9911796707
TMI Blog1989 (9) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as activated manganese dioxide ore or electrolytic manganese dioxide which can be obtained by separate and distinct process. The ore in fact is natural ore which is subjected to purely physical treatment which consists of crushing of ore and suspending the ore in stream of water to remove the physical impurities such as earth and stones. Obviously such ore which is in the natural form cannot be utilised in the manufacture of dry cells and for which purpose the further treatment becomes necessary for removal of other impurities such as copper, antimony and arsenic which is done essentially by chemical treatment before the ore can be labeled as "manganese dioxide battery grade" and thus it has been used in the manufacture of dry cells and the Company has been importing such natural ore. In addition thereto the Company has been also importing activated dioxide and also electrolytic manganese dioxide. The property of these three items become necessary because all these three items are mixed and blended together for the purpose of making the battery grade manganese dioxide. The present proceeding however is restricted to the natural ore and not the other two types by activated dioxid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it was in coarse form. As stated the application for re-testing was impliedly rejected because the article was never got re-tested either at the official laboratory of the Central Revenue Control at Delhi or official laboratory at Jamshedpur even though the petitioners were prepared to bear the expenses in that behalf. 4. This classification obviously entailed into demanding and levying the custom duty because under entry 26 nothing is payable whereas under entry 28 itself 40% ad valorem is to be paid. The Custom duty amounting to Rs. 2,79,161-00 was levied on the basis of that classification. The petitioners, therefore, obviously claimed refund of the said amount maintaining that the goods consisted of natural ore which has been subjected to mere physical process of crushing and suspending it in stream of water to separate the ore from the earth and other physical impurities without subjecting the commodity for any other test or treatment. In the meanwhile the petitioners got the commodity tested through Italab Private Limited, who certified that the same contains percentage of manganese dioxide of 83.64%. As and from 1st April 1978 Madhya Pradesh Company was merged into pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irection to re-hear the matter afresh after giving full opportunity to the petitioners. That is how the matter came back to the first forum after these two rounds. 7. However, no action was taken by the Assistant Collector for nearly one year. The petitioners were anxious enough and, therefore, they informed the Assistant Collector reminding him about their application to send the commodity to Delhi and Jamshedpur for which purpose they were prepared to bear the expenses and also to give the copy of the test report. One such letter is dated 27th December 1979. However, the petitioners knew nothing of the said reports, and even as to whether the article was really sent to the Central Laboratory nor were they supplied with the copies of the said test reports. It is, however, at the personal hearing that the supplementary test report carried out by the Customs House on 28th January 1976 was shown to the representative of the Company and which as stated has certified that the percentage of manganese dioxide was 82.84%. Some contentions were canvassed on behalf of the petitioners before the Assistant Collector with this further ground. 8. The Assistant Collector, however, rejected a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector on 22nd April 1982 inspite of direction of the Appellate Authority to consider other test reports once again relied on the physical appearance of the goods as also earlier test report and in fact he very much relied on previous order dated 22nd July 1980 and it is on these basis he once again came to the same conclusion that the commodity would fall under Entry 28 of the Indian Tariff Act. 12. Once again the forum had to be switched over to the Appellate Authority of the Customs when the petitioners were obliged to file an appeal on 29th July 1982 under Section 128 of the Customs Act. Parallel to that the petitioners had also moved this Court under Article 226 of the Constitution by filing writ petition No. 1421 of 1982 and that was placed for disposal prior in point of time before appeal pending could be touched. The learned Single Judge directed that Respondent No. 2 should finally hear the matter without any further remand and it was specifically indicated that the appellate authority should ignore the tariff advice of the Central Board of Revenue because the concerned authority had very much relied on the same. This order was recorded on 4th August 1982. 13. Some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anganese dioxide coupled with the Tariff Advice whereas the final order is essentially founded on the item falling in Entry 25.01 of Customs Tariff Act 1975. The net result is that the earlier ground would not stand the test of scrutiny in view of the material on record including supplementary test report carried out by Customs House itself whereas the main ground as adopted by the appellate forum of applicability of New Act of 1975 would also be non-existent because it is conceded on behalf of the department that the said provision would not apply. It is equally conceded when questioned that the Entry 25.01 is not corresponding to entry 28 of the Tariff Act and, therefore, there cannot be any analogy of comparison. It is then conceded on behalf of respondents that the scrutiny will have to be restricted as to whether the case falls in entry 26 or 28 of the Indian Tariff Act without reference to the entries in Customs Tariff Act of 1975. Once this premise is accepted then the question arises as to whether the matter can be disposed of on this forum itself or whether the Collector of Customs (Appeals) should be directed to re-hear the matter. However, the matter has lingered for yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in powder/grain form has been conclusively established and that the goods are meant for battery industry and if the ore is in grain form it is correctly assessable under Item 28." It is essetially on that basis that he refused refund confirming that the classification is under Entry 28. 18. The appellate forum however, had gone entirely on different track which was equally erroneous. In fact it has concentrated on one aspect about the applicability of Chapter 25 and thus entry 25.01 under Customs Tariff Act, 1975. In that behalf as stated at the outset the respondents have practically conceded that this Act was not in force at that time and therefore would not be applicable and what is of more importance is that it is conceded that this entry 25.01 under New Act is not parallel or has no comparison with entry 28 of Indian Tariff Act. He declined to put the entry atleast in Item 26.01 of the New Act essentially because it is based on the form in which the ore is to be derived from the mine. Therefore, according to him de hors of such derivation if those are to be used in batteries they can be taken away from Item 26 and can be rightly put under Heading 25.01/32(3). Incidentally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d battery grade manganese dioxide, which in trade circle is known as synthetic hyrate, i.e. Sedema M. The split up of items refers to several features the prominent being percentage of manganese dioxide and it is relevant to note that in the natural ore it is 82.84% while in electrolytic it is minimum 91% while in third it is minimum 89%. The other item consists of Iron Oxide, insoluble acid etc. and what is of utmost significance is that as per this table the naturally occurring manganese ore contains 82.84% manganese dioxide and that practically tallies and coincides with the percentage that is found in second test report by the Customs House as also by the test carried out by the Italab and this is in contrast with the first test report by the Customs House when percentage was found to be 95% and which falls in the second group relating to electrolytic manganese dioxide. Then he has given various other items which differentiates the others. He has also indicated various modes of treatment, one being natural one being galvanic method i.e. by electrolysis and other is known as chemical synthesis. He has also indicated that battery grade manganese dioxide has got very high oxygen g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question inferentially indicated. It is rightly submitted by Shri Talyarkhan, the learned counsel, that it was wrong on the part of the authority to hold otherwise predominantly on the ground that it is in powder form. That form or shape really speaking would not be that relevant. If at all any authority is required the same is furnished through the ratio in Minerals Metals Trading Corporation of India Ltd. v. Union of India 1983 (13) E.L.T. 1542 (S.C.) = AIR 1972 S.C. 2551. It has been observed as:- "The separating of woldfram ore from rock to make it usable ore is a process of selective mining and not a manufacturing process. The important test is that the chemical structure of the ore should remain the same. Whether the ore imported is in powder or granule form is really immaterial. There is a preponderating weight of authority both of experts and of books...." Therefore this substantiates the arguments advanced by Shri Talyarkhan, the learned counsel, that articles under powder form hardly makes any difference whereas the other feature has been completely highlighted by the Expert's Report. 21. On the analysis of this entire material through which the controversy is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition have practically gone unchallenged and especially when they are fully substantiated by other material on record. 23. In this view of the matter the petition obviously would succeed and placing the commodity in Entry No. 28 of the Indian Tariff Act and equally an endeavour to place it in Entry No. 25.01/32 of the Customs Tariff Act, 1975, both of which being thoroughly erroneous, will have to be set aside with the further necessary result that it would be the Entry No. 26 of the Indian Tariff Act which would squarely cover the commodity in question and assertion of the petitioner in that behalf will have to be upheld. In view of this finding when the impugned orders being set aside it should follow as a logical corollary that consequently relief of refund of amount, which has been already paid by the petitioner when the customs duty was levied on the footing of Entry No. 28 will have to be granted. Shri Sethna, the learned counsel appearing for the Department, however, contended, which contention is no doubt related to the proposed consequential relief of refund of the amount, that the larger Bench of this Court is seized of the matters where similar question has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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