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TMI Blog1990 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... llants are alleged to have removed from their factory a quantity of 3937.270 M.T. of Manganese Ore Sinters valued at Rs. 41,53,728.40 P. without payment of duty amounting to Rs. 4,15,372.84 P. for the period 7-4-1984 to 31-8-1984 and a quantity of 5251.030 M.T. of manganese ore sinters valued at Rs. 50,94,087.90 P. without payment of duty amounting to Rs. 5,09,408.79 P. for the period 1-11-1983 to 31-3-1984. The f lower authorities have held that manganese ore sinters are manufactured by the appellants and that it is a new product having distinct name, character and use and classified the same under Tariff Item 68 and demanded duty of Central Excise. The appellants are seriously contesting the finding of the Revenue and they have taken a stand that there is no manufacture of a new product with distinct name, character or use and that manganese ore sinters are not dutiable products. 4. Appeal Nos. 605 and 606/85-C relate to the period from 24-4-1981 to 2-2-1983 covered in the show cause notices dated 7-4-1983 and amended on 8-8-1983 alleging contravention of Rules 174,173B, 173C, 173F and 173G and evasion of duty of Rs. 11,48,019.11 P; another demand for the period 1-6-1983 to 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manufacture so as to attract levy of excise duty? The appellants call these lumps by the name manganese ore sinters and the process undertaken by them as sintering . They have claimed that in the process undertaken by them, no chemical change takes place whatsoever. Only the physical form is changed by which the fines are converted into large particles or lumps. The lumps are put to the same use as the raw materials, that is, for the manufacture of Ferro Manganese Alloy. The character of the lump is also the same as that of the fines. The process is akin to sticking together of the candles. They have contended that this process cannot be said to be manufacture. They have further stated that the manganese ore lumps are being obtained in the premises which have been included by the Department itself in the ground plan of Maharashtra Electro Sme.l.t. Ltd. The manganese ore lumps are used within the factory of production and hence they have claimed exemption under Notification No. 118/75 which they say, is applicable to all goods under Tariff Item 68 and captively consumed. 9. The appellants have further stated that M/s. Maharashtra Electro Sme.l.t. Limited, a subsidiary of Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of size transformation. (2) In a letter dated 15-10-1984, Dr. C.K. Gupta, Head Extractive Metallurgy Division of the Bhabha Atomic Research Centre has stated that the properties of sintered ore fines and parent ore fines are usually the same. He has further observed that no new product is created by sintering the ore fines. (3) By his letter dated 14-6-1984, the Superintendent Officer (Ore Dressing) of the Department of Mines, has stated that sintered ore fines and parent ore lumps have similar characteristic and composition and they can be utilised in similar manner as the ore lumps. No different new chemical product comes into existence because of the process of sintering. (4) By letter dated 16-7-1984, M/s. M.N. Dastur Co. (P) Ltd., Consulting Engineers, has stated that sintering of ore fines is a process of size enlargement. They further stated that no new product is created by the process. Further sintering does not change the properties of the parent ore. (5) In letter dated 13-6-1984, Department of Metallurgical Engineering of the Visvesvaraya, Regional College of Engg., has stated that the properties of the parent ore do not undergo any change by sintering. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquid-phase sintering of some powder mixtures, material transport takes place in the solid state which results in some changes of the properties of the compacted powder, as shown in Figure 4. With increasing temperature and time, the strength of the powder mass increases, electrical resistivity and porosity decreases, and density, therefore, increases. The grain structure also undergoes some changes, and recrystallization and grain growth occur. In order to avoid oxidation of the metal-powder mass during the high temperature treatment, either a neutral or a reducing atmosphere is provided. The movement or transport of material during sintering is caused by surface diffusion, volume or lattice diffusion, grain boundary diffusion, evaporation and condensation, and plastic or vis.c.ous flow (29.31). Probably several of these mechanisms not simultaneously depending on the type of powder, its particle size and shape, and especially the temperature". 13. He has further relied upon the Size Enlargement as appearing in Vol. 21, Page 77 which is reproduced below - Size enlargement concerns those processes that bring together fine powders into larger masses in order to improve the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates Steel is also relied upon. At page 214, Section 5, it is as under - Introduction - The term beneficiation in regard to iron ores encompasses all the methods, used to process ore to improve its chemical or physical characteristics in ways that will make it a more desirable feed for the blast furnace. Such methods include crushing, s.c.rewing, blending, grinding, concentrating, classifying and agglomerating. Because of the differences in structure and mineral content of ores from different deposits, beneficiation methods vary considerably . At page 218, Agglomeration Process, is described as under - The blast furnace is a counter-current, gas-solid reactor in which the solid charge materials are moving downward while the hot reducing gases are flowing upward. The best possible contact between the solids and the reducing gas is obtained with a permeable burden which permits not only a high rate of gas flow but also a uniform gas flow with a minimum of channelling of the gas. The primary purpose of agglomeration is to improve burden permeability and gas-solid contact and thereby reduce blast-furnace coke rates and increase the rate of reduction. A secondary consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable, sintering and pelleting are the most important. In the Sintering process, mixture of iron ore fines or concentrates and coke fines is deposited on a traveling grate. The travelling grate is shaped like an endless loop of conveyor be.l.t. forming a shallow trough with small holes in the bottom. The bed of material on the grate first is ignited by passing under an ignition burner that is fired with natural gas and air and then, as the grate moves slowly toward the dis.c.harge end, air is pulled down through the bed. As the coke fines burn in the bed, the heat that is generated sinters the small particles. At the dis.c.harge end of the machine, the sinter is crushed to remove extra large lumps, then is cooled, and finally s.c.reened. In some cases, limestone or dolomite fines are added to the sinter food to produce a self-fluxing sinter (see Lime and Limestone). In a modern integrated steel plant, most of the iron bearing dusts and slags are recycled by adding them to the sinter plant feed mix". 16. Shri Lakshmi Kumaran, learned Counsel for the appellants, arguing very strongly on these technical literature and on the basis of the evidence brought out before us above, submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct which is classifiable under Tariff Item 68. He submitted that although there is no chemical change, yet there is a change in physical state which itself can be considered as manufacture.He relied on the citation in the case of Unique Beautycare Product P. Ltd. v. Collector of Central Excise -1988 (37) E.L.T. 369. He submitted that the appellants had failed to file a classification list and follow the various provisions of the Excise Act. Thereby, they have suppressed the fact of production of sinters in the factory and hence, invoking Section 11A was justified. He further submitted that the manganese ore lumps are marketable and therefore, it satisfies the marketability test also. Therefore, he has sought for upholding the orders passed by the authorities in all the appeals. 18. We have heard both the sides and carefully examined the entire material, evidence and technical literature produced by the appellants and reasoning given by the lower authorities in the impugned orders. The main question that arises for our consideration is whether the process by which manganese ore fines which are produced by the appellants from Maharashtra Electro Sme.l.t. Ltd. are converted into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled ammonium nitrate is no different from the ammonium nitrate that went into the prilling process. It would be easy to say that prilling results in a higher concentration and amounts to manufacture but it is difficult to see why this would be so. Mere concentrating a product will not by that fact alone produce a different product. It may perhaps be said that there has been processing and a manufacture but if the result is in the production of the same goods, even of a higher purity, then the manufacture/processing cannot have the effect of making the purer product liable by that fact alone to excise duty. A manufacture under the Central Excises and Salt Act is required to be a manufacture that creates excisable goods . 20. In Punjab Industries v. Collector of Central Excise - 1989 (43) E.L.T. 314 (Tribunal), it has been held that - In the present appeal the coal is converted into coal briquettes. The only other element that is used is molasses as a binding agent. The coal powder is turned into coal briquettes for more convenient use of coal powder. Both coal powder and coal briquettes have the same use. We do not agree with the learned JDR that coal powder cannot be burn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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