9911796707
TMI Blog2000 (9) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... s. HCL and M/s. HZL were procuring the explosives from the appellants against CT-2 certificates issued by their jurisdictional Central Excise authorities and after observing Chapter X procedure formalities in terms of the Notifications 191/87-C.E., dated 4-8-1987 and 7/94-C.E., dated 1-3-1994. These explosives are used by M/s. HZL and M/s. HCL for blasting in their mines to extract copper, zinc and lead ores. Then the ores are crusted/ground in their Bale Mill and later subjected to floatation or screening process to obtain the concentrates. These processes are called ore beneficiation methods and in fact ore concentrates are manufactured in this way. 2.3. The Department entertained a view that the explosives so used by M/s. HCL and M/s. HZL, cannot be considered as having been used in the manufacture of concentrates of ores, but only for extraction of ores from the mines. Accordingly, the benefit of Notification Nos. 191/87 and 7/94 was sought to be denied to the appellants. Accordingly, the classification lists filed by the appellants were approved at normal rate of duty by denying them the benefit of nil rate of duty under the said notifications. On challenge, the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the succeeding paragraphs. 5. In the case of Associated Cement Co. Ltd. v. Collector of Central Excise reported in 1990 (50) E.L.T. 295 (Tribunal) relied upon by the ld. JDR, Shri Roy, it was held that the goods used for quarrying and mining of limestone kiln lining was held as not being used in or in relation to manufacture of cement, and not eligible for benefit of Modvat credit. The above decision has been relied upon by the Department in support of their plea that Explosives used for extraction of copper ore for the subsequent manufacture of copper concentrates has got no relation with the manufacture of copper concentrates and hence are not eligible for the benefit of notification in question. 6. We find that the above decision of the Tribunal was subsequently considered and deviated from in another case of the same appellants i.e. M/s. Associated Cement Co. Ltd. v. Collector of Central Excise [1991 (55) E.L.T. 415]. Relying on the Hon ble Supreme Court s decision in the case of Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes reported in 1965 (16) STC 259 (S.C.), it was held that the Explosives used in blasting were eligible for Modvat credit if used by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s detailed in the preceding paragraph of this order for obtaining the concentrates. As such, the Explosives used for blasting or mining operations of extracts ores cannot be equated with their use in the manufacture of concentrates which is a product different than the ores. Merely because, CT-2 certificates have been produced by the buyer to the appellants firm, this fact will have no bearing on the interpretation of the Notification. Further, Chapter X procedure provided in the proviso to the notification would be applicable only if the main conditions of the notification are satisfied. As the appellants do not satisfy the substantive condition of the notification, we held that the benefit thereof, is not available to them. 6. In view of the foregoing, we uphold the impugned order and reject both the appeals. Date : 3-9-1998 Sd/- (Archana Wadhwa) Member (J) 7. [Contra per : S.K. Bhatnagar, Vice President]. - With due respects to Hon ble Member (Judicial), my views and orders in the matter are as follows. 8. I observe that in this case, the basic question is whether the explosives manufactured by the appellants and used by their customers in the manufacture of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate their valuable constituents (minerals) into products (concentrate) of smaller bulk, and simultaneously to collect the worthless material (gangue) into discardable waste (tailing). The fundamental operations of ore-dressing processes are the breaking apart of the associated constituents of the ore by mechanical means (severance) and the separation of the severed components (beneficiation) into concentrate and tailing, using mechanical or physical methods which do not effect substantial chemical changes. Beneficiation. This step consists of two fundamental operations : the determination that an individual particle is either a mineral or a gangue particle (selection); and the movement of selected particles viz. different paths (separation) into the concentrate and tailing products. 14. It is significant that the notification allows the use of the goods elsewhere than in the factory of production (provided of course the prescribed procedure is followed). In the context of nature of these commodities and the method and manner of obtaining them, the word factory should also not be construed in a narrow sense and where activities start from mining and continue in such a way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether in view of observations of Hon ble Member (Judicial), the appeals are required to be rejected or in view of observation and findings of the Vice-President, the appeals are required to be accepted. 18. As the facts have been clearly set out in the above orders, for the sake of brevity, I refrain from repeating the same. 19. The issue for consideration in these two appeals is whether explosives used in blasting at mining site for extraction of ore can be considered to have been used in the manufacture of concentrate in order to be eligible for full excise duty exemption under the Notification in question. 20. The learned Member (Judicial) has expressed the view that as the explosives are used for blasting in mining operations for the purpose of extraction of ore, the same cannot be said to have been used in the manufacture of concentrates and as such ineligible for the benefit of the said notification. In contrast, the learned Vice-President held that the very purpose of mining being obtaining concentrates through a continuous process involving a succession of steps - the first being extraction of ore and the second being beneficiation - the explosives used in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it is incorrect to say that the purpose of mining is to obtain concentrate. In fact, the primary aim of mining is extraction of ore which by itself is an excisable commodity falling under Chapter 26 of the Central Excise Tariff. The ore so obtained is used as raw material for manufacture of concentrate falling under the same Chapter of the said Tariff. It is, therefore, crystal clear that mining of ore and manufacture of concentrate are two distinct operations, independent of each other, and undertaken at two different premises. There is neither any integral process involved nor exists a continuous process. In fact, manufacture of concentrate is said to commence only after the ore and the other raw materials are fed into the manufacturing process in the factory. That being so, the explosives which are exclusively used for the purpose of extraction of ore at mining site cannot be said to have been used in the manufacture of concentrate . No doubt, the notification permits use of explosives elsewhere than in the factory of production subject to observance of Chapter X procedure. But, this provision, in my view, does not come to the rescue of the appellants because of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
