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TMI Blog2019 (4) TMI 1679X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. MnO classifiable under CETH 28209000, appears to be weak. Hon. Supreme Court in the case COMMISSIONER OF C. EX., LUCKNOW VERSUS WIMCO LTD. [ 2007 (10) TMI 3 - SUPREME COURT OF INDIA] observed that merely because there is a tariff entry it does not become excisable unless manufacture is involved. Therefore in this case the department requires to prove that there is an act of manufacture and as a result of that a new product has come into existence. Therefore, the issue requires to go back to the adjudicating authority to go into the issue in the entirety and to come to a conclusion as to whether the process undertaken by the Appellants are not normal to metallurgy so as to exclude the impugned item from the scope of chapter 26 and also to ascertain whether as a result of such process a new product technically and commercially identifiable and usable product which is entirely different from the ore has emerged. If need be adjudicating authority shall obtain opinion of an expert in the field. Time Limitation - HELD THAT:- Having clarified in with manner issuing a Supreme Court Notice dated 28.01.2010 alleging suppression of fact is not acceptable. The department sought to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is a specific mis-statement in appellant s letter dated 12.9.2002 to the effect that in the process of refining, there is no physical addition of any chemical; MnO is obtained by a chemical reduction process; the appellants claimed exemption under Notification No.6/2002 with an intention to evade payment of duty and that longer period of limitation under proviso to Section 11A(1) is applicable. 3.2. The appellant submits that the show cause notice is based on incorrect appreciation of facts and the legal position and is liable to be dropped in its entirety. HSN explanatory note states that ore would remain ore even after reduction process is carried out. As per HSN (reproduced in para 8.5 of the show cause notice) Processes to which products of headings 26.01 to 26.17 may have been submitted include physical, physico chemical or chemical operations provided they are normal to the preparation of the ore for extraction of metal. With the exception of changes resulting from calcinations, roasting or firing, such operations must not alter the chemical composition of the basic compound which furnishes the desired metal. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the letter. When the Appellants mentioned in their letter that no chemical was added, the Appellants meant that no chemical other than that mentioned in the letter was added. The Appellants did not mislead the central excise department. In any case, if there was any doubt in the mind of the central excise department, it was always open to the department to call for further information from the Appellants. Hence, there is no suppression or mis-statement as alleged in the show cause notice. There is no material / evidence on record to suggest that the Appellants deliberately suppressed with an intention to evade payment of duty. The issue involved is purely interpretational and legal in nature. The Appellants have maintained regular books of accounts and all transactions are duly recorded The demand of in the present case is based only on the books of account and other records maintained by the Appellants. The Appellants had bona fide belief that they were not liable to pay central excise duty on MnO. There being no positive act on part of the Appellants to suppress any fact from the department and there being no evidence for such allegation, proposal to invoke extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /manufactured is the new distinct, identifiable and marketable product, totally different from manganese ore, classifiable under specific CETH 28209000 emerges. Therefore, the process amounts to manufacture. 4.2. The chemical reactions required to produce manganese oxide, as given in Wikipedia, are as follows. (i) MnO can be prepared by the reduction of any higher oxide with hydrogen MnO2+H2 --- MnO +H20 (ii) commercially it is prepared by reduction of MnO2 with hydrogen, CO or Methane MnO2 + CO --MnO +CO2 (iii) MnO can he prepared by heating MnCo3 in vacuum MnCo3-----------Mn0 + CO3 4.3. In terms of Explanatory notes to harmonized system of nomenclature the ore are classified under Chapter 26 of CETH'85. Heading 26.01 to 26.17 are limited to metallic ores and concentrates which: (a). Ores are of mineralogical species, actually used in the metallurgical industry for the extraction of the metals of section XIV OR XV of mercury or of the metal of heading 28.44, even if they are intended for non-metallurgical purposes, and (b). Have not been submitted to processes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e product is taken beyond the Chapter 26. The appellants argued that the physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, flotation, screening, grading agglomeration of powders (e.g., by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small quantities of binders), drying calcinations, roasting to oxide, reduce or magnetise the ore, etc. (but not roasting for the purpose of sulphating chlorinating etc.). 5.1. We find that a reference at this stage to the relevant chapter notes of Chapter 26.Chapter Note 2 to Chapter 26 specifies that For the purposes of headings 26.01 to 26.17, the term ores means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury, of the metals of heading 28.44 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. Headings 26.01 to 26.17 do not, however, include minerals which have been submitted to processes not normal to the metallurgical industry . 5.2. Relevant HSN Notes are as below He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Also excluded are more or less pure products obtained by repeated physical changes (fractional crystallisation, sublimation, etc.), even if there has been no change in the chemical composition of the basic ore. Concentrates of ores obtained by treatments, other than calcining or roasting, which alter the chemical composition or crystallographic structure of the basic ore are excluded (generally Chapter 28). Also excluded are more or less pure products obtained by repeated physical changes (fractional crystallisation, sublimation, etc.), even if there has been no change in the chemical composition of the basic ore. 5.3. A plain reading of the Section note gives to understand that for items to fall under headings 2601 to 2617 they need to be minerals and should not have undergone processes which are not normal to metallurgical industry. The show cause notice accepts that fact that the appellants procure the ores from the mines of Manganese Ore India Ltd at Dongri Buzurg, Tumsar etc. Therefore, the origin of the ore is not disputed. It is to be seen now whether the processes under taken by the appellant are not normal to metallurgical industry. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s undertaken by the Appellants are not common to metallurgy in refining the ore or extraction? (ii). Who are the buyers of said manganese oxide and what is it used for further. In order to ascertain whether the metallurgical process still are remain to make the said MnO usable. The learned Authorised Representative from the Department sought to rely upon the case of Mukesh Kumar (Supra) wherein it was held that such case issues be decided on the basis of technical opinion instead of any general opinion. However the department has proceeded to decide the case only on the basis of general opinion supported by only Wikipedia. As submitted by Learned Counsel of the Appellants Supreme Court held, in Acer India (Supra), that Wikipedia is an online encyclopedia and the opinion which can be modified by any person and as such it is not reliable. The department could have approached any technical person for opinion on the subject before coming to a conclusion. It appears that even the samples of the impugned product have not been drawn and tested to confirm whether the product would be eligible to be called MnO, so that it is eligible to be classified under chapter 28 of C. E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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