2011 (1) TMI 712 - AT - Customs

Demand - whether the iron ore pellets exported by the appellant are classifiable as iron ores and concentrates, all sorts under Heading No. 11 of the Second Schedule to the Customs Tariff Act - The literature nowhere says that pelletisation of iron ore will change its chemical composition. It only brings about a physical change to facilitate the charging of the ore into the blast furnace as part of metallurgical operations for extraction of elemental iron (Fe) - It is nobody s case that the same circumstances prevailed in 2007-08 after almost half a century or that the intention of Chowgule & Co. survived the tenure of the contract - The meaning of iron ore in trade parlance today cannot be the same as what it was half a century ago, and there is no reason why it should exclude iron ore pellets - It is obvious that the affidavits were solicited to suit the appellant s purpose, such documents cannot be relied upon - Appeal is dismissed

Summary

Issues Involved:
1. Classification of iron ore pellets under Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975.
2. Applicability of the Bombay High Court judgment in FCA No. 46 of 1978 to the present case.
3. Relevance of affidavits submitted by technical experts.
4. Interpretation of the term "all sorts" in the context of export duty.

Detailed Analysis:

1. Classification of Iron Ore Pellets:
The primary issue was whether iron ore pellets exported by the appellant should be classified under "iron ores and concentrates, all sorts" in Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975, thus subject to export duty. The appellant argued that iron ore pellets, being distinct from iron ore due to physico-chemical changes during pelletisation, should not fall under this heading. They relied on the Supreme Court's judgment in Minerals and Metals Trading Corporation of India Ltd. v. Union of India, which emphasized the importance of chemical changes in determining whether a process amounted to manufacture.

The Tribunal, however, upheld the classification under Heading No. 11, agreeing with the Commissioner (Appeals) that the term "all sorts" indicated the widest possible coverage, including iron ore pellets. The Tribunal noted that the First Schedule to the Customs Tariff Act and the Central Excise Tariff Act classified iron ore pellets under agglomerated iron ores, and this classification should be considered for export duty purposes as well. The Tribunal emphasized that the legislative intent was to use a wider expression in the Second Schedule, encompassing all subdivisions of similar entries in the First Schedule.

2. Applicability of the Bombay High Court Judgment:
The appellant heavily relied on the Bombay High Court judgment in The Board of Trustees of the Port of Marmugao v. Chowgule & Co. Pvt. Ltd., which held that iron ore pellets were not included in the term "iron ore" under a specific contract. The Tribunal found this judgment inapplicable to the present case, as it was based on the interpretation of a contract from 1959 under Portuguese law and was binding only on the contracting parties. The Tribunal noted that the commercial understanding of "iron ore" had evolved, and the legislative intent in the Customs Tariff Act, 1975, was to include iron ore pellets within the broader classification of "iron ores and concentrates."

3. Relevance of Affidavits Submitted by Technical Experts:
The appellant submitted affidavits from Dr. Naresh Bedi and Mr. Purushottam Motilal Pai, stating that iron ore pellets were distinct from primary iron ore fines, lumps, or concentrates. The Tribunal rejected these affidavits, noting that they were identically worded and appeared to be solicited to suit the appellant's purpose. The Tribunal cited previous decisions where such solicited documents were deemed unreliable.

4. Interpretation of the Term "All Sorts":
The Tribunal interpreted the term "all sorts" in Heading No. 11 of the Second Schedule to the Customs Tariff Act as having the widest possible coverage. This interpretation was supported by the Gujarat High Court's decision in Jalal Plastic Industries v. Union of India and the Tribunal's decision in Kirloskar Electric Co. Ltd. v. Collector of Central Excise. The Tribunal concluded that "iron ores and concentrates, all sorts" should include all goods classified under Heading 2601 of the First Schedule, including iron ore pellets.

Conclusion:
The Tribunal dismissed the appeals, upholding the classification of iron ore pellets under Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975, and the resultant export duty. The decision emphasized the broader legislative intent and the evolving commercial understanding of "iron ore," rejecting the appellant's reliance on outdated contractual interpretations and solicited affidavits.