2021 (10) TMI 251 - AT - Customs

Classification of imported goods - Zircon Sand Bulk (Zirconium Ore) - to be treated as concentrate to deny exemption of CVD as per Sl. No. 56 of N/N. 12/2012-C.Ex. dated 17.03.2012 or otherwise? - HELD THAT - In the Circular F.No. 332/1/2012-TRU dated 17.02.2012, clarification has been issued that processes in the nature of crushing, screening, sizing or washing will not result in concentrate, which is leviable to Central Excise Duty. That the term concentrate applies to ores which have had part or all of the foreign matter removed by special treatment. It can be seen that for previous import, the Department had sent samples for analysis and expert opinion to ascertain whether the imported goods are Zirconium ore or Zirconium concentrate. The percentage of Zirconium Oxide contained in the goods would help to ascertain the nature of the goods. However, in the present case, the Department has failed to draw samples and send for analysis - When the Department has sent the samples for test for the previous imports, we do not understand why they have failed to take such steps in respect of the present consignments. In the absence of such opinion by an expert, it is not possible to ascertain the nature of the goods as to whether they are ores or concentrates. Even in the Tariff, ores and concentrates fall under the same Chapter Heading. Similarly, the Customs Notification No. 12/2012-Cus. dated 17.03.2012 grants exemption from Basic Customs Duty of all goods under Chapter 26 (2601 to 2607) i.e., to both ores and concentrates, in terms of Sl. No. 117. The Department cannot decide that the nature of the goods to be concentrate merely by stating that certain processes were undertaken by the appellant. As per the HSN Explanatory notes to Chapter 26, the term concentrate applies to ores which have had part or all of the foreign matter removed by special treatment. In the present case, there is no evidence to show that the subject goods have undergone any special treatment. Mere washing, cleaning and drying cannot be considered as special treatment - There is no expert evidence adduced by the Department to rebut these chemical analysis reports furnished by the appellant. Only on the fact that the goods have undergone processes of cleaning, washing and drying, it cannot be concluded that the imported goods are Zirconium concentrate. The importer-appellant having furnished the chemical analysis report of the overseas supplier, the same cannot be totally disregarded unless there is a report of an expert contrary to this analysis report - On the basis of the analysis report of the overseas supplier as well as the clarification issued by the Board vide Circular F.No. 332/1/2012-TRU dated 17.02.2012 that when ores are only subjected to processes like crushing, sizing, screening and washing, the resultant product cannot be considered as concentrate , we have to hold that the imported goods are ore and not concentrate . The imported goods are Zirconium ore and not concentrates. The demand of Duty (CVD) by denying the benefit of exemption Notification No. 12/2012-C.Ex. dated 17.03.2012, is not legal and proper - Appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods as "Zirconium Ore" or "Zirconium Concentrate."
2. Eligibility for exemption from Countervailing Duty (CVD) under Central Excise Notification No. 12/2012-C.Ex.
3. Validity of the assessment and collection of CVD at 12%.

Detailed Analysis:

1. Classification of Imported Goods:
The appellants filed Bills-of-Entry for clearance of goods declared as Zircon Sand Bulk (Zirconium Ore) under CTH 2615 1000, claiming the goods as "ore" to avail the exemption under Sl. No. 56 of Central Excise Notification No. 12/2012-C.Ex. The Department contended that the goods had undergone physical processes, losing the characteristics of ore and becoming "concentrate," thus ineligible for the exemption.

The Original Authority and Commissioner (Appeals) upheld this view, classifying the goods as Zirconium concentrates based on the processes they underwent. The appellants argued that the goods were merely cleaned, washed, and dried, which does not amount to special treatment converting ore into concentrate as per the HSN Explanatory Notes and CBEC Instructions.

2. Eligibility for Exemption from CVD:
The exemption under Sl. No. 56 of Notification No. 12/2012-C.Ex. is applicable only to "ores." The appellants contended that the imported goods were ores, supported by the chemical analysis report showing 65% Zirconium Oxide content. They argued that processes like cleaning, washing, and drying do not qualify as special treatments to convert ore into concentrate, as clarified in the HSN Explanatory Notes and CBEC Instructions.

The Department relied on Circular No. 09/2012-Cus. and the introduction of Chapter Note 4 to Chapter 26, which states that converting ores into concentrates amounts to manufacture. However, the appellants pointed out that the Circular and Chapter Note do not alter the definition of ore and concentrate for classification purposes.

3. Validity of Assessment and Collection of CVD:
The Department assessed the Bills-of-Entry by levying CVD at 12%, without extending the benefit of the exemption Notification. The appellants had previously imported similar goods, which were tested and classified as ore based on the Zirconium Oxide content. In the present case, the Department did not conduct any chemical analysis to ascertain the nature of the goods.

The Tribunal noted that mere processes like washing, cleaning, and drying do not convert ore into concentrate. In the absence of any special treatment and expert analysis, the Tribunal relied on the chemical analysis report provided by the appellants, showing 65% Zirconium Oxide content, indicating the goods were ore.

Conclusion:
The Tribunal concluded that the imported goods are Zirconium ore and not concentrates. The demand for CVD by denying the exemption under Notification No. 12/2012-C.Ex. was deemed illegal and improper. The impugned order was set aside, and the appeal was allowed with consequential benefits as per law.

(Order pronounced in the open court on 01.10.2021)