2019 (3) TMI 1525 - AT - Customs

Export of Iron ore concentrates - benefit of N/N. 62/2007-Cus dated 3.5.2007 - appellants contend that Iron ore concentrate is nothing but enriched and prepared ore and covered by the word Ores appearing in T1 26; Ore is the genus and concentrate is the species. Whether the iron ore concentrate exported by the Appellants can be treated as Iron Ore and whether the Appellants are eligible for the N/N. 62/2007-Customs dated 03.05.2007? Held that - The Appellants sister concern is engaged in carrying on the business of Iron Ore mining and export of Iron Ore as such or after processing. This activity generated large quantities of tailing / waste and rejects which have no commercial value due to low Fe contents and thus unviable for both exports and domestic application. The Appellants have made use of this waste abundantly available and having a low range of Fe i.e. 30 to 40% into a commercially viable one. For this they have adopted the process of beneficiation and magnetic separation of the particles having very low Fe contents. The aforesaid activity resulted in Iron Ore concentrates which the Appellants declared to be Iron Ore concentrates. These processes apparently are not those which are not normal metallurgical operations so as to take the product away from the domain of Chapter 26 and they do not alter any chemical composition. It is pertinent to note that the application made by the Appellants to set up a 100% EOU for export of Iron Ore having Fe contents 58%. The project report further mentions that the unit would concentrate the Iron Ore - the process undertaken by the Appellants are not those which are not normal to the metallurgical industries - In view of the Chapter notes to Chapter 26 of Custom Tariff Act, 1975, it has to be concluded that Ores includes concentrates. Therefore the benefits of notification 62/2007 is applicable to concentrates also. Having held that the exemption available to Ore is also available to concentrates, the procedural infractions cannot take away benefit when substantial compliance is not disputed and when the Tariff recognizes the description mentioned in the Notification and the description mentioned in the Shipping Bill and Other Documents. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of "Iron Ore Concentrates" as "Iron Ore" for exemption eligibility.
2. Applicability of Notification No. 62/2007-Customs dated 03.05.2007 to "Iron Ore Concentrates".
3. Procedural compliance and its impact on exemption eligibility.

Issue-Wise Detailed Analysis:

1. Classification of "Iron Ore Concentrates" as "Iron Ore" for exemption eligibility:
The appellants presented a shipping bill for the export of iron ore concentrates, claiming a reduced export duty under Notification No. 62/2007. The primary contention was whether "Iron Ore Concentrates" could be classified as "Iron Ore" for the purposes of the exemption. The appellants argued that "Iron Ore" is a genus, and "Concentrate" is a species, citing previous judgments including CC (Imports) Mumbai v Hindustan Gas & Industries Ltd. and MMTC v UOI. The tribunal noted that the term "Ore" includes "Concentrates" as per Chapter Note 2 of Chapter 26 of the Customs Tariff Act and HSN explanatory notes. The tribunal concluded that "Iron Ore Concentrates" should be considered as "Iron Ore" for the purposes of the exemption.

2. Applicability of Notification No. 62/2007-Customs dated 03.05.2007 to "Iron Ore Concentrates":
Notification No. 62/2007-Customs exempts "Iron Ore Fines" with Fe content of 62% and below from excess duty. The appellants argued that their product, although labeled as "Iron Ore Concentrates," met the physical criteria of "Iron Ore Fines" as it had a size below 10 mm and Fe content below 62%. The tribunal examined the definition and processes related to "Ores" and "Concentrates," concluding that the exemption should apply to "Iron Ore Concentrates" as well. The tribunal referenced the Supreme Court's judgment in MMTC v UOI and the tribunal's own decision in Hindustan Gas & Industries Ltd., affirming that "Ore" includes "Concentrates."

3. Procedural compliance and its impact on exemption eligibility:
The tribunal addressed the procedural aspects, noting that the appellants had described the export product as "Iron Ore Concentrate" in the shipping bill and other documents. However, the tribunal found that the substantial compliance with the exemption criteria was met, as the product exported had Fe content below 62% and met the physical characteristics of "Iron Ore Fines." The tribunal emphasized that procedural infractions should not negate the eligibility for exemption when the substantive conditions are fulfilled. The tribunal also noted that the department had, at times, considered the product as "Iron Ore Fines" in its correspondence.

Conclusion:
The tribunal allowed the appeal, concluding that "Iron Ore Concentrates" should be treated as "Iron Ore" for the purposes of the exemption under Notification No. 62/2007-Customs. The tribunal held that the exemption applies to "Iron Ore Concentrates" with Fe content below 62%, and procedural discrepancies should not deprive the appellants of the exemption benefits. The appeal was allowed with consequential relief.