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TMI Blog2024 (2) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to deeming fiction that finds place, through a note, in chapter 26 of Schedule to Central Excise Tariff Act, 1985. The source actual or fictional - of the liability, intended as the objective of Central Excise Act, 1944, is not material to duty that emanates from the authority of section 3(1) of Central Excise Tariff Act, 1975 prescribing levy, equivalent that of duty of excise chargeable, solely for being akin to goods emerging from manufacturing process; the process of emergence, whether in domestic production or activity overseas, is, of itself, irrelevant to the charging of this duty and rate thereof. To the extent that there is no variance in tax rates at the eight , or tariff item , level, the corresponding descriptions make for distinction without difference. Therein lies the nub: a tax policy that admits of tax preferences among the enumerations within a sub-heading which is bereft of methodology either inherent or insinuated to isolate and distinguish fails to communicate the intent and offers, thereby, little scope for judicial determination from having to steer clear of intervention in tax policy. It cannot, therefore, be conceived that the tax collection or assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onge & Power Ltd is before us challenging the discard of their claim of imports being in conformity with description corresponding to tariff item 2601 1119 only to be saddled with rate of duty corresponding to tariff item 2601 1150 of First Schedule to Customs Tariff Act, 1975 which has had the effect of recovery of differential duty, along with applicable interest under section 18(3) of Customs Act, 1962, owing to ineligibility for exemption extended to 'ores' by notification issued under section 25 of Customs Act, 1962. The appellant, a manufacturer of 'sponge iron', 'mild steel (MS) billets' and 'TMT bars', imported 'iron ore lump' from Khumani mine in South Africa claiming assessment accordingly with eligibility for exemption from additional duty of customs permitted by notification no. 12/2012-CE dated 17th March 2012 which customs authorities held to be otherwise for having undergone process for removal of 'foreign matter' rendering those to be 'concentrate' which, admittedly, was not covered by the exemption. 2. The 'ore' had been imported in two consignments of 60,000 metric tons against bill of entry no. 013/JGD/Into-Bond/16-17/01.08.2016 for warehousing and of 30,903 met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for valuation and, while finalizing the assessment, the proper officer found no fault in the declaration of content of 'Fe' as well as the declared assessable value. However, the finalization also included re-determination of classification for which the only prelude was the 'query memo' that, to the 'proper officer', appeared to suffice for re-determination of 'rate of duty' for purposes of section 12 of Customs Act, 1962, commonly referred to as classification. 'Query memo' is a tool devised to assist 'proper officer' in assessment of imported goods wherein statutory provisions contemplating seeking of clarifications or for expressing doubts about the correctness or completeness of information furnished for assessment is resorted to. Even where rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 empowers rejection of declared value, either from non-response or from unsatisfactory response to query envisaged therein, revision for assessment must necessarily be preceded by notice of intention to resort to specific alternative, in accordance with the Rules, before onus is shifted to importer for discard of such proposal. It cannot but escape our at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd issue, regarding, whether crushing, grinding, washing, grading etc to 'Iron Ore' results into 'Iron Ore Concentrate', I find it necessary to understand meaning of words, namely, "Ores", "concentrates" and "beneficiation" for which the purported definition of 'ores' in note 2 in chapter 26 of Central Excise Tariff Act, 1985, the purported meaning of 'concentrates' in Explanatory Notes relating to headings and sub-headings in chapter 26 of Harmonized System of Nomenclature (HSN) Code, as well as in Kirk-Othmer's Encyclopaedia of Chemical Technology, and of 'beneficiation' in McGraw Hill Dictionary of Scientific and Technical Terms (6th edition) were drawn upon to conclude that '14.5 ……. This, I find that, if any one or more 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 "concentrate". In short, the term "concentrate" is applicable to ores which are made free of impurities through the application of certain processes by which part or all of the foreign matter are removed for the reason that such foreign matter might hamper subsequent me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either should 'ease of transport' be inferred as the intent of the expression 'economical transport' in the Explanatory Notes as expressions have been selected, and exactingly crafted, in the Explanatory Notes in pursuit of precision for ease of interpretation of the heading groups. 9. Thus, the liability was fastened on, and upheld against, the appellant on the finding that 'ores' and 'concentrates' are distinguishable, owing to meaning assigned in the First Schedule to Customs Tariff Act, 1975 that replicated Explanatory Notes and in the Explanatory Notes respectively, for ferrous extractions, that the contents of web-site of supplier is, in the context of particulars in contract, more reliable authority on processes that mined material has been subjected than a certificate produced on prompting of assessing officer and, owing to which, the disadvantage of excise duty leviable upon occurrence of similar activity in India would have to be neutralized through additional duty of customs at like rate for having been manufactured in South Africa. 10. Yet another caveat would not be out of place here. The headings in the Harmonized System of Nomenclature (HSN) Code are scientifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient, as well as necessary, condition for assessment. Congruity of activity for transformation - within and outside the country - are not germane to determination under the two tariff schedules, even by ignoring deeming of manufacture, as such activity is relevant only for determining taxable event and not the rate of duty; attempt by the tax administrator to venture thereto for fastening parity in tax burden on that premise is the improper arrogation of the exclusive preserve of the Central Government by an instrument of that government. It is here that the compartmentalization of judicial interpretation in the two contexts, precluding cross-over and an aspect that should have made its brooding presence felt in assessment to duty, has not received due acknowledgment in the impugned order. 12. According to Learned Counsel for appellant, the finalization relied on description of activities in the web-site of supplier to hold that processing at the site of mining - washing, screening, crushing, jigging - for removal of foreign matter, to make fit for metallurgical operations and economic transportation, sufficed for categorizing as 'concentrates' which the first appellate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms (Preventive), Mumbai [2022 (381) ELT 704 (Tri-Mumbai)], had also drawn upon the process of 'beneficiation' which, as set out in the notice therein, was far removed on facts from the stand taken by the lower authorities in the proceedings now before us. 14. According to Learned Authorized Representative, the imported goods, by having undergone a process beyond that described in the certificate, were more aptly classifiable as 'concentrates' and that even the certificate, for not having been produced at the time of import, did not suffice to support claim of the appellant in the face of web-site of the supplier having elaborately set out the activities undertaken by them to leave no room for doubt that the goods were indeed 'concentrates' not conforming to claim in bills of entry. It was pointed out that 'washing' and 'jigging', in addition to 'crushing' and 'screening', were intended for removal of foreign matter from the mined material. He drew upon the information on the web-site to submit that any process after extraction could only be for production of 'concentrates' with the ISO 9001:2015 certification corroborating that conclusion. Reliance was placed on the decisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Tribunal does not support the case of the lower authorities as no provision of either Customs Act, 1962 or Customs Tariff Act, 1975 requires determination of 'manufacture' at place unknown to these statutes for assessment to duty on import; indeed, it is settled law that the rate of duty would be such as is applicable to goods 'as presented' and any assessment to '(1)….duty.. equal to the excise duty for the time being leviable on a like article if produced or manufactured in India ….' in section 3 of Customs Tariff Act, 1975, that applies to imported goods akin to manufactured goods, is tested on similarity of description and not on the process by which these emerge. 17. In re Star Industries Ltd, the issue before the Hon'ble Supreme Court was not about classification of the imported 'molybdenum' which, admittedly, was 'roasted' but about eligibility for exemption notifications intended for 'ores' that the importer pleaded to be inclusive of 'concentrates' also owing to heading 2613 of First Schedule to Customs Tariff Act, 1975 being applicable to 'Molybdenum ores and concentrates' and, therefore, were interchangeable. Furthermore, the descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note 4 to Chapter 26, can his interests be sub-served when concentrates imported into India are not levied to CVD at the same rate by interpretation of Notification No. 4/2006 so as to construe that ores includes 'concentrates' and, therefore, no CVD is leviable. In our humble view, such an interpretation militates against the interests of domestic producers and also the plain language of the notification. Accordingly we hold that the benefit of exemption under Notification No. 4/2006-CE will not be applicable to 'concentrates' imported from abroad." to, effectively, approve the finding of the Tribunal on the intent of duties leviable under section 3(1) of Customs Tariff Act, 1975 after noting that '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 'manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding' level was combined similarly; here it is the outcome of a classification question that has had the effect of denial of notification. The ascertainment of legislative intent to afford level playing ground to indigenous production and foreign import is not of relevance here. The outcome of a dispute that was restricted to the description at the 'four digit', and 'heading', level in which authority of Explanatory Notes could have been drawn upon may not find resonance in a dispute that arises from policy driven segregation of similar heading at the 'eight digit', and 'tariff item', level transcending the utility of those very Explanatory Notes common to the two, as well as other, minerals once the national policy has deemed 'ores' and 'concentrates' of 'iron' to be distinct for amenability to separate rates of duty. The resolution against the appellant in the claim, of the appellant in re Star Industries Ltd, of both being 'ores' is too patently contextual to have any bearing on the dispute before us. 18. Learned Counsel has placed before us the decision of the Tribunal, in re Amba River Coke Ltd, with particular reference to the interpretation of 'beneficiation', or enriching ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires a personality when the tariff enumeration is expanded to the 'eight digit level' and it is only then that the stamp of the intent of the Central Government to be different is made apparent by building upon the resource that The International Convention on the Harmonized Commodity Description and Coding System (HS Convention), along with supplements and complements including the Explanatory Notes, provides. Evident here is another limitation of the Explanatory Notes because of congruity only in relation to descriptions upto the 'sub-heading', or 'six digit', level. 21. To the extent that there is no variance in tax rates at the 'eight , or 'tariff item', level, the corresponding descriptions make for distinction without difference. Therein lies the nub: a tax policy that admits of tax preferences among the enumerations within a sub-heading which is bereft of methodology - either inherent or insinuated - to isolate and distinguish fails to communicate the intent and offers, thereby, little scope for judicial determination from having to steer clear of intervention in tax policy. It cannot, therefore, be conceived that the tax collection or assessment machinery have been endowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing 'ores' and 'concentrates', the emphasis is not on just 'process' but 'special process' without any explanation attending thereon. It would also appear that 'concentration' is a question of degree than an absolute. We may safely posit that such distinguishment is left to the preferences of national policy formulation attending upon intent to segregate the two for fastening different rates of duty thereto. This is further evident from the placement of 'oxides' of the metal concerned in chapter 28 of the Schedule thus 'Concentrates of ores obtained by treatments, other than calcining or roasting, which alter the chemical composition of crystallographic structure of the basic ore are excluded. …. 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.' making it apparent that chapter 26 of the Schedule is intended to be restricted in coverage to inputs for further processing after mining. The logic of the lower authorities would stultify 'ores' in the heading entirely; the absence of objective criteria for differentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. This is evident from '3. Hence, it is clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN notes, 'that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport' in circular of 17th February 2012 which has drawn upon '2. ……………From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have "clarified that no special treatment is involved in the crushing and screening of ore and the end product can be termed as a concentrate only when the grade of ore is sufficiently improved through beneficiation. Federation of Indian Mineral Industries have also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation & Concentrate thickening have to be undertaken for ores to be converted into concentrate.' therein. Furthermo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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