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TMI Blog2022 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... , both the show cause notice as also the impugned order, after extracting the pictorial representation from the global website of Vale International have categorically asserted that the mined ore at Carajas, Para, Brazil underwent two preparatory processes mainly crushing and screening at Carajas, Para, Brazil, before shipment of the same. It is evident from the aforesaid pictorial representation of the stage-wise extraction process of Iron Ores, that there are total of 11 stages involved from the extraction of the ore from the Carajas Mine to its shipment from Brazil. These sequential stages are titled in the pictorial representation as Infrastructure, Extraction, Transport, Crushing, Conveyor Belt, Screening, Stockyard, Recovery, Loading, Rotary car dumpers and Shipment. Out of these 11 stages, only 2 stages deal with physically preparing the ore for shipment, which are crushing and screening. In the process of crushing, the ore which has been mined and is in the shape of a boulder/uneven blocks of upto 15 meters, is crushed using a primary crusher into smaller size - The pictorial representation records that Vale has 17 production lines at its screening site, where the crushed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to crushers and screens is envisaged. There can be no basis to impute any certainty that alumina to silica ratio would always be greater than 1 in case of natural ores. The appellant had, in the reply, demonstrated that naturally occurring high grade iron ores, even in India at the Bacheli and Bailadila of NMDC have the alumina to silica ratio less than 1. The impugned order as also the evidence relied in support of the same have not disputed this position. The report of Dr. Rathod could not, therefore, have been relied upon to hold that what had been imported by the appellant was Iron ore that had been concentrated. The contents of the letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer in the Indian Bureau of Mines are contrary to the opinion of the Ministry of Mines, as communicated of the Circular dated 17.02.2012. The process of crushing and screening undertaken on the Iron Ore after they have been mined at Carajas, Brazil and subsequent blending at Oman with 5-10% iron ore concentrate would result in classification of the goods imported under CTI 2601 11 31 as Iron Ore fines and would consequently be entitled to the benefit of exemption from payment of CVD u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Chemical Composition (on Dry Basis) Fe SiO2 Al2O3 P MN LOI 64.77 PCT 2.30 PCT 1.27 PCT 0.025 PCT 0.45 PCT 2.37 PCT II) Physical Specification (on Wet Basis): 12.5 MM 5MM 0.5 MM 6.3 MM 4.8 PCT 17.5 PCT 59.1 PCT 13.6 PCT 5. The appellant classified the iron ore fines under CTI 2601 11 31 and claimed exemption from payment of CVD in terms of the notification dated 17.03.2012, which grants complete exemption from payment of excise duty to "ores". 6. The relevant entry in the said exemption notification is as under: In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) and in supersession of *******, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below read with relevant List appended hereto and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Excise Tariff Act), as are given in the corresponding entry in column (2) of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s carried out by the supplier of Iron ore Carajas Sohar at Oman. A letter dated 13.1.2015 was sent by the appellant explaining that at Oman, Vale International was receiving Iron Ore Carajas and Iron Ore concentrate from Brazil and was blending them using the yard and equipment available at the port. The blend had a proportion of 90-95% of Iron Ore Carajas and 5-10% of Iron Ore concentrate. The appellant addressed another letter dated 27.3.2015, wherein it explained that the Iron ore Carajas Sohar is formed through a blend/mixing operations of two products imported from Vale Brazil namely, Iron Ore Carajas and Iron Ore concentrate. The Iron Ore concentrate was produced by Vale from its Southeastern System in Brazil and that the same had iron content of around 66.65% and that 84% of the consignment had a particle size of (- 0.015mm). As against this, the iron content in Iron ore Carajas Sohar was around 64.34% and about 18% of the consignment had particle size of (+6.3mm), while 50% of the consignment had a particle size of (+1mm) and that only 25% of the consignment had a particle size of (-0.15mm). 9. The provisional assessments were finalized by the Deputy Commissioner of Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad by Circular dated 17.2.2012, after consulting the concerned line ministry i.e. the Ministry of Mines, clarified that the process of converting ore into concentrates involved removal of whole or part of the foreign matter. The process of crushing and screening did not result in removal of whole or part of the foreign matter and that it is only when the processes such as milling, hydraulic separation, magnetic separation, floatation and concentrate thickening were undertaken that it could be said that the ores were converted into concentrate. It was submitted that admittedly the ore at Carajas, Para, Brazil only underwent the process of crushing and screening, which as clarified by the CBIC, did not result in the concentration of the ore. Also the process of blending 90-95% of iron ore with 5-10% of iron ore concentrate also did not result in removal of part or whole of the foreign matter so as to qualify as a concentrate. The appellant also sought cross examination of Dr. Walmik Rathod of VJTI and Shri D.K. Swamy, Administrative Officer at Indian Bureau of Mines. The appellant also placed reliance on the opinion of Shri R.C. Prasad, Ex-Professor IIT, Bombay as also on the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent, upon concentration of the iron content in the prepared or processed concentrate was the norm to enable the user to undertake such further metallurgical operations." 14. Shri Vipin Jain, learned counsel for the appellant assisted by Shri Vishal Agarwal and Shri Abhishek Kapadia, made the following submissions: (i) The Explanatory Notes to the HSN clarify that for the purpose of Heading 2601 to 2617 the term 'concentrate' 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 for economical transport. It is evident from the aforesaid Explanatory Notes to HSN that 'concentrate' is a reference to 'ore' which has had all or part of the foreign matter removed by special treatment. Conversely, if there is no special treatment undertaken on the 'ore' so as to remove part or whole of the foreign matter, it cannot be considered as a concentrate; (ii) This position has also been clarified by the CBIC in its Circular dated 23.03.2012. The Circular notes that doubts had been raised on the issue as to whether the term 'ore' would include concentrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site. 15. Shri S.K. Mathur, learned special counsel appearing for the Department, however, made the following submissions: (i) The appellant have mentioned that the Iron ore supplied from Oman is a blend of 90-95% Iron ore Fines of Carajas, Brazil with 5-10% of Iron Ore Concentrates. Thus, what is imported is not Iron Ore which is naturally extracted from the mines but Iron ore subjected to processes crushing, screening, blending etc., for removal of impurities such as Alumina and Silica to make it fit for direct use in the furnace. Iron Ore with 95% purity is none else than Iron Ore concentrate which was not declared by the appellant and the actual contents were suppressed with intention to avail exemption from payment of CVD under notification dated 17.03.2012; (ii) Excerpt from the official website of Vale clearly shows that Carajas is situated in the Amazonian tropical rain forest and the mined ore is heavy in water content; (iii) Irrespective of the processing done, it remains a fact that the test report of sample at VJTI mentioned 95% concentration of Fe2O3 which means it was an Ore (concentrate) directly capable for feeding into the furnace; (iv) Dr. Rathod is a qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for the purpose of Heading 2601 to 2617, the term 'concentrate' applies to 'ores' which have had part or all of the foreign matter removed by special treatment, either because such foreign matter may hamper subsequent metallurgical operations or for economical transportation. It is, therefore, clear that 'concentrate' is a reference to 'ore' which has had all or part of the foreign matter removed by special treatment. In other words, if no special treatment has been undertaken on the 'ore' so as to remove part or whole of the foreign matter, it would not be considered as a 'concentrate'. 20. This position also emerges from the CBIC Circular dated 23.03.2012 which is reproduced below: "Circular No. 9/2012-Cus., dated 23-3-2012 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Applicability of exemption under Sr. No. 4 of the Notification 4/2006-CE., dated 1-3-2006 on import of Ore Concentrates - regarding. Doubts have been raised whether on imports of Ore Concentrate classifiable under Chapter 26 of the First Schedule to the Customs Tariff Act, 1975, the benefit that is admissible to "Ore" und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, is required to be removed from the ore, and this process is called beneficiation. The relevant extract arising from paragraph 18 of the notice reads as follows: "Beneficiation is a process, which removes the gangue particle, like alumina and silica etc. from the iron ore. Basically it separates Fe2O3 or Fe3O4 from other impurities in the iron ore. In this process, the iron content is improved to the maximum possible extent. The highest can be 70%, i.e. the possible purest form". 22. What needs to be noticed is that the Supreme Court in National Minerals Development Corporation held, after referring to the dictionary/technical material that 'concentrate' consists of enriched ore segregated from waste in a concentration plant. 23. The relevant portion from the dictionaries, referred to in the aforesaid judgment of the Supreme Court are: "(I) Dictionary of Mining Terms by Paul Thrush & Staff of the Bureau of Mines, 1968, edition, reprinted, 1990 'concentrate' is defined as follows: a) In mining the product of concentrate used in plural form as arrangement for treating the concentrate were complete. b) Concentrate are called ore. c) In mining, to separate ore or metal fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow: "Circular: 332/1/2012-TRU dated 17-Feb-2012 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Dutiability of "iron ore" and "iron ore concentrates"-Clarification regarding. A reference has been received from Bhuwaneswar Zone seeking clarification on the issue of whether "Iron ore lumps and fines" are dutiable as "concentrates" when subjected to crushing, screening, sizing or washing etc. 2. In Budget 2011, a Note was inserted in Chapter 26 of the First Schedule to the Central Excise Tariff to deem the process of converting "Ores" into "Concentrates" as a process amounting to manufacture. Both ores and concentrates are classifiable under Chapter 26 and while the term 'Ore' is defined in Note 2 of the said chapter, the term 'concentrate' is not. HSN Explanatory Note spell out the scope of the term "Concentrate" as under: "For the purposes of Headings 2601-2617, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments either because such foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racting the pictorial representation from the global website of Vale International have categorically asserted that the mined ore at Carajas, Para, Brazil underwent two preparatory processes mainly crushing and screening at Carajas, Para, Brazil, before shipment of the same. It is evident from the aforesaid pictorial representation of the stage-wise extraction process of Iron Ores, that there are total of 11 stages involved from the extraction of the ore from the Carajas Mine to its shipment from Brazil. These sequential stages are titled in the pictorial representation as Infrastructure, Extraction, Transport, Crushing, Conveyor Belt, Screening, Stockyard, Recovery, Loading, Rotary car dumpers and Shipment. Out of these 11 stages, only 2 stages deal with physically preparing the ore for shipment, which are crushing and screening. In the process of crushing, the ore which has been mined and is in the shape of a boulder/uneven blocks of upto 15 meters, is crushed using a primary crusher into smaller size. The webpage further reads that the ore may pass through the crusher upto three times. The crushed ore is thereafter carried in a conveyor over 85 km, where it is screened. The pict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration, magnetic separation, floatation and concentrate thickening that the ore can be said to have been concentrated. 30. The impugned order, however, holds that Vale International was using water for removal of impurities. This finding has been arrived at by an incorrect extrapolation of the pictorial representation in the impugned order. It needs to be noted that the show cause notice had not made any reference to the aforesaid pictorial extract from the website. It is on the bases of the incorrect pictorial representation that the impugned order holds that at Cajaras, Vale was using several equipment such as filters, pumps, thickeners, magnetic separators, floatation column for removal of impurities. It is evident from the website of Vale that conventionally, where the ore is of a low grade, the use of water and equipment such as filters, pumps, thickeners, magnetic separators, floatation column, in addition to crushers and screens is envisaged. On the other hand, the website records that the Iron ore extracted at Carajas is rich iron ore and dry processing is undertaken. The Vale website does not admit use of any water for processing or that there was any removal of part or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio would always be greater than 1 in case of natural ores. The appellant had, in the reply, demonstrated that naturally occurring high grade iron ores, even in India at the Bacheli and Bailadila of NMDC have the alumina to silica ratio less than 1. The impugned order as also the evidence relied in support of the same have not disputed this position. The report of Dr. Rathod could not, therefore, have been relied upon to hold that what had been imported by the appellant was Iron ore that had been concentrated. The contents of the letter dated 28.04.2016 of Shri D.K. Swamy, Administrative Officer in the Indian Bureau of Mines are contrary to the opinion of the Ministry of Mines, as communicated of the Circular dated 17.02.2012. 34. The contention of learned special counsel for the Department that the imported goods were fit for directly being used in pellet making cannot also be accepted. Apart from the fact that this may not be a factor for determining whether the goods that had been imported were 'concentrate', even otherwise, it is not in conformity with the statement of Shri Jyotindra Deshmukh who was handling the operations of Pellet Plant of the appellant. 35. It, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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