2014 (4) TMI 231 - AT - Customs

Waiver of pre-deposit and stay against recovery Levy of CVD (additional customs duty) Whether imported material is Manganese ore or concentrate - Held that - For manganese ore , no CVD (additional customs duty) would be payable and if it is concentrate , CVD would be payable - HSN extract, explains For the purpose of headings 26.01 to 26.17, the term concentrate applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport - There is no finding as to what exactly are the processes which the imported product has undergone. Although it may be true that ores are seldom marketed before preparation but this cannot lead to an automatic conclusion that ores which are imported have become concentrates without any supporting evidence or discussion - The evidence available on record is not sufficient to come to the adverse conclusion against the assessee/importer and the stand taken by the Revenue is not supported by solid facts - No expert opinion has been taken and no enquiries have been made abroad and no trade practice has been considered and the processes undertaken by the supplier and its effect on the ore have not been considered - The percentage of manganese in the ore before washing and crushing and after washing and crushing have not been found out and identified The appellants have made out a case for waiver - stay granted.

Summary

Issues: Classification of imported item as manganese ore or concentrate for customs duty purposes.

Detailed Analysis:
1. Issue of Classification: The appeals involved the classification of the imported item as either manganese ore or concentrate, determining the liability for additional customs duty (CVD). The Revenue contended that the imported item was concentrate, while the appellants argued it was ore. The introduction of Chapter Note 4 under Central Excise Chapter 26 led to the dispute. The appellants highlighted that domestic suppliers also cleared manganese ore without excise duty, emphasizing that washing and crushing to remove impurities did not amount to manufacturing, citing a relevant case law.

2. Contentions of Parties: The learned Chartered Accountant for the appellants argued that the Revenue's classification was incorrect post the introduction of Chapter Note 4. On the other hand, the Additional Commissioner relied on Chapter Note 4 and the HSN extract to support the classification as concentrate. The appellants' representative referred to a previous decision to assert that removing impurities did not result in a new product.

3. Judicial Analysis: The Tribunal examined Chapter Heading 26 and noted that both manganese ore and concentrate fell under the same heading. The percentage of manganese content varied, making it challenging to differentiate between ore and concentrate based on the heading alone. Chapter Note 4 highlighted that converting ores into concentrate amounted to manufacturing, without a clear definition of concentrate. The HSN extract provided by the appellants defined concentrate as ores with foreign matter removed for economical transport, involving various physical and chemical operations.

4. Decision and Reasoning: The Tribunal found that the evidence presented was insufficient to support the Revenue's classification as concentrate. No expert opinion, foreign inquiries, or consideration of trade practices were conducted. The processes the imported product underwent, specifically washing and crushing, were not adequately assessed. The Tribunal concluded that the appellants had a case for waiver, as the Revenue's stand lacked solid factual support. Consequently, the requirement for pre-deposit was waived, and a stay against recovery was granted during the appeal's pendency.

5. Conclusion: The Tribunal's detailed analysis focused on the interpretation of Chapter Heading 26, Chapter Note 4, and the HSN extract to determine the classification of the imported item. The decision highlighted the lack of substantial evidence supporting the Revenue's classification as concentrate, leading to a waiver of pre-deposit for the appellants during the appeal process.