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TMI Blog2023 (10) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... as also been cleared in the domestic market under the very same classification under the Central Excise Tariff (CET) since 1986. In fact, copy of invoices placed on record supports the above claim. 1.2 Similar to its earlier exports, the assessee filed two shipping bills both dated 02.03.2013, for export of Upgraded Beneficiated Ilmenite (Synthetic Rutile) under CTH 2823. The Revenue, however, not accepting the above classification of these goods, sought to classify the same under CTH 2614 00 20. 1.3 Not satisfied with the reply filed by the assessee for the re-classification by the Revenue, the Assistant Commissioner of Customs, Tuticorin vide Order-in-Original No. 575/2013 classified the goods under export under Tariff Item No. 2624 00 20, as proposed. It appears from the record that the appellant-assessee preferred an appeal before the first appellate authority against the said reclassification by the adjudicating authority and the first appellate authority vide Order-in-Appeal No. 47/2013 (TTN) dated 17.05.2013, accepted the classification made by the assessee thereby setting aside the re-classification proposed and confirmed by the original authority. 1.4 Against the said O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which oxides from the above ore would combine with the Carbon in the charcoal and thus Carbon Dioxide mixture gets liberated, thereby leaving the Ilmenite concentrate. (iv) The roasted ore is thereafter charged to a digester wherein Leaching process takes place, with Hydrochloric Acid of about 30 to 31% concentrate. The said leaching process is repeated multiple times under high-pressure and temperature until the iron content drops from 33-35% to 2.5%, and hence this process of leaching is treated as the most crucial step/process whereby the Iron [Fe] content in the said Ilmenite ore [FeTiO3] is converted into Ferric Chloride [FeCl3], thereby leaving Titanium Dioxide [TiO2] of the highest possible purity and moisture. (v) Typically, 'Rutile' would mean a molecular structure having tetragonal shape, as given below: - (vi) Rutiles are generally of two types, namely, natural Rutile and synthetic Rutile and the common difference is in their molecular structure. If the molecular structure is tetragonal in the natural state of the mineral, then they are natural Rutiles. If the tetragonal molecular structure, which is called rutile structure, is achieved by any chemical processes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses, and (B) Have not been submitted to processes not normal to the metallurgical industry. The term "ores" applies to metalliferous minerals associated with the substances in which they occur and with which they are 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 headings 26.01 to 26.17, 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 headings 26.01 to 26.17 may have been submitted include physical, physiochemical or chemical operations, provided they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h alter the chemical composition or crystallographic structure of the basic ore are generally classified under Chapter 28; the Ilmenite ore in the present case that are purchased/procured, are subjected to both physical and chemical processes during the conversion from Ore to synthetic Rutile; the chemical formula of mineral ore is FeTiO3 and its crystal structure is hexagonal. The synthetic Rutile that is finally exported, is identified with the chemical formula TiO2 and its crystal/molecular structure is tetragonal. 5.6 Our attention was drawn to the following test reports of the experts, wherein it has been opined that there is a chemical as well as crystallographic change in the impugned product, and the same occurs after the process of leaching, which happens at the digesters: - Sl.No. Name of the Organization Report Reference No. 1 CSIR - Institute of Minerals & Materials Technology TSP-001/07/14/210 dated 14-08-2014 2 TSP-001/11/14/218 dated 12-11-2014 3 Pondicherry University, Department of Earth Science PU/Esc/SB/DCW-02 dated 11-05-14 4 Bhabha Atomic Research Centre (BARC) ACD/Sample/AVRReddy/RKS/224 dated 19-02-2014 5.7 It is their further case that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of leaching carried out only reflects that there was an increase in the concentration of TiO2 and thereby resulting in the reduced FeO content. (iii) Even the final product is claimed to have 95% of Titanium and 5% of impurities. This indicates that the Titanium is not fully separated from the Ore. (iv) The description itself therefore clearly indicates that Ilmenite still contains TiO2 and not pure TiO2. (v) The test report of the Department of Earth Science, Pondicherry University referred to by the Commissioner (Appeals) was not available with the adjudicating authority. (vi) Moreover, the logic behind the conclusion is not forthcoming from the report of Pondicherry University, as to how the university concluded that the change in the structure occurs only during the process of leaching. The report of the Puducherry University indicates that the crystallographic structure change of the product happens during the process of leaching whereas, the website of Kerala Minerals indicates that the chemical change and crystallographic change can occur only during the process of roasting. 6.2 He placed reliance on an order of this Bench in the case of M/s. V.V. Minerals v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site cannot outweigh the expert opinion obtained from reputed Government testing houses like CSIR, BARC and Pondicherry University. 8. We have heard the rival contentions, we have perused the orders of lower authorities, and we have also carefully considered test reports/certificates issued by the various organisations. 9. After hearing both sides, we find that the only issue that is to be decided by us is: whether the item exported by the assessee namely "Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO2 95% Min. Moisture 0.5% Max." is classifiable under CTH 2614 as contended by the Revenue, or CTH 2823 as declared by the exporter-assessee? 10. At the foremost, it is essential to understand the importance of a structure of a molecule. It is the structure that determines the chemical and physical properties of a substance. The shape of a molecule can affect how it contacts with other molecules, including how it binds to receptors in the body or how it reacts with other substances in a chemical reaction. The understanding of the structure of molecules is therefore essential in fields of chemistry, biochemistry and pharmacology as it allows scientists to predict and control t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the metallurgical industry for extraction of the metals of Section XIV or XV, of mercury or of the metals of heading 28.44, even if they are intended for non-metallurgical purposes, and (D) Have not been submitted to processes not normal to the metallurgical industry. The term "ores" applies to metalliferous minerals associated with the substances in which they occur and with which they are 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 headings 26.01 to 26.17, 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 headings 26.01 to 26.17 may have been submitted include physical, physiochemical or chemical operations, provided they are normal to the preparation of the ores for the extraction of metal. With the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny concerned who uploaded in the website. Hence, the alleged reference also tantamount to mere allegation, without any basis or any stuff. For this reason, the same does not take anyone anywhere. 16.1 At this juncture, we find it appropriate to look at the test report dated 14.08.2014 of CSIR. For the sake of convenience, the same is reproduced hereinbelow: - Sl.No. DCW Sample Code Sample details Minerals identified by XRD Chemical formula of mineral present Crystal structure of mineral present XRD Reference Code Remarks 1. 1 Ilmenite Ore (54-55% TiO2) Ilmenite Fe(TiO3) Hexagonal 92-010-5698 Annexure- 1 Hematite Fe2O3 Rhombohedral 00-024-0072 2. 2 Purified Ilmenite Ore after Magnetic Separator Ilmenite Fe(TiO3) Hexagonal 98-010-5698 Annexure- 2 Goethite FeO(OH) Orthorhombic 98-011-2688 Magnetite Fe3O4 Cubic 98-002-8170 Hematite Fe2O3 Rhombohedral 00-024-0072 3. 3 Reduced Ilmenite Ore after Roasting Ilmenite Fe(TiO3) Hexagonal 98-010-5698 Annexure- 3 Goethite FeO(OH) Orthorhombic 98-011-2688 Iron Titanium Oxide Fe1.5Ti0.5O3 Hexagonal 98-004-8810 Hematite Fe2O3 Rhombohedral 00-024-007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013):- "We purchase Ilmenite Ore falling under Chapter 2614 from M/s. Indian Rare Earths Limited and also import the same. We are manufacturing upgraded beneficiated ilmenite synthetic rutile TiO2 95% in our Factory since 1970 and exporting through Tuticorin Port by adopting the following manufacturing process. In the industrial process adopted by us, the raw ore is first reduced in rotary furnaces by subjecting it to roasting at a high temperature using coke breeze or coke fines as the reducing medium. The roasted ore is then charged to digestors, which are spherical autoclaves with special materials of construction for withstanding the highly corrosive condition. The ore and hydrochloric acid of 30-31% concentration are charged to the digestors and subjected to repeated leaching under high pressure and temperature. The leaching is continued till the iron content drops from 33-35% to 2.5%. The iron gets converted to ferric chloride. On completion of leaching, the beneficiated Ilmenite synthetic rutile is subjected to repeated water washing to remove the ferric chloride formed in the reaction and excess unreacted acid. The synthetic rutile ilmenite slurry after blowing down of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal products. Further, the ultimate manufacturer who would like to use only Titanium dioxide with 95% and not the Ilmenite. The two products are so different that one is not an alternative/or supplement to the other warranting both to classify under the same head. The user of the Synthetic rutile cannot use the Ilmenite as it has got Iron content of over 40% which is impossible for any Titanium manufacturer to use straight away for their purpose as in case of using Synthetic Rutile. Thus, it is impossible to bring both Ilmenite and Synthetic rutile under one category which we would like the department to take cognizance off." 18. In view of the above, we have no hesitation to hold that the scientific analysis carried out by the Government agencies like BARC/CSIR are clear and understandable and hence, the same prevails over the mere download from website of Kerala Minerals. It is the above Government agencies who have reported that the change in the chemical composition/crystallographic structure from Raw Ilmenite ore and the final exported goods has happened during the chemical process of leaching. In view of this, the final product that emerges and which is exported is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of both the sides, we, for the reasons given below, are of the view that the product, in question, is correctly classifiable under Heading 28.25. .... (3) As per HSN explanatory notes to Chapter 26 (page 214), "concentrates of ore obtained by treatments other than calcination or roasting, which alter the chemical composition a crystallographic structure of the basic ore are excluded from Chapter 26 and are covered by Chapter 28..... ..." We find that the ratio in the above orders is squarely applicable to the case on hand to justify our conclusion that the goods in question could only be classified under Chapter Heading 2823. 19.3 We find that in the decision of M/s. D.L. Steels (supra), the Hon'ble Supreme Court has held as under: - "12. We would, at this stage, take on record the well-settled principle that words in a taxing statute must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. When a word is not explicitly defined, or there is ambiguity as to its meaning, it must be interpreted for the purpose of classification in the popular sense, which is the sense attributed to it by those people who are convers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Schedule to the Customs Tariff Act, 1975 merely reproduces the Heading and the sub-heading of the HSN, without specifically including or excluding pomegranate seeds under the sub-heading 1209.99." (Emphasis supplied) Hence, when the Revenue disagrees with regard to a scientific fact, the reasonable expectation would be to subject the goods to a scientific analyses to arrive at a sensible conclusion, which is lacking in the case on hand. Hence, the reports of the experts in the field like CSIR, BARC are very much relevant. 19.4 Further, as rightly pointed out by the Ld. Advocate, we find that in the case of M/s. V.V. Minerals (supra), the issue was relating to processed and unprocessed Ilmenite ore and between Tariff item 2614 0010 and 2614 0020. Moreover, we do not find any reference to chemical processes being involved and nor any dependency on the resultant change in the chemical composition and crystallographic structure, as against the issue in the case on hand. 20.1 In the Order-in-Original dated 26.03.2013, the Assistant Commissioner has observed that the General Interpretative Rules (GIR) are to be applied whenever there arises any dispute or ambiguity in classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haps downloaded from the website of Kerala Minerals & Metals Ltd. at pages 10 and 11 of the Order-in-Original. Various processes are also mentioned in the same page of the Order-in-Original. When we look at the 'Process Outline', it is found that at the stage of Roaster, Hydrochloric Acid is never used and it is mentioned that the reduced Ilmenite is cooled and sent to the digesters where it is leached with 18 to 20% Hydrochloric Acid. Then, there is also a reference to digester and thereafter, it is mentioned as under: - 23. What is conspicuously absent is the specific observation as to when the chemical or crystallographic change occurs and what is the molecular structure at each stage of the processes that are mentioned in the said page. Hence, this download from website may not be of much relevance, especially when compared to the reports of Government agencies. 24.1 It may not be out of context to mention that it is for the authorities to properly look into the description of goods and then classify the same on its merits, if the description is the sole criterion. Further, they should not go with the classification in the statute first and then fit-in the goods under the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inues till date. When the Revenue does not act, that should not be allowed to be causing undue hardship to bona fide assessees. The results are glaring, long drawn multiple disputes. 27. Further, we find from the impugned Orders-in-Appeal that the assessee has been manufacturing/exporting the very same product from 1986 by declaring/classifying the same under Chapter Heading 2823, both for their export and domestic clearances. This only establishes that the assessee has been consistent, which was not disputed at all by the Revenue for more than 30 years and hence, to deviate from the practice in place for more than three decades, the Revenue has to come up with formidable defence to break the forte. But unfortunately, there has only been a half-hearted attempt, without any supporting evidence, whatsoever. 28.1 In the Order-in-Appeal dated 23.08.2013, we find that the Commissioner (Appeals) has nowhere referred to the reports/certificates issued by CSIR or BARC. Though reference is made to the report from Bureau of Mines, Bangalore but however there is no discussion on this either, in the impugned order. Moreover, the first appellate authority has chosen to refer to part of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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