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TMI Blog2016 (4) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Commissioner of Customs & Central Excise, Goa vs. Phill Corporation Ltd. (2008 (2) TMI 3 - Supreme Court of India) that for classification of the manufactured goods, HSN is a safe guide. Therefore, since the processes undertaken by the appellant on ores, and the resultant satisfies the meaning of 'concentrate' as explained in the HSN, hence in our considered opinion, it should be considered as "manufacture" as per Sec.2(f)(ii) of CEA,1944 in view of the chapter note 2 of Chapter 26 of CETA,1985 and the resultant Iron Ore concentrate is dutiable. There is a significant difference between clause(i) and clause(ii) of the definition of 'manufacture laid down under sec.2(f) of CEA,1944. The processes which are considered not manufacture in the ordinary sense under clause (i), if mentioned in the relevant Section or chapters of CETA,1985 as amounting to manufacture, such processes will fall under the definition of 'manufacture'. The broad and detail tariff entry has been introduced with effect from 2005-06 classifying ores having different Fe content assigning different sub-headings. Therefore, in absence of an increase in the Fe content by benefication or any other meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of iron ore at their mines at Oraghat, Sanindapur. The processes carried out by them are similar to the one mentioned above. The appellant was also issued with a show cause cum demand notice on 28.2.2012 demanding duty of ₹ 38,03,50,566/- for clearance of the goods during the period March, 2011 to December, 2011. On adjudication demands were confirmed and penalty of equivalent amount had been imposed. 4. In the Appeal No.EA-71306/13 facts of the case are that the Appellant M/s. SAIL, a Govt. of India Enterprises, engaged in mining activities amongst other places at its Barsua Iron Ore Mines. The mining activity include drilling and blast of rocks containing iron ore. The blasted rock is subjected to tracing operation comprising washing and sizing. Iron ore extracted from the said mines is solely and exclusively used as iron ore on their integrated steel plants. Four show cause cum demand notices were issued for the period from March, 2011 to December, 2012 demanding a total duty of ₹ 42,11,77,311/-. On adjudication, the demands were confirmed by the ld.Commissioner and penalty of equivalent amount was imposed. 5. In Appeal No.EA-75746/14, the Appellant M/s.Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained which then transported to crushing and screening plant inside the mining area where the same are crushed and screened to required sizes. It is further submitted that in the process of crushing and screening, iron ore fines are also generated which are sold without carrying out any further processes. 7.1. It is his contention that the appellant do not carry out any beneficiation process for removal of foreign matters from the iron ores so as to result into manufacture of 'iron ore concentrates' falling under Chapter sub-heading No.26011150 of CETA and the appellant had not installed any concentration plant in their premises. It is his submission that the process of beneficiation or concentration is a process of removal of foreign matters such as silica, alumina etc. from ores by special treatment for enrichment of the ore. He has contended that concentration is carried out with low grade iron ore (having 35% to 45% Fe content) for removal of foreign matters with a view to enrich it up to 60% to 65% of the Fe content for its use in further metallurgical operations or for economic transport. By application of the process of beneficiation the Fe contents in the iron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012-TRU dated 17.2.2012. The CBEC has clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN notes. The said circular is binding on the deptt.. 7.6. It is contention that in the case of Indian Rare Earths v. CCE - 2002 (139) ELT 352, the Tribunal held that without special treatment of the ores it will remain as ores only. Referring to the decision of Hon'ble Supreme Court in National Mineral Development Corporation Ltd. v. State of M.P. (2004) 6 SCC 281, he has submitted that the process of beneficiation consists of grinding, magnetic separation, froth floatation which are carried out in large concentration plants for concentration of ores. It is his contention that in the case of Hyderabad Industries Ltd. v. UOI - 1995 (78) ELT 641 (SC) and Minerals Metals Trading Corp. of India v. UOI - 1983 (13) ELT 1542(SC) it has been held that the process of mining does not amount to concentration. He has further submitted that the process of crushing and screening results into concentration need to be established by the department and the burden squarely rests on the department. In support he has referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the beneficiation process is carried out it cannot be construed as a manufacturer of concentrates. He has submitted that the meaning of concentration has not been explained in the HSN, but it has been explained in the Order dt.19.02.2013 of the Competition Commission relating to Iron Manufacturers Association Vs. National Mineral Development Corporation, case No 09 of 2012. He further submits that the word 'special treatment' referred to in the Board's Circular dated 17.2.2012 and in the HSN has not been defined and hence the process carried out by them cannot be considered as special treatment. Further, he has submitted that the Hon'ble Supreme Court in their own case dismissed the appeal filed by the Revenue against the Order of the Tribunal. He has further submitted that alternatively the Appellant are eligible to the benefit of Notification No.63/95 CE dt. 16.03.1995. 9. Shri Manas Mahapatra, ld.Sr.Adv. appearing for M/s.Kamal Jeet Singh Ahluwalia interpreting the HSN explanatory note submitted that for the purpose of ores to be termed as concentrate, two steps are involved. Firstly, a part or all of the foreign matters needs to be removed by a specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has submitted that iron ore obtained in the mining activities are exempted in view of the exemption Notification04/2006 CE dated 01.3.2006 as amended by Notification dated 17.3.2012. Further he has submitted the appellant is not required to pay duty on excisable goods which are absolutely exempted under section 5A(1A) of the Central Excise Act, 1944. 10. Shri K.K.Acharya, learned Advocate for the Appellant submitted that two issues are involved for determination in their case, namely whether processes of crushing, screening of iron ore lumps amounts to manufacture and the resultant graded iron be treated as concentrates falling under chapter 26 of CETA, 1985. Tracing the development of levy of duty on iron ore concentrates, the learned Advocate submitted that ores and concentrates falling under chapter 26 of CETA, 1985 was exempted by Notification No.19/88-CE dated 01.03.1988. The said Notification was rescinded by Notification No.19/96-CE dated 23.07.1996 and simultaneously another Notification No.8/96-CE dated 23.07.1996 was issued where under ores classified under chapter headings 26.01 to 26.17 was only exempted and by implication the exemption granted to concentrates w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has submitted that it is well-settled proposition of law that a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied and there is no room for any intendment. In support he has referred to the judgement of Hon'ble Supreme Court in the case of Ranbaxy Laboratories Ltd. vs. UOI - 2011 (273) ELT 3 (SC). He submits that in view of the judgement of this Tribunal in SAIL's case (supra) upheld by the Hon'ble Supreme Court rejecting Revenue's Appeal saying that processes of crushing and screening to the mined ore cannot be treated as a process of conversion of 'ore' to 'concentrate' so as to tantamount to manufacture. It is his contention that insertion of chapter note 4 to 2 chapter 26 has no relevance whatsoever to its activities in as much as the appellant never subjected the mined ore to any processes with the view to remove any part or all of the foreign matters contained in it so as to result into conversion of 'iron ore' into 'iron ore concentrate'. 10.4 He has also submitted that all activities of crushing/grindi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concentration of the processes, necessarily for all the process of beneficiation need not be carried out; even if few processes mentioned in the HSN notes, like crushing and screening are carried out, so as to meet the requirement of ores to be used for subsequent metallurgical operations or with a view to economical transport. It is his contention that this twin requirements need to be satisfied before charging duty on concentrates. He has contended that in the present case the processes of crushing and screening are satisfied the said requirement accordingly duty is leviable on concentrates irrespective of whether there has been change in the ferrous content in the ores. 11.3. He has further submitted that the decision cited by the ld.Adv. are not applicable to the facts and circumstances of the present case as the same had been passed not in the context of chapter note 4 of chapter 26 introduced w.e.f. 01.3.2011, but while considering the argument whether conversion of Ores to concentrate results into a new commodity. It is his submission that before 01.3.2011, no legal friction was created to call the conversion of ores into concentrates a process of manufacture, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ore is enhanced. 12.2 Referring to the meaning of 'ore' contained in note 2, and newly inserted chapter note 4 of chapter 26 of CETA, 1985, HSN notes and Board Circular dated 17.02.2012, the ld.AR contended that to attract Central Excise levy, concentrates must meet the HSN definition i.e. concentrates applies to ores which have had part or all of the foreign matters removed by special treatments either because such foreign matter might hamper the subsequent metallurgical operations or with a view to economical transport. Responding to the appellant's argument that process of concentrates requires special treatment, like crushing, grinding, screening, magnetic separation, gravimetric separation and agglomeration etc. whereas the appellants undertook only crushing and screening only, therefore, the resultant product is not concentrate, the ld.AR submitted that HSN notes refers to physical and physico-chemical processes, and the HSN notes cannot be interpreted to mean that all these enumerated processes are necessary for converting ores into concentrates because no ore is subjected to all these processes for conversion into concentrates which depends on the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result into 'iron ore concentrates' and becomes 'manufacture' in view of chapter note 4 to chapter 26 of CETA,1985 inserted w.e.f 01.03.2011,accordingly leviable to duty under tariff sub-heading 26011150 of CETA, 1985. 15.2 The contention advanced on behalf of the Appellants is that on application of the aforesaid processes to 'ores', it does not convert/result into 'concentrates', hence no 'manufacture' is involved and therefore, the resultant is not liable to duty under the said tariff heading. To support their contention, they have referred to the judgements of this Tribunal in M/s Indian Rare Earth's case and M/s SAIL's case(supra), the meaning of concentrate as per the HSN , the clarifications issued by the Ministry of Mines and the Central Board of Excise and Customs. The Revenue's contention on the other hand is that after insertion of chapter note 4 to chapter 26 a legal fiction has been created whereby conversion of 'ores' into concentrates becomes 'manufacture' and the processes carried out by the appellant's on the mined Ores, satisfy the meaning of concentrate prescribed in the HSN, accordingly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes more elaborative and 'iron ore concentrate' is assigned a separate tariff sub-heading, namely, 26011150. 15.5 The contention of the Revenue is that w.e.f. 01.03.2011, the chapter note 4 has been added to chapter 26 which reads as follows:- 4. In relation to products of this Chapter, the process of converting ores into concentrates shall amount to manufacture . 15.6 It is the Revenue's argument that application of the processes of crushing, grinding, screening and washing to ores converts it into concentrates and becomes 'manufacture' w.e.f 01.3.2011, which activities were earlier held by this Tribunal as not amounting to 'manufacture'. It is vehemently opposed by the Appellants submitting that the processes of crushing, grinding, screening of ores would not make the resultant as 'concentrates' unless some special treatment, like the process of benefication is carried out on the 'ores' to improve the Fe content so as to call the resultant as 'iron ore concentrates' and the Tribunal in both these cases observed that application of the very same processes to Ores had not resulted into concentrates, accordingly, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case. 13. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 14. The following words of Lord Denning in the matter of applying precedents have become locus classicus: Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.'' *** *** *** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial treatment go out of the scope of ores. No such special treatment is carried out in the present case. 9. The Apex Court has held in the case of Hyderabad Industries and Ors. v. Union of India Ors. that no manufacture of a new or distinct commodity takes place on account of the processes of separation of naturally occurring asbestos from asbestos rocks. In the earlier case of Minerals Metals Trading Corporation of India Ltd., the Apex Court held that the separating of wolfram ore concentrate from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test according to the Apex Court is that the chemical structure of the ore should remain the same. Thus, the principle of law is clear that basic operations carried out to produce usable ore would not amount to manufacture of a new product. In the instant case, the appellants are carrying out certain physical and mechanical processes to separate mineral sands from ordinary sea shore sand. At the end of the processes, the mineral sands do not undergo any transformation. They remain in the same condition in which they remained along with ordinary sand on the sea beach. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to manufacture must lead to emergence of a new commercial product, different from the one with which the process started. In the landmark judgment in the case of U.O.I. v. Delhi Cloth General Mills, 1977 (1) E.L.T. (J 199) (S.C.), the Apex Court has held that manufacture is generally understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance. The Court has held that ... something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. The Supreme Court has laid down a two fold test for determining whether the process is that of manufacture in J.G. Glass Industries Ltd. v. U.O.I., 1998 (97) E.L.T. 5 (S.C.) as under: First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; Secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity, which was already in existence, will be of no commercial use but for the said process. 7. Applying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were expressed in the case of Seth Liladhar Biyani Sons v. CCE Jaipur, 2001 (129) E.L.T. 423 (T) relied upon by the learned Advocate. In view of this we hold that the processes undertaken by the Respondents do not result in the manufacture of a different commercial commodity. Hence no Central Excise duty is leviable. Accordingly, all the appeals are rejected. 15.11 It is vehemently argued on behalf of the Appellants that the processes narrated in the said decision of this Tribunal remained unchanged and the Tribunal considering such processes has held that Ores subjecting to process of crushing, grinding, screening and washing with a view to remove foreign materials would not result into concentrate, therefore, no manufacturing process involved and accordingly, duty is not leviable on resultant concentrate. It is their further contention that even after insertion of Chapter Note 4 to Chapter 26 since the processes employed to ore do not result into concentrate, therefore, the said Chapter Note 4 is not applicable to their case. 15.12.The Revenue on the other hand argued that the Tribunal has not recorded any finding nor required also in these two cases that with applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous unwanted material from the ore and as such is devoid of gangue which adheres to the blasted ores and rejected the contention of the Revenue that the constituent of the final product are distinctly different from that of the blasted ore. Further, it is observed that on account of the processes undertaken by M/s.SAIL, no new and different article has emerged on which Central Excise duty could be levied and collected. Referring to the meaning of concentrate as in HSN this Tribunal observed that mere removal of foreign matters would not bring into existence a new and different article having a distinctive name, character or use. The use of iron ore as mined or after the process undertaken by M/s.SAIL remains the same, that is, to be used in metallurgical industry for the extraction of metals and finally they observed that the process undertaken by M/s.SAIL do not result of manufacture of different commercial commodity hence no Central Excise duty is leviable. 15.15 A careful reading of the aforesaid decisions, we do not find anywhere in these judgements this Tribunal has held that after application of processes viz. crushing, grinding, washing, grading etc. on ores, the resulta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted from the mine; it also applies to native metals in their gangue (e.g. metalliferous sands). Ores are seldom marketed before preparation for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores. For the purposes of the present heading, the term concentrates applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. Processes to which products of this heading may have been submitted include physical, physico-chemical or chemical operations, provided that they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcinations, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading, agglomeration of powders (e.g., by sinte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the HSN. It is Revenue's argument that when the ores are subjected to physical, physico-chemical or chemical operations which are normal to the preparation of the ores for extraction of the metal then the resultant is concentrate. It is their further argument that the physical or physico-chemical operations mentioned in the said explanation of concentrates under the HSN include, crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading agglomeration of powders etc. . It is the contention of the revenue that on application of any one or more of the processes, which would result in removing a part or all of the foreign matter, so as to make it fit for metallurgical operation or economical for transport, would result into concentrates. 15.22 The appellants on the other hand fervently argued that unless the process of benefication is undertaken on the ores, the resultant cannot be called as concentrates. In support, reliance has been placed on the letter issued by the Ministry of Mines dated 25.01.2012. The Ministry of Mines in the said letter has opined as follows:- 3. In this regard it is informed that the term Concentrate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; employed in the said meaning of concentrates. It is their contention that since special treatment has not been defined under the Tariff or HSN, therefore special treatment refers to the process of beneficiation. 15.25 In our view, the processes mentioned under the definition of beneficiation are also included in explaining the term concentration under HSN. It is laid down that the physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening etc. which are normal to the preparation of the ores for the extraction of metals. While explaining the meaning of concentration, it is also mentioned that ores are seldom marketed before preparation for subsequent metallurgical operations. Hence, the Ores are to be subjected to special treatment. The Revenue had argued that all the processes narrated under the category of beneficiation or under the HSN need not be applied on the extracted Ore; even if by the application of few processes as enumerated under the scope of 'beneficiation', with an objective for removal of impurities or for economical transportation, definitely, covered under the scope of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of the test of emergence of new and distinct commodity having different use and character after the processes applied to a commodity becomes irrelevant. Their Lordships at para 13 of the order observed as:- 13. The decisions aforesaid make it clear that the definition of the expression `manufacture' under Section 2(f) of the Act is not confined to the natural meaning of the expression `manufacture' but is an expansive definition. Certain processes, which may not have otherwise amounted to manufacture, are also brought within the purview of and placed within the ambit of the said definition by the Parliament. Not only processes which are incidental and ancillary to the completion of manufactured product but also those processes as are specified in relation to any goods in the section or chapter notes of the Schedule to the Central Excise Tariff Act, 1985 are also brought within the ambit of the definition. ............ 15.27 In the case of O.K Play (India) Ltd. Vs. Commissioner of C.Ex.,New Delhi 2005 (180) ELT 291(SC), the question came up before the Hon'ble Supreme Court was whether powdering of Low Density polyethylene(LDPE) and High Density po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise, Goa vs. Phill Corporation Ltd. 2008 (223) ELT 9(SC), wherein their Lordships observed as follows:- 25. The learned Additional Solicitor General contended that the deeming provision of Section 2(f) (ii) was squarely raised at all levels of the proceedings. In the show cause notice, Section 2(f) has been invoked. Similarly, in the order in original, the Commissioner has categorically relied upon Chapter Note 3 of Chapter 20 and Section 2(f)(ii) and referred to various documents to strengthen his case. The learned Additional Solicitor General has also submitted that the Constitution Bench judgment of this court in Delhi Cloth and General Mills (supra) is not applicable in the instant case as the deeming provisions of section 2(f)(ii) were not at all enacted during the relevant period. Section 2(f)(ii) was incorporated/substituted in the Central Excise Act with effect from 28-2-1986 vide MF (DR) Notification No. 10 of 1986-Central Excise dated 5-2-1986. 26. It was submitted by the learned Additional Solicitor General that the judgment of the Delhi Cloth and General Mills (supra) was rendered on 12-10-1962 much before enactment of the deeming provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liament in enacting these provisions and once the legislative intention is properly gathered, then the bounden duty and obligation of the courts is to decide the cases in consonance with the legislative intention of the Parliament. 15.29 The said Chapter Note 2 to Chapter 26 inserted from 01.03.2011 has been recently considered by the Hon'ble Supreme Court in Star Industries Vs Commissioner of Customs(Imports), Raigad 2015 (324) ELT 656, while considering the eligibility of Notification 4/2006, wherein their Lordships observed as:- 28. According to us, it is very clear from the reading of the judgment in Hindustan Gas case that basic and the common thread which runs throughout the decision is that subjecting ore to the process of roasting does not amount to manufacture. This very basis gets knocked off with the amendment carried out in the year 2011 with the insertion of Note 4. Note 4 now categorically mentions that the process of converting ores into concentrates would amount to 'manufacture'. Therefore, it cannot now be argued that roasting of ores and converting the same into concentrates would not be manufacture. For the same reason, the judgment in MMTC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection XV would be included in the term 'ores'. However, after the insertion of Chapter Note 4, these two Notes, namely, Note 2 and Note 4 have to be read harmoniously. If we accept the submission of the learned counsel for the assessee predicated on Note 2, then Note 4 even after its conscious inclusion, would be rendered otiose which cannot be countenanced. Therefore, Note 2, when seen along with Note 4, has to govern itself in limited territory. On the basis of deeming fiction created by Note 4, 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. 31. We, thus, are of the opinion that in the impugned judgment, the Tribunal has rightly arrived at the conclusion that by virtue of Note 4, concentrate has to be necessarily treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Fe content by benefication or any other method, if there cannot be a manufacturing process, the chapter note 4 inserted with effect from 01.3. 2011 defeat the very purposes and becomes otiose. Such a situation, in our opinion, cannot be the intention of the legislature. Therefore, in our considered opinion application of processes of crushing, grinding, screening and washing and grading of iron ore, converts it into iron ore concentrates and accordingly in view of the chapter note 4 of chapter 26 becomes manufacture and leviable to Excise duty. 15.31 The other issue raised by all the appellants, except the Appellant M/s Odisha Mining Corporation is that since the processes on ores have been carried out in the premises declared as mines, and they are governed under the Mines Act, therefore, the benefit of exemption notification 63/95 CE dt.16.03.1995 is applicable to them. However, all the appellants fairly accepted that this issue of exemption was not raised before the adjudicating authority and the claim has been advanced for the first time before this Tribunal. Ld. Special Counsel and other representatives appearing for the revenue have not raised objection to the said cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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