2002 (12) TMI 142 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product as "Iron Ore" or "Iron Ore Concentrate" chargeable to Central Excise duty u/s Heading 26.01.
2. Whether the processes undertaken by the Respondents amount to "manufacture" under Central Excise law.

Summary:

1. Classification of the Product:
The primary issue is whether the product in question is "Iron Ore" or "Iron Ore Concentrate" chargeable to Central Excise duty u/s Heading 26.01 of the Central Excise Tariff Act. The learned Departmental Representative argued that the Respondents' processes of crushing, grinding, screening, and washing the mined iron ore to remove foreign materials and concentrate the ores result in "iron ore concentrate." The Explanatory Notes of HSN define "concentrates" as ores that have had part or all of the foreign matters removed by special treatments, which include physical or physico-chemical operations like crushing, grinding, and screening.

2. Processes Undertaken by Respondents:
The Respondents contended that their activities of crushing, screening, and washing do not convert iron ore into iron ore concentrates as no special treatments are undertaken, nor does the Fe content increase. They argued that these processes are normal mining activities and do not amount to the manufacture of new or different goods. The National Metallurgical Laboratory, Jamshedpur, supported this by stating that such processes are essential to dress the ore while maintaining its identity as ore.

3. Legal Precedents and Definitions:
The Respondents referred to Note 2 to Chapter 26 of the Tariff, which defines "ores" and excludes minerals subjected to processes not normal to the Metallurgical Industry. They also cited several legal precedents, including the Indian Rare Earths Ltd. case, where similar processes were not considered as manufacturing concentrates. The Tribunal in that case held that the processes did not bring about any upgradation or augmentation of purity in the mineral sands separated from ordinary sand.

4. Tribunal's Analysis:
The Tribunal considered the submissions and noted that the processes undertaken by the Respondents do not result in the emergence of a new commercial product. The Supreme Court's two-fold test for determining manufacture was applied, which requires that a new and different article must emerge having a distinctive name, character, or use. The Tribunal concluded that the processes of crushing, grinding, screening, and washing do not transform the iron ore into a new product known as "iron ore concentrates." The use of iron ore remains the same for metallurgical purposes.

5. Conclusion:
The Tribunal held that the processes undertaken by the Respondents do not amount to the manufacture of a different commercial commodity. Therefore, no Central Excise duty is leviable on the product, and all the appeals were rejected.