2017 (10) TMI 1283 - AT - Central Excise

Liability of Central Excise Duty - processing of iron ore whether amounts to manufacture or not? - Held that - There is no special process facility with the appellant. Improvement in the content of Fe due to the processes undertaken by the appellant by itself will not make the resultant product as iron ore concentrate - process undertaken by the appellant do not amount to manufacture of new product as understood in the industry - liability of duty do not arise - appeal allowed - decided in favor of appellant.

Summary

Issues: Central Excise duty liability on processing of iron ore, determination of whether the process amounts to manufacture, reliance on Board Circular and case laws.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Delhi concerned the Central Excise duty liability of the appellants engaged in processing iron ore. The dispute revolved around whether the process undertaken by the appellants amounted to manufacture, thereby attracting Central Excise duty. The Revenue contended that the conversion of iron ore into concentrate constituted manufacture liable to duty, resulting in a confirmed duty liability of &8377; 18,73,230 for the period April 2011 to November 2012, with a penalty imposed accordingly.

The appellant argued that the process they undertook did not result in a product that could be classified as iron ore concentrate. They relied on a Board Circular dated 17/02/2012 and the decision of the Hon'ble Apex Court in Steel Authority of India Ltd. to support their contention that the increase in the "Fe" content of iron ore through various processes did not transform the final product into iron ore concentrate. The lower authorities, however, supported by the Authorized Representative, maintained their stance based on the examination of HSN notes of the Tariff.

Upon hearing both parties and examining the appeal record, the Tribunal noted that the dispute centered on the excise duty liability arising from the process undertaken by the appellant. Despite a Board Circular clarifying similar circumstances, the impugned order reached a different conclusion based on the interpretation of HSN notes. The Tribunal observed that the processes undertaken by the appellant were undisputed, and the mere improvement in the "Fe" content of iron ore did not automatically classify the resultant product as iron ore concentrate. The Tribunal also referenced various case laws cited by the appellant to support their position.

Referring to precedents such as Bheraghat Minerals, Steel Authority of India, Indian Rare Earth Ltd., and Super Engineering, the Tribunal concluded that the process carried out by the appellant did not amount to the manufacture of a new product as recognized in the industry. Consequently, the Tribunal found the impugned order to be meritless and set it aside, allowing the appeal in favor of the appellant. The order was dictated and pronounced in open court, bringing closure to the dispute over the Central Excise duty liability on the processing of iron ore.