new goods were produced. The counsel contended that the separation of minerals in the Mineral Separation Unit should not be classified under CSH 2614 and 2615, maintaining that the goods remained as ore concentrate. The counsel also argued that the denial of benefits under Notification 4/97-C.E. was unjustified due to separate processes at different units after separation.

4. The Judicial Member differentiated the present case from Indian Rare Earths Ltd. by emphasizing the use of magnetic, electrostatic, and gravity processes to extract minerals like Illmenite, Rutile, and Zircon. The Judicial Member agreed with the appellant's position that no new product emerged from the separation process, as the minerals retained their original form without undergoing significant changes. Drawing parallels to previous Supreme Court judgments, the Tribunal concluded that the goods did not transform into distinct products, leading to the setting aside of the impugned orders and allowing the appeals with consequential relief.

In conclusion, the judgment focused on the classification of goods from the Mineral Separation Plant, emphasizing the absence of significant transformations leading to the creation of new products. By analyzing legal precedents and the specifics of the separation processes involved, the Tribunal ruled in favor of the appellant, highlighting the continuity of the minerals' characteristics and the lack of substantial changes warranting a different classification.