2024 (12) TMI 1253 - SCH - Customs

Violation of principles of natural justice - non-consideration of submissions - 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goods are ore or concentrate and whether eligible for availing exemption under N/N. 4/2006 CE dt. 01.03.2006 as superseded by N/N. 12/2012 CE dt. 17.03.2012 - time limitation. Classification of imported goods - import of natural Rutile Ore/ Leucoxene Sand of different grades - HELD THAT - Reliance placed upon a decision of this Court in the case of M/S. STAR INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) , RAIGAD 2015 (10) TMI 1288 - SUPREME COURT where it was held that ' once we arrive at the conclusion that process of roasting of Ore amounts to manufacture and it creates a different product known as concentrate, for the purpose of exemption notification, which exempts only 'ores' it is not possible to hold that concentrate will still be covered by the exemption notification. Therefore, harmonious construction of Note 2 and Note 4 would lead us to hold that in those cases when Note 4 applies and Ores becomes a different product, it ceases to be ores.' Non-consideration of submission - principles of natural justice - HELD THAT - It is found from the judgment of the Tribunal that without even considering what is laid down in paragraphs 29 and 31 of STAR INDUSTRIES, the Tribunal has brushed aside the binding decision. Therefore, the case will require re-consideration at the hands of the Tribunal. Time Limitation - HELD THAT - Even as regards the finding on limitation, the Tribunal has overlooked the fact that the show cause notice was based on IIT, Powai s test report dated 03rd May, 2013. The finding of fact of the Tribunal on delay is without considering the factual aspects on record. Conclusion - Due to failure to consider properly the submissions, the impugned judgment is set aside and appeal restored to the file of The Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai for fresh consideration. Appeal allowed in part by way of remand.

Summary

Issues:
1. Interpretation of statutory provisions regarding the process of converting ores into concentrates.
2. Application of legal fiction created by statutory amendments.
3. Consideration of binding judicial precedents.
4. Review of Tribunal's decision on limitation and factual aspects.
5. Direction for re-consideration of the case by the Tribunal.

Analysis:
The Supreme Court addressed the issue of interpreting statutory provisions related to the process of converting ores into concentrates. The appellant relied on a previous decision of the Court in the case of Star Industries Vs. Commissioner of Customs (Imports), emphasizing the impact of statutory amendments on the definition of "manufacture." The Court highlighted the significance of Note 4, which categorically states that converting ores into concentrates amounts to "manufacture," thereby affecting the liability for excise duty. The judgment stressed the consequential implications of treating concentrates as a different product from ores, as per the legal definition of "manufacture" under Section 2(f) of the relevant Act.

Furthermore, the Court delved into the application of legal fiction created by the statutory amendments, particularly focusing on the harmonious reading of Chapter Note 2 and Chapter Note 4. It emphasized that both notes must be construed together to avoid rendering any provision redundant. The Court clarified that when Note 4 applies, transforming ores into concentrates results in a different product, leading to the conclusion that the exempt status of ores does not extend to concentrates. This detailed analysis aimed to guide the proper interpretation and application of statutory provisions in determining the classification and liability of converted products.

Moreover, the Court scrutinized the Tribunal's decision, noting that it failed to consider the binding precedents and relevant legal principles established in the earlier judgment. The Court found shortcomings in the Tribunal's assessment of factual aspects, such as the basis for the show cause notice and the issue of delay. Consequently, the Court set aside the Tribunal's judgment and directed a fresh consideration of the case, emphasizing the importance of re-evaluating the matter in light of the legal principles elucidated in the Star Industries case.

In conclusion, the Supreme Court partially allowed the appeal, highlighting the need for the Tribunal to prioritize the disposal of the case in line with the established legal principles. The Court left all other questions open for the Tribunal's consideration, underscoring the significance of adhering to binding precedents and ensuring a comprehensive review of all relevant aspects in the re-consideration process.