1984 (11) TMI 326 - AT - Customs

Issues Involved:
1. Classification of imported "Moanda Manganese Ore" under the Customs Tariff Act, 1975.
2. Applicability of Chapter Note 2 to Chapter 26 of the Customs Tariff Act, 1975.
3. Determination of whether the imported goods fall under Heading 25.01/32(3) or Heading 26.01.
4. Interpretation of "metallic ores" and "ore concentrates" in the context of the Customs Tariff Act, 1975.
5. Consideration of commercial parlance and technical literature in classification.

Detailed Analysis:

1. Classification of Imported "Moanda Manganese Ore" under the Customs Tariff Act, 1975
The core issue is whether the imported "Moanda Manganese Ore" should be classified under Heading 25.01/32(3) as "Battery Grade Manganese Dioxide" or under Heading 26.01 as "Metallic Ores and concentrates." The Assistant Collector classified the goods under Heading 25.01/32(3) and charged duty at 60%+15% ad valorem. On appeal, the Appellate Collector reclassified the goods under Heading 26.01 with a duty of 40%+5% ad valorem. The Central Government issued a show cause notice proposing to revert to the original classification under Heading 25.01/32(3).

2. Applicability of Chapter Note 2 to Chapter 26 of the Customs Tariff Act, 1975
Chapter Note 2 to Chapter 26 defines "metallic ores" as minerals of mineralogical species actually used in the metallurgical industry for the extraction of metals, even if intended for non-metallurgical purposes. It excludes minerals subjected to processes not normal to the metallurgical industry. The Tribunal examined whether the imported battery grade MnO2 ore meets these criteria.

3. Determination of Whether the Imported Goods Fall Under Heading 25.01/32(3) or Heading 26.01
The Tribunal considered the specific entry for battery grade MnO2 under Heading 25.01/32(3) and the general entry for metallic ores under Heading 26.01. The imported goods were agreed to be "ore" and "ore concentrate" belonging to known mineralogical species. However, the Tribunal found that battery grade MnO2 ore, due to its unique properties and specific use in dry cell batteries, does not fall under the category of "metallic ores" used for extraction of metals as per Note 2 to Chapter 26.

4. Interpretation of "Metallic Ores" and "Ore Concentrates" in the Context of the Customs Tariff Act, 1975
The Tribunal held that the imported battery grade MnO2 ore, though originating from the same ore body as metallurgical grade ore, is distinguishable due to its specific properties and uses. It is not used for the extraction of metal but for the manufacture of dry batteries. Therefore, it does not meet the criteria of "metallic ores" under Chapter 26. Consequently, the ore concentrates of such non-metallic ores also do not fall under Heading 26.01.

5. Consideration of Commercial Parlance and Technical Literature in Classification
The Tribunal reviewed technical literature and commercial practices to understand the distinction between battery grade MnO2 and metallurgical grade MnO2. The literature indicated that battery grade MnO2 is identified through selective mining and physical processes, and its suitability for battery manufacture is determined by trial and error. The Tribunal concluded that the specific entry for battery grade MnO2 under Heading 25.01/32(3) should prevail over the general entry for metallic ores under Heading 26.01.

Conclusion:
The Tribunal concluded that the imported "Moanda Natural Battery Grade MnO2 Ore" falls under Heading 25.01/32(3) of the Customs Tariff Schedule of 1975 and not under Heading 26.01(1). Consequently, the impugned orders were set aside, and the appeals were allowed.

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