2018 (4) TMI 492 - AT - Customs

Classification of imported goods - import of natural Rutile Ore/ Leucoxene Sand of different grades - whether the imported goods are ore or concentrate and whether eligible for availing exemption under N/N. 4/2006 CE dt. 01.03.2006 as superseded by N/N. 12/2012 CE dt. 17.03.2012? Held that - the supplier M/s Iluka Resources Ltd, Australia has described the goods as Rutile/ HYTI91 Leucoxene Sand/ Leucoxene Sand in import documents whereas in Bill of Entry filed by the Appellant the goods were described as Rutile Ore/ Rutile Ore Leucoxene/ Sand in Bill of Entry - the naturally Rutile/ Leucoxene is an ore found in sea sand alongwith other raw material and out of the same after segregation of sand the imported goods were derived . The Tribunal in case of M/s Jains Mines and Minerals India Ltd. Vs. CCE, JABALPUR 2017 (10) TMI 1283 - CESTAT, Delhi , the bench after appreciation of chapter Note 2 and 4 of Chapter 26 in reference to Iron Ore held that improvement in content of Fe due to process undertaken by the Appellant by itself will not make the resultant product as iron ore concentrate . The impugned goods being Ores are eligible for the exemption from CVD in terms of Notification No. 4/2006- CE dt. 01.03.2006 (Sr. No.4) as superseded by Notification No. 12/2012 CE dt. 17.03.2012 (serial No.56) - the demand is not sustainable on merits. Time limitation - Held that - the issue invloved itself has been of interpretation of activity undertaken in respect of impugned goods, HSN notes and chapter notes - non payment of CVD cannot be attributed to any malafide intention on part of Appellant - the demand is barred by limitation of time and are not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of imported goods as "ores" or "concentrates."
2. Eligibility for exemption under Notification No. 4/2006-CE and Notification No. 12/2012-CE.
3. Validity of the test reports and expert opinions.
4. Allegation of misdeclaration and manipulation of goods' description.
5. Applicability of extended period for demand and penalties.

Detailed Analysis:

1. Classification of Imported Goods as "Ores" or "Concentrates":
The primary issue was whether the imported goods should be classified as "ores" or "concentrates." The revenue alleged that the goods were concentrates, not ores, due to the processes they underwent, such as wet concentration, attrition, secondary concentration, and dry mill processing. The appellant argued that these processes were normal to the mining industry and did not alter the chemical composition of the minerals, thus retaining their classification as ores. The tribunal agreed with the appellant, noting that the processes undertaken were normal in the metallurgical industry and did not involve any special treatment that would convert ores into concentrates.

2. Eligibility for Exemption under Notification No. 4/2006-CE and Notification No. 12/2012-CE:
The appellant claimed exemption from additional duty of customs under the aforementioned notifications, which apply to ores but not to concentrates. The tribunal concluded that since the imported goods were classified as ores, they were eligible for the exemption. The tribunal emphasized that the processes undertaken did not change the chemical composition of the minerals and were normal to the metallurgical industry, thus retaining their classification as ores.

3. Validity of the Test Reports and Expert Opinions:
The tribunal examined the test reports from IIT Powai and the Indian Bureau of Mines (IBM). The IIT Powai report was found inconclusive as it did not specifically address whether the goods were ores or concentrates. In contrast, the IBM report consistently identified the goods as "naturally occurring Rutile Ore/Leucoxene Sand." The tribunal gave more weight to the IBM report, considering it an expert opinion in the mining industry. The tribunal also noted that the IBM report was corroborated by the Indian Standard IS 4104-1967, which defines Rutile Ore.

4. Allegation of Misdeclaration and Manipulation of Goods' Description:
The revenue alleged that the appellant had manipulated the description of the goods by adding the word "ore" to claim the exemption fraudulently. The tribunal found that the supplier had described the goods as "Leucoxene Sand" and not as concentrates. The tribunal concluded that the appellant's use of the term "Rutile Ore" was for classification purposes and not with the intent to misdeclare the goods. The tribunal noted that the supplier did not describe the goods as concentrates, and the appellant's description did not change the nature of the goods.

5. Applicability of Extended Period for Demand and Penalties:
The demand was raised for the period from March 2011 to December 2012, invoking the extended period due to alleged misdeclaration. The tribunal found that the issue was known to the revenue as early as August 2011 when samples were sent for testing. The tribunal held that the non-payment of CVD could not be attributed to any malafide intention by the appellant, as the issue involved interpretation of the activity undertaken on the goods. Therefore, the tribunal concluded that the demand was barred by limitation and not sustainable.

Conclusion:
The tribunal set aside the impugned order, holding that the imported goods were correctly classified as ores and were eligible for exemption under the relevant notifications. The tribunal also found that the demand was barred by limitation and not sustainable on merits. The appeal was allowed with consequential reliefs to the appellant in accordance with the law.