2023 (5) TMI 1201 - AT - Customs

Classification of export goods - Ilmenite upgraded (processed) - to be classified under Tariff Item 2614 00 20 (as beneficiated/processed Ilmenite) or under Customs Tariff Act 2614 00 10 (as unprocessed Ilmenite)? - HELD THAT - As per the definition beneficiation is done for three purposes. Any processes done for the above three purposes carried out on the mined sand would be known as beneficiation . From the flow chart which has been noticed above it can be seen that the various processes undertaken on the raw sand by the appellants achieves the purpose of regulating the size, removing unwanted impurities and also improving quality or SI grade of Ilmenite - it is difficult to agree with the view of the Department that to obtain beneficiated Ilmenite processes like roasting and chemical treatment is mandatory. Without furnishing any evidence to establish the said contention, the processes undertaken by the appellant would result in beneficiated Ilmenite. Though the original authority had discussed and held in Para 18 that the goods are not upgraded Ilmenite, however, has held in the operative part of the order that goods which are upgraded ilmenite has to be classified under CTH 26140010. The Commissioner (Appeals) held that the goods are unprocessed and has to be classified under 26140010. From the facts discussed and on the basis of the documents, it is concluded that such processes result in beneficiated Ilmenite. Thus, the goods which are upgraded/processed Ilmenite are classifiable under 2614 00 20. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Classification of Ilmenite (processed vs. unprocessed)
2. Applicable export duty rate

Summary:

1. Classification of Ilmenite:
The primary issue was whether the Ilmenite exported by the appellant should be classified as "processed" or "unprocessed." The appellant argued that their Ilmenite, which underwent a beneficiation process, should be classified under Customs Tariff Heading (CTH) 2614 00 20 as "Ilmenite upgraded (beneficiated Ilmenite)." The Department contended that the Ilmenite did not undergo sufficient processing to be considered upgraded and should be classified under CTH 2614 00 10 as "unprocessed Ilmenite."

The Tribunal noted that the appellant provided a flow chart and certificates from the Geology and Mining Department and the Department of Atomic Energy, indicating the beneficiation process undertaken. The Tribunal referred to Rule 3(d) of the Mineral Conservation and Development Rules, 1988, which defines "beneficiation" as processes for regulating size, removing unwanted constituents, and improving quality. The Tribunal found that the processes undertaken by the appellant met this definition, thus classifying the Ilmenite as upgraded.

2. Applicable Export Duty Rate:
The appellant sought to classify their Ilmenite under CTH 2614 00 20, which attracts a 5% export duty rate as per Notification No. 27/2011-Cus, amended by Notification No. 15/2013. The Department insisted on classifying it under CTH 2614 00 10, which attracts a 10% export duty rate.

The Tribunal supported the appellant's classification under CTH 2614 00 20, referencing previous decisions, including the case of V.V Minerals Vs. Commissioner of Customs, Tuticorin, and the Supreme Court's interpretation of "beneficiation" in Tata Steel & Others v. UOI. The Tribunal concluded that the processes undertaken by the appellant resulted in beneficiated Ilmenite, thus attracting the lower export duty rate.

Conclusion:
The Tribunal held that the Ilmenite exported by the appellant is classifiable under CTH 2614 00 20 as "Ilmenite upgraded (beneficiated Ilmenite)" and is subject to a 5% export duty rate. The impugned order was set aside, and the appeal was allowed with consequential reliefs as per law.