Custom, Excise & Service Tax Tribunal
M/S Trimax Sands Pvt Ltd vs M/S Trimax Sands Pvt Ltd on 6 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH REGIONAL BENCH AT HYDERABAD BENCH - DB COURT - I Appeal(s) Involved: C/30774-30776/2017-DB E/30911/2016-DB (Arising out of Order-in-Appeal No. VIZ-CUSTM-000-APP-009 to 011-17-18 dated 31/05/2017 & OIA No. VIZ-EXCUS-001-APP-027-16-17, dated 6.7.2016 passed by Commissioner of Customs Central Excise & Service Tax (Appeals) Visakhapatnam) M/s Trimax Sands Pvt Ltd., Vatchavalasa (V), GaraMandal, Srikakulam-532 404 Appellant(s) C VCommissioner of Customs, Visakhapatnam Versus CCommissioner of Customs, Visakhapatnam M/s Trimax Sands Pvt Ltd Vatchavalasa (V), GaraMandal, Srikakulam-532 404 Respondent(s) Appearance: Mr.Sujay Kantawala, Adv & Mr. P.S. Pruthi, Consultant for the Assessee. Mr P. Jaya Dev, A.R. for the Respondent. CORAM: HON'BLE Mr. M.V.RAVINDRAN, MEMBER (JUDICIAL) HON'BLE Mr. MADHU MOHAN DAMODHAR, MEMBER (TECHNICAL) Date of Hearing: 15/09/2017 Date of Decision: Final Order No. A/ / 2017 [Order per: M.V.RAVINDRAN] .
When Sh. P.S. Pruthi Consultant,alongwith Sh. SujayKantawala Advocate for the appellant in this case, made appearance on behalf of the appellant, the Bench raised a query whether Sh. Pruthi is eligible to appear in view of the condition of section 129(6) of Customs Act, 1962 as made applicable to Central Excise which debars Members from appearing before the Tribunal. Sh. Kantawala mentioned that the legal position on this issue stands settled in favour of Sh. P.S. Pruthi in view of the judgement of Delhi High Court in the case of Union of India vs Ramesh Nair. He further stated that Sh. P.S. Pruthi, an ex-officer of Indian Revenue service worked in various senior positions and retired as Chief Commissioner of Chandigarh Zone of Central Excise and Service Tax in January, 2014. Thereafter, he joined CESTAT(Mumbai) as Member(Technical) on 26.05.2014 and remained on probation till he retired on 12-10-2016. The advocate also placed on record a copy of letter dated 29-06-2017 received from Registrar, CESTAT, New Delhi which affirmed that Shri P.S. Pruthi was not confirmed as Member.
2. We have considered the submissions of learned Counsel and observe that Section 35Q of Central Excise Act,1944 read with Central Excise( Appeals) Rules interalia permits ex-employees of Department of Customs and Central Excise or Narcotics to appear as authorized representative of the appellants before appellate authorities provided they had retired or resigned from such employment after having rendered service in any capacity in one or more of the said departments for not less than ten years in the aggregate. Section 35Q (3) provides that no person who was a member of the Indian Customs and Central Excise Service Group A and had retired or resigned from such Service after having served for not less than three years in any capacity in that Service, shall be entitled to appear as an authorised representative in any proceedings before a Central Excise Officer for a period of two years from the date of his retirement or resignation, as the case may be.
3. Further, the provisions of Section 129(6) of Customs Act, 1962 provide that on ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal. Section 129(6) of Customs Act reads as follows:-
"129. Appellate Tribunal -
(6) On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal".
4. In the past the question was raised as to whether restriction on appearance before CESTAT under provisions of section 129(6) was also applicable to those Members who ceased to hold office during the probation period. This issue came up for determination before Honble Delhi High Court in the case of Union of India Vs. Ramesh Nair W.P. (C) 7112/2013. The judgment in that case was delivered on 2nd December 2013, wherein the Honble high Court held that a Member, CESTAT who demits office while on probation is not barred from appearing before CESTAT. The Honble High Court held that only a Member of Tribunal who is confirmed to hold office in such capacity can be said to have ceased to hold the sameand therefore the provisions of section 129(6) of the Act would not be attracted in the case of a Member who was not confirmed in his post. The relevant extracts of the judgment are cited below: -
17. Thus, on the basis of the discussions in the aforementioned judgments the Tribunal concluded that a person under probation may not be said to be holding an office for the purpose of section 129(6) of the Act. It was further concluded by the Tribunal that in case of discharge of probationer from service on account of not being not found suitable for being confirmed may not be compared with cessation of office by person who has acquired a lien on it. Further, while appreciating the intention of legislation incorporating Section 129 (6) of the Act, the Tribunal referred to an order of ITAT Delhi ('B' Bench) Special Bench reported as (2009)120 ITD wherein it was held that Members of ITAT are debarred from appearing before ITAT only after retirement from service of the Tribunal and such conditions are not made applicable to a member discharged from service during the period of probation. Thus, on the basis of the aforesaid decisions the Tribunal, with regard to issues (i) and (ii), held that a member of the Tribunal discharged from service during probation period may not be debarred from practicing before it and provisions of Section 129(6) of the Act would be applicable only to such members who cease to hold office only after their confirmation. It was further held that the phrase 'on ceasing to hold office as Member' used in section 129 (6) of the Act would not include discharge of probationer and only a Member who is confirmed to hold office in such capacity can be said to have ceased to hold the same. Since a probationer does not acquire any lien on the post of Member before its confirmation, there is no question of his ceasing to hold the same..
27. The challenge to the vires of Section 129(6) before this Court and the Supreme Court was made by officers of the Indian Customs and Central Excise Service who were also working as Member (Technical) in CAGET/CESTAT on different dates. Some of them were repatriated to parent department from CAGET and some them demitted office as Member (Technical) in CAGET/CESTAT. In that way the ratio of the opinion of the Supreme Court in N.K.Bajpai's case (supra) would not be of relevance while deciding the issue raised by the respondent before the Tribunal. In other words, the bar under Section 129(6) would be applicable to a Member holding the post on substantive basis. This we say so for the reason, it is not the case of the respondent that even after demitting office as a confirmed Member (Judicial) he can practice in CESTAT. His case was on demitting office as a probationer, the bar under Section 129(6) would not be applicable..
33. A Member demitting office while on probation does not retire whereas a Member who is confirmed, retires on attaining the age of superannuation, unless he resigns. The rules do recognize Member on probation and a Member who is confirmed as two distinct separate classes..
34. The provision in question must be read to mean that the bar would not be applicable to a Member who demits the office while on probation.
35. The conclusion arrived at by the Tribunal is a plausible view. Even if another view is possible, this Court in exercise of the jurisdiction under Article 226 of the Constitution of India would not like to interfere with the impugned order. The writ petitions are accordingly dismissed. There would be no order as to costs..
5. The Union of India appealed before the Supreme Court against the aforesaid order of Delhi High Court. The Honble apex court in its judgement dated 17-04-2017 dismissed the appeal as having been rendered infructuous and kept the question of law open.
6. In view of the foregoing facts, we hold that Shri P.S. Pruthi, ex-IRS officer is entitled to appear before CESTAT as authorized representative/consultant of the clients.
7. Two appeals are taken up together. The first appeal by Revenue E/30911/2016-EX[DB] of 22/11/2016 is against the order of Commissioner (Appeals) ordering the classification of Ilmenite under tariff item 26140020 as against 26140010 as claimed by Revenue. The second set of appeals by the appellant M/sTrimex Sands Pvt Ltd Appeal Nos C/30774-30776/2017-CU(DB)are against the rejection of their refund claims by the Commissioner (Appeals)under Order No. VIZ-000-APP-009 to 011-17-18 dt 31/05/2017. The refund claims were filed by the appellant on account of change in classification sought in respect of the Ilmenite Ore exported by them.
8. On 13th September, when the second set of appeals came up for hearing, the consultant representative of the appellant mentioned that the issue of classification under 26140020 was not challenged by the Revenue in the order passed by the Commissioner (Appeals) rejecting the refund claims. The refund claims were rejected on other grounds. However the Bench observed that without deciding the issue of classification in the first appeal, a conclusion arrived in the second appeals could result in an incongruous situation. Therefore, with the consent of both sides,both appeals were taken up for hearing on 15/09/2017.
Appeal No E/30911/2016-EX[DB] of 22/11/2016
9. The respondent are manufacturer and exporters of processed Ilmenite. The dispute is about classification of their product--between two competitive entries in the Central Excise Tariff namely 26140010-Ilmenite,unprocessed and 26140020 -Ilmenite, upgraded (beneficiated ilmenite). The Commissioner (Appeals) vide his order No. VIZ-EXCUS-001-APP-027-16-17 dated 06/07/2016 decided the classification of ilmenite manufactured and exported by the appellant under tariff item 26140020 as upgraded ilmenite (beneficiated ilmenite). For coming to this conclusion, he relied upon Tribunals decision in the case of V.V. Minerals- 2016(332) ELT 888 (Tri.- Chennai), the documents of National Meteorological Laboratory and Department of Atomic Energy and the Mineral Conservation and Development Rules,1988.
Submissions
10. The arguments of Revenue are five-fold. Firstly, that the respondent were initially classifying their goods under 26140010. Later, change in classification was sought only when export duty on beneficiated ilmenite was reduced from 10% to 5% by notification 15/2013-Cus dated 01/03/2013. The Department relies on various judgments to emphasize that a benefit/notification cannot change the classification of goods. The next contention is that the process adopted by the appellant is to convert Beach sand to processed sand which cannot be termed as processed ore so as to justify classification under 26140020. The process adopted only separates the mineral ilmenite from the sand and increases the percentage of Ilmenite in the sand. It does not upgrade the main content of Ilmenite Ore, which is Titanium Dioxide-TiO2. Beach sand is a heterogeneous mixture of various mineral bearing sands such as ilmenite sand, rutile sand etc. The resultant product after the process undertaken by the appellant are at best processed sands and not processed ores to merit classification under 26140020. The common tradeparlance name of beneficiated ilmenite is synthetic rutile. Rutile is the most common natural form of Titanium Dioxide which is used in manufacture of pigments. The goods in question are not Beneficiated ilmenite.
11. The third contention is that the definition of "beneficiation", relied upon by Commissioner Appeals, as given in the Mineral Conservation & Development Rules, 1988, has no applicability tothe impugned case as the beach sand falls under the category of sand which is a minor mineral as per Rule 70 of Mineral Concession Rules vide Notification No. GSR 333 Dated 10/02/2015. And the said Rules do not apply to minor minerals.The fourth contention is that various documents such as DCW Limited (one of the biggest exporters of beneficiated ilmenite) website, M/s Cochin Minerals and Rutile Limited website, DGFT SION norms, article by Dr. CK Gupta in his book "Chemical Metallurgy" all describe beneficiated ilmenite as synthetic rutile which contains a high percentage of Titanium Dioxide but the processed sand made by the respondent does not.The last contention is that the Commissioner (Appeals) relied on the case of M/s VV Minerals without the finality of the case law.
12. Respondents contention is that they realized their inadvertent mistake of wrong classification when the case of VV Minerals came to their knowledge. There is no estopple to classification. Revenue is taking contradictory stands. On the one hand it is claimed that Beach sand is not an ore and on the other hand, in Para 5 of the grounds of appeal, the process employed by Trimex is detailed wherein Ilmenite of 7% to 9% is upgraded to Ilmenite of 96% to 97%. In Para 5.1 of the ground of appeal itself states that the process carried out leads to separation of Ilmenite ore. Respondent further contends that Chapter note 4 of Chapter 26 states that the process of converting ores into concentrates shall amount to manufacture. And as per Wikipedia In the mining industry beneficiation or beneficiation in extractive metallurgy, is any process that improves (benefits) the economic value of the ore by removing the gangue minerals, which results in a higher grade product (concentrate) and a waste stream (tailings).
13. It is also argued that Chapter 26 Heading 2616 is the classification for titanium ores and concentrates. Just as iron ore and concentrate falls in Chapter 26 but the base metal of iron falls in Chapter 72, similarly, the base metal of Ilmenite that is titanium dioxide falls under tariff item 28230010. The definition of beneficiation as given in Rule 3(d) of the Mineral Conservation and Development Rules, 1988 is applicable to the goods made by the respondent. The said Rules apply to major minerals. As per Rule 70 of Mineral Concession Rules, sand used for metallurgical process is not a minor mineral. Hence the given definition of beneficiation applies in this case.
14. Reliance is placed by Respondent on the Honble Supreme Court decision in the case of Tata Steel and Others Vs. Union of India- 2015(10) TMI 2386- Supreme Court. The respondent also submits documents from the National Metallurgical Laboratory and Mining Scheme as approved by the Department of Atomic Energy, which indicate that the activities undertaken by respondent amount to beneficiation.
Findings
15. We have given careful thought to the submissions of both sides and seen the various documents and records produced before us.
16. As stated in para 3 above, the issue in short is the classification of the goods, whether under 26140010 or under 26140020. The former entry relates to Ilmenite, unprocessed and the latter entry to Ilmenite, upgraded (beneficiated ilmenite). To decide the issue, it may be useful to examine the manufacturing process undertaken by the respondent. The various steps involved are :
* Mining of raw sand containing 8-10% ilmenite using excavator and tipper and transportation of the same to pre-concentration plant (This is the unprocessed ilmenite which is raw material for processing the same);
* Mined raw sand is thereafter transported and unloaded in the pre-concentration plant dump hopper;
* From the dump hopper, the raw sand is conveyed through a belt conveyor to a mixing chamber, where the raw sand is added with water to make it into slurry;
* The mixed slurry is fed into a rotating screen called trommel for giving a uniform feed less than 1mm size by removing the trash and oversize materials;
* The screened raw sand is collected in a surge bin below the trommel and pumped through the slurry pump to a set of spirals termed as rougher spirals. In rougher spirals, the raw sand is processed and the % of ilmenite content in the concentrate is upgraded to 36%-38% from 8-10% ilmenite in the raw / unprocessed ilmenite, utilising the specific gravity difference between the ilmenite and quartz;
* The middling fraction from the rougher spirals is treated with mids-scavenger spirals for further recovery of ilmenite into concentrate. The tailings from rougher spirals and mids-scavenger spirals is pumped back to the mined out areas;
* The concentrate from the rougher spirals and the mids-scavenger is further beneficiated in another set of spirals termed as cleaner spirals. In this process the ilmenite content in the concentrate is upgraded to 52-55% from 36-38% in the feed material.
* Two portions arrive, Portion-I contains Ilmenite 30-32%, Rutile 1.3%, Sillimanite 20%, Zircon 1.0%, Garnet 20% and Portion-II is waste (Quartz). The waste portion is transported to the mining areas for back filling; the Portion-I is further processed in another set of spirals, where, this is split into two portions. In the first portion, the Ilmenite content is increased to 50% -52% from 30%-32%, Rutile 1.6% from 1.3%, Zircon 1.45% from 1.0%, Garnet 25% from 20% and Sillimanite reduces to 10% from 20% and the balance is waste (Quartz).
* The concentrate from the cleaner spirals is sent to Floatex Density Separator for further upgradation of ilmenite. In the first Floatex Density Separator, the Ilmenite content in underflow concentrate is further increased to 58%-60% Rutile 2% and Zircon 1.8% utilizing the hindered settling classification. This portion is pumped to Mineral Separation Plant through pipeline about 2 kms length. In the second Floatex Density Separator, the garnet and Sillimanite contents is increased to 60% and 30% respectively; The 30% Sillimanite is further increased to 80% in another process plant. The 60% garnet and 80% Sillimanite are transported to Mineral Separation Plant in tippers.
* The underflow concentrate having 58-60% ilmenite from the floatex density separator is pumped to mineral separation plant through a series of pumps. The concentrate is dewatered using hydro cyclones and belt filters to reduce the moisture content to less than 7%;
* The dewatered concentrate having less than 7% moisture is conveyed through a conveyor and collected in the feed bin, in order to provide consistent feed rate to the fluidized bed drier;
* The dewatered concentrate from the feed bin is fed to fluidized bed drier in order to remove the moisture completely and to achieve a temperature of 105 degrees. The dried material is further screened through a vibro-screen conveyor in order to give a uniform feed with less than 600 micron size to high tension roll separators;
* The dried and screened material is first treated in a set of high tension roll separators termed as primary HT separators, in order to separate ilmenite and rutile utilising the electrical conductivity property of the minerals. Ilmenite being conducting mineral, reports to the conducting fraction. The ilmenite content in the conducting fraction will be 85% which has been upgraded from 58-60% in the feed; and Rutile content is increased to 5% from 2% in the feed. The non-conducting portion having Zircon content is increased to 10% to 12% from 1.8% in the feed.
* The middling fraction from the primary HT separators is further processed in another set of high tension roll separators termed as secondary HT separators for further recovery of ilmenite into conducting fraction;
* The non-conducting fraction from the primary and secondary HT separators are further processed in a set of rare earth roll (RER) magnetic separators to recover misplaced ilmenite in the non-conducting fraction;
* The combined material of conduction fraction from primary and secondary HT separators and the magnetic fraction from RER is further beneficiated in rare earth drum magnetic separators. The magnetic fraction is collected as ilmenite product having more than 96% pure ilmenite and the non-magnetic portion is final Rutile mineral of 94%.Thus the ilmenite is upgraded to above 96%.
17. With the process undertaken described above, we may now see the relevant entries under Chap26 in the Tariff:
261400 - Titanium Ores and Concentrates 26140010 ---Ilmenite, unprocessed
26140020 Ilmenite, upgraded (beneficiated Ilmenite including Ilmenite ground)
--- Rutile:
26140031---Rareearth oxides including rutile sand 26140039--- Other 26140090--- Other
18. The issue hinges on the point whether the processes employed by the respondent amount to beneficiation so as to hold classification under 26140020. It is apparent that the process is undertaken in an elaborate plant employing a string of various mechanical and physical processes. Revenue is implying, by referring to CEGATs decision in Indian Rare Earths Limited vs. Commissioner of Central Excise, 2002 (139) ELT 352(Tri.- Kolkata), that, because no special process including roasting and chemical treatment is carried out, the process does not result in beneficiated ilmenite. We are unable to appreciate this reasoning because Firstly, the citation referred to is on the manufacture and exciseability of the product and not on the issue of classification. Therefore, reference to this citation is clearly misplaced. Secondly, the fact that mechanical and physical processes by themselves can result in beneficiation of an ore is clearly brought out in the Supreme Court decision in the case of Tata Steel (supra). It was held that "26. The question that, therefore, arises is what is the consequence of beneficiation? Very briefly, the consequence of beneficiation of coal is upgrading or improving its quality from ROM coal. In the Convenience Volume handed over to us, with references to beneficiation of coal, it is stated by Tata Steel as follows:
The crushed raw coal (ROM) has ash percentage varying from 222 to 40 and moisture of 3% to. For use in Blast furnace for steel making, we require clean coal of uniform quality at low ash. So, Beneficiation of ROM raw coal is done to reduce the ash content to bring up to Steel Grade coal.
ROM coal of various seams at coal mine is fed into the Coal washery (Beneficiation plant) for beneficiation so that the final clean coal product has ash of below 15% (Steel Grade coal).
For coal beneficiation, gravity separation methods from coarser (size 13 mm to 0.5 mm) material and froth floatation method for finer material (size < 0.5mm) are done.
So, before beneficiation, the raw coal is crushed into size below 13 mm at Coal Handling Plant (Crushing Plant). The coarse material i.e. size from 13 mm to 0.5 mm is treated in dense media cyclone where, less than 0.5mm is treated by froth floatation method. As beneficiation is a wet process hence, it increases the moisture percentage of beneficiated coal by around 8% to 15%.
After beneficiation, apart from the clean coal (required in Blast furnace for Steel making), we also get Coal by-products named as, middling (ash 40-45%), Tailings (ash 40-45%) and Rejects (ash 60-65%).
The product quantity after beneficiation process gets increased due to wet process by adding moisture into the output, shown by an example below-
Production (Extraction): The basis figure of production of 100 tonnes of ROM coal has been taken.
Therefore, Quantity produced (Extracted) : = 100 tonnes Beneficiation: The products are dewatered but still the surface moisture gets adhered to the product generated. The beneficiation is a wet process i.e. raw coal mass flows through different process in slurry form. Output is measured on wet process because it is transported on wet basis (with moisture). Hence the output is more than the input of raw coal.
Beneficiation process results in Clean Coal;
Middlings;
Tailings; and Rejects . . .
Conclusion:
It is quite clear that beneficiation process (dense media gravity separation and froth floatation) are a physical separation process to separate higher ash coal and lower ash coal, so no chemical changes are there in the coal mineral, as there are no chemical reactions involved during this beneficiation process.
It is undoubtedly clear from this judgement, that the Supreme Court described the physical and mechanical processes undertaken to lower the ash content in coal which processes are described as beneficiation by the Court. We see much similarity in the physical and mechanical process employed by the respondent to reduce waste and obtain ore containing 96-97% Ilmenite, to justify description of finished product as beneficiated ilmenite. Thus, a literal meaning is to be adopted as done by the Supreme Court.
19. We note that the grounds of appeal take a confused stand. The elaborate process described in the Grounds of Appeal obtained from the report of the Jurisdictional Range Officer. It shows that the percentage of Ilmenite ore is raised from 6-7% to 96-97% of Ilmenite ore; yet the Department refers (Para 2.5 of grounds of appeal) to the processed goods as Ilmenite sand which cannot be considered as an ore. Again,in Para 2.1 it is stated that the process leads to separation of Ilmenite ore. Revenue is confusing the process of concentration of Ilmenite ore with the process of concentration of titanium dioxide which is contained in the ore. In fact, the concentrated titanium dioxide which is also referred to in trade as synthetic rutile, would not even fall under 26140020. It would evidently fall under Chapter 28. The Departments argument that upgraded Ilmenite under 26140020 is nothing but synthetic rutile, is fallacious. We also note that in Para 3.5 it is mentioned that synthetic rutile is classified under rutile (26140031). In the same Para 3.5 under sub-para (ii), it is stated that synthetic rutile will not be classified under 26140031. Here again we find contradiction in the grounds of appeal. Assuming that the Departments argument is that only upgraded Ilmenite which is synthetic rutile is classifiable under 26140020, the argument is self-defeating because rutile clearly falls under 26140031,26140039 and 26140090 in the tariff and no distinction is made between naturally occurring rutile and synthetic rutile in the Heading for Rutile .
20. To support their contention, Revenue has relied on the case of M/s Gujarat State Fertilizers Co. Ltd., Vs. Collector of C. Ex., Vadodara (reported in 1996 (83) ELT 624(Tribunal) to support that classification should be decided only by relevant Headings and Section notes and relevant judgments. We find that the decision of Commissioner (Appeals) is in fact based on the relevant headings and is supported by Tata Steel judgement. Revenue has also relied upon Ponds India Ltd. Vs. Commissioner of Trade Tax, Lucknow-2008(227) ELT 497 (SC) to express an opinion that when an entry has been interpreted consistently for several years, ordinarily it would not be permissible for the Revenue to depart therefrom. We have read this judgment. It relates to the issue whether petroleum jelly is a drug or a cosmetic. The issue was discussed at length and on merits it was held that there is no need to change the classification from drugto cosmetic. An observation was indeed made in the judgement regarding consistency of assessment. But we find the judgment never expressed a view that even if classification is required to be changed on merits it should not be done. It appears to us that the officers who have framed the grounds of appeal did not read the entire judgment. The ratio of the cited case is clearly not applicable to the present case.On the contrary, it is a well established principle that judgments should not be quoted out of context.Honble Supreme Court in the case of Commissioner of Central Excise , Mumbai Vs. Fiat India Pvt. Ltd., [ 2012 (283) E.L.T. 161 (S.C.)] noted the observations made by it in the case of Sushi Suri Vs CBI Each case depends on its own facts and a close similarity between one case and another is not enough because either a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases ( as said by Cardozo ) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.
That, there is no estoppel against an assessee claiming change in classification is confirmed by the Supreme Court in the case of Crompton Greaves Ltd. Vs. Collector 2002 (142) ELT A182 (SC).
21. Revenue has put forward an argument that when the term beneficiation does not find mention in Central Excise law, it must be interpreted according to its meaning in common trade parlance. Some literature has been presented in support. Although we do not agree with a bland statement like this when not made in proper perspective, we also find discrepancies in the literature relied upon by Revenue. Regarding the website of DCW referred by revenue, we find a crucial fact not disclosed in the appeal is that the website also reveals that synthetic rutile is classified by M/s DCW under 282300 and not under 26140020. This belies the contention that the beneficiated ilmenite under 26140020 is nothing but synthetic rutile. The Indian Minerals Book refers to upgraded Ilmenite when Ilmenite is treated chemically to obtain titanium dioxide pigment. The book does not refer to upgraded (beneficiated Ilmenite) ore which is the goods in question here. The description in DGFT SION norms cannot be taken as an authority for classification.
22. In our considered opinion, recourse to documents of the Ministry of Mines, Government of India would be valuable. It is seen from the same Indian Minerals Book as well as the license given by the Department of Atomic Energy for operating mines, that all the operations are subject to strict control of these Departments of Government of India. Therefore, it is apt to refer to such documents to decide the meaning of the word beneficiated. Rule 3(d) of the Mineral Conservation and Development Rules, 1988 define "beneficiation" as beneficiation means processing of minerals or ores for the purpose of-
(i) regulating the size of a desired produce;
(ii) removing unwanted constituents; and
(iii) improving quality, purity or assay grade of desired product This is precisely the process undertaken by the appellant. Revenue has contended in para 4 of the grounds of appeal that this definition does not apply because the goods in question is a minor mineral to which the said Rules do not apply by virtue of exclusion clause in Rule 2(iv) of chapter 1 of the Rules. We find that in terms of Rule 70 of Mineral Concession Rules, sand used for metallurgical process will not be treated as a minor mineral. In the present case the sand being used for metallurgical process is not therefore a minor mineral and does not fall under the exclusion clause 2(iv) of the Mineral Conservation and Development Rules. In any case, Ilmenite is the goods in question here and not the sand. Ilmenite is rare earth mineral. Even the Press Information Bureau of Ministry of Mines note dated 12.08.2015 fixing royalty rates, refers to Ilmenite as a major mineral. Hence, contrary to the reasoning of Revenue, the definition of beneficiation as given in Rule 3(d) of the Rules does apply.
23. Respondent has produced a letter from the National Metallurgical Laboratory certifying that the process undertaken by them is a beneficiation process. Further, respondent has obtained a license from the Department of Atomic Energy Government of India for their operations. This Department has also endorsed the Scheme of mining undertaken by them, which refers to their process as mineral beneficiation. In view of all the authentic documentary evidence, we find no hesitation in holding that the process undertaken is one of beneficiation.
24. Board Circular 332/1/2012-TRU dated 17.2.2012 also clarifies that by beneficiation process the end product of ore is concentrate or upgraded ore with regard to the Chapter notes of Chapter 26. The Circular states 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 concentrate only when the grade of ore is sufficiently improved through beneficiation. Federation of Indian Mineral Industries has also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation and concentrate thickening have to be undertaken for ores to be converted into concentrate
25. We find from the order passed by the coordinate Bench in the case of VV Minerals the process undertaken by the appellant in that case is the same as in the present case. Revenue has not put forth any evidence to indicate that the processes are not identical. VV Minerals held that the taxpayer had carried out various processes of beneficiation as stipulated under Rule 3(d) of the Mineral Conservation and Development Rules, 1988 and by such process, the unprocessed ore becomes upgraded Ilmenite and hence, the impugned goods shall be classified under tariff item 26140020 as ilmenite upgraded (Beneficiated ilmenite) and chargeable to export duty at the rate of five percent.
26. In addition to our findings in paras above, we find the dictum of VV Minerals is squarely applicable in the present matter before us.
27. Accordingly, the impugned order is upheld and Revenues appeal is rejected.
Appeal Nos C/30774-30776/2017-CU(DB) The appeals arise from Order in appeal No. VIZ-CUSTOM-APP-009 to 011-17-18 dated 31/05/2017 under which the Commissioner (Appeals) upheld the order of adjudicating authority who rejected the refund amounts of Rs 1,43,93,974/-,Rs 2,34,68,983 and Rs 7,34,95,348 respectively,under three separate orders.
2. The facts are recapitulated as follows. The appellant exported Ilmenite under various shipping bills from December 2014 to May 2015. The shipping bills were assessed provisionally, as per practice, awaiting the finalization of the quantities and value of the goods exported. They were finalized later on confirmation of the quantities exported. The classification of the goods exported was stated as 26140010. The duty on export of Ilmenite unprocessed as well as processed was 10%. However, with effect from March 2013 vide Not 15/2013-Cus dated 1-3-2013, the export duty on unprocessed Ilmenite became 10%, whereas on processed Ilmenite under 26140020 it became 5%. In the case of VV Minerals Vs. CCE- 2015 (10) TMI 2261- CESTAT Chennai, the Tribunal held that the processed ore exported by the party is upgraded Ilmenite (beneficiated Ilmenite) and chargeable to duty at 5% under 26140020.As the process of manufacture of upgraded Ilmenite undertaken by the appellant is the same as that of VV Minerals, the appellant wrote to the Commissioner of Customs, Vishakhapatnam on 06/11/2015 that they should be allowed the change to classification from 26140010 to 26140020 and be given consequential export duty benefit at 5%. No reply has been received from Commissioner Customs to this letter till date.
3. On 20/11/2015 the appellant being a manufacturer exporter also addressed a letter to the Assistant Commissioner in-charge of their Division requesting for change of classification of Ilmenite manufactured by them from 26140010 to 26140020. Their request was rejected. However, in appeal, the Commissioner (Appeals) allowed their claim for classification under 26140020 as upgraded Ilmenite (beneficiated Ilmenite), with consequential export duty benefits. Revenues appeal against this order of Commissioner (Appeals) now stands dismissed by us vide our Order above.
4. The appellant filed refund applications claiming the benefit by considering the export duty as 5% instead of the duty at 10% already paid by them in respect of shipping bills whose details along with other details are mentioned in the chart submitted at the time of hearing. The refund claims were rejected by the Assistant Commissioner. In appeal, their claims were rejected by the Commissioner (Appeals) on the ground that the order of assessment under which the shipping bills were finally assessed, were not challenged and therefore refund claims are not sustainable. Reliance was placed on the decisions of the Supreme Court in Flock India Pvt. Ltd. 2000 (120) ELT 285 (SC) and Priya Blue Industries case 2004(172) ELT 145 (SC). Reliance was also placed on CBEC Circular 24/2014-Cus dated 18/03/2004 in which it was clarified that the ratio of above Supreme Court decisions would apply in Customs cases also.
5. The first contention of the appellant is that their shipping bills were finalized only on the issue of weight and value. The consequent duty short paid was made up by them. However, no order was passed on the classification issue which they had challenged in their letter dated 6-11-2015 to Commissioner Customs (as mentioned in para 2 above) and therefore the provisional assessments being provisional for all purposes, any order finalizing the assessments without finalization of classification is not sustainable. It was also contended that in the case of Aman Medical Products Ltd. Vs. Commissioner 2010(250) ELT 30 (Del.), the Delhi High Court had held that the judgments of Priya Blue Industries and Flock India will not apply when there is no lis pending between the parties.Various judgments were also referred to by the appellant in their favour.It was also argued that, in any case, Section 27 of the Customs Act dealing with refunds was amended in 2011. In view of such amendment the ratio of Priya Blue and Flock India does not apply.
6. We have carefully considered the submissions made by both sides and the law on this issue.
7. We find that in the case of Aman Medical Products the Delhi High Court held that .4.?If therefore we refer to language of Section 27, it is more than clear that the duty which is paid is not necessarily pursuant to an order of assessment but can also be borne by him. Clauses (i) and (ii) of sub-section (1) of Section 27 are clearly in the alternative as the expression or is found in between clauses (i) and (ii). The object of Section 27(i)(ii) is to cover those classes of case where the duty is paid by a person without an order of assessment, i.e. in a case like the present where the assessee pays the duty in ignorance of a notification which allows him payment of concessional rate of duty merely after filing a Bill of Entry. In fact, such a case is the present case in which there is no assessment order for being challenged in the appeal which is passed under Section 27(1)(i) of the Act because there is no contest or lis and hence no adversarial assessment order. In the present case too, we find that there is no lis in that no formal Order was passed in the matter of classification. Therefore, the High Court order squarely applies. It is to be noted that in the petition for special leave to appeal (Civil No. CC 4781) of 2010 filed by Commissioner of Customs Delhi against this High Court order, the Supreme Court ordered that there will be no stay, hence assessee would be entitled to the refund.
8. In a recent judgment in the case of Commissioner of Customs ICD Vs. Kent RO System Pvt. Ltd. 2017 (347) ELT (Del), the Delhi High Court rejected the ground that bill of entry had not been challenged before filing of refund claim. The Court referred to the judgment in the case of Aman Medical Products. And observed that the amounts could not have been lawfully collected in the first place.
9. Revenue has referred to judgments including a judgment of the Madras High Court in the case of Ace Designers 2015(329) ELT 0109. We have seen this judgment. In which reference is made to the Priya Blue Industries and Flock India. But the judgment nowhere holds that the said Supreme Court judgments would apply even when there is no lis on the issue which gives a cause for refund.
10. On the other hand the following judgments of the Coordinate Benches of CESTAT have clearly held the issue in the favor of the party.
A. CESTAT order dated 25/08/2016 in Appeal No. C/209/2006 Hyderabad Bench in M/s Nikhil Refineries Ltd. Vs. Commissioner Vijayawada.
In cited case the assessment was finalized based on ship ullage. But the party had earlier claimed that the duty should be paid only on shore tank basis. CESTAT held that refund is admissible even if there was no challenge to the assessment order on the Bill of Entry. We note that in the present appeal, the appellant had sought change in classification vide letter dated 6-11-2015 addressed to Commissioner Customs and also before the Assistant Commissioner Central Excise vide letter dated 23-11-2015. In other words, there was challenge to the rate of duty even if there was no appeal against the assessment order finalizing the Shipping Bills.But no action was taken by Customs on the letter dt 6-11-2015.
B. CESTAT order in case of Ruchi Infrastructure Ltd.;Bangalore Bench- 2008 (224) ELT 477 (Tri Bang.) Upheld by High Court of Andhra Pradesh- 2015 (317) ELT A214 (AP) C. CESTAT order dated 22/03/2016 in Shyam Solvex (I) Pvt. Ltd vs. Commissioner Hyderabad in Appeal No C/ 28528/2013.
It was held that .It is the contention of Department that a refund claim is not maintainable when the assessee did not challenge the assessment order before any appeal forum and the assessment having become final, the refund cannot be allowed. Section 17 of Customs Act, 1962, has been amended with affect from 8/4/2011 to provide for self-assessment as against assessment by customs officials. Simultaneously, amendment was brought forth in Section 27 also. Taking into consideration these amendments, the Tribunal in various judgments has analyzed the issue of eligibility of refund when bill of entry is filed on self-assessment basis. The issue whether such bill of entry filed on self-assessment basis is required to be challenged by way of appeal is no longer res-integra. The coordinate bench of the Tribunal in Suryalaxmi Cotton Mills Ltd. Vs. CCE, Nagpur, 2015(327) ELT 718(Tri. Mum) following the judgment laid in Aman Medical Products Ltd. 2010(250) ELT 30 (Del) held that if the duty is paid and borne by the assessee, refund is admissible without challenging the bill of entry. In the present case, undisputedly, the duty was paid and borne by the appellant. The dictum laid in Suryalaxmi Cotton Mills is squarely applicable to the first ground of objection raised by revenue The ratio of this case is applicable in the present appeal before us.
D. CESTAT order dated 11.04.2016 in Kamdhenu Global Ltd. Vs. Commissioner Hyderabad- Hyderabad Bench in appeal No. C/200322014.
E. CESTAT order in M/s Styleman Vs. CC-2006(198)ELT 559 (Tri.- Chennai). It was held that ..4.It is noticed that the learned Commissioner (Appeals) relied on the Honble Apex Courts judgment in the case of Priya Blue Industries Ltd. reported in 2004 (172) E.L.T. 145 and took the view that, as the assessment of the Bill of Entry was not challenged by the assessee, they were not entitled to any refund of duly. It is further noticed that this ground was not taken by the original authority for rejecting the refund claim. Further, we have already found that the assessee was protesting against the assessment of the machinery without granting the benefit of the above notification. It is not as if they were acquiescing in the assessment. In the circumstances, we are of the view that the refund claim should not have been rejected on the ground that assessment was not challenged.5.In the result, the impugned order gets set aside and the refund claim stands allowed and the appeal also stands allowed...
F. M/s Asia Pacific Commodities Ltd., Vs AC 2012 (280) ELT 481 (A.P), wherein the Honble High Court of Andhra Pradesh held that 31.?In case an exporter/importer or a customs agent parts with customs duty under an Act which is no more in force or the duty is paid excessively than at required rate or duty is paid wrongly, is there any necessity for the person to file an appeal. In case he makes an application for refund under Section 27 of the Act and customs officials themselves find merit in the claim and allow, is it necessary to file appeal against such order which has been accepted as one where excess amount of duty is paid? In our considered opinion there is no such necessity to file an appeal and without there being an appeal, refund claim is maintainable and if the persons make out a case such refund claim ought to be allowed. The customs officials or the CESTAT cannot deny the refund when there is nothing adverse to the person who paid the customs tariff. We are supported in this view by the decisions of the Supreme Court in Flock India and Priya Blue on which the Senior Standing Counsel also placed reliance.
10. A significant change has been brought about in the law dealing with refund claims. This change was brought about much after the judgments in Priya Blue and Flock India were delivered. The relevant Section 27before 08/04/2011 read as
27. Claim for refund of duty. (1) Any person claiming refund of any duty
(i) paid by him in pursuance of an order of assessment, or
(ii) borne by him, And with effect from 08 /04 /2011 it reads as
27. Claim for refund of duty. (1) Any person claiming refund of any duty or interest, -
(i) paid by him; or
(ii) borne by him, may make an application such form and manner as may be prescribed for such refund of to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest:
It is apparent that the provision has undergone a significant change with effect from 8th April 2011. The wordsin pursuance of an order of assessment, on the basis of which the judgments in the case of Flock India and Priya Blue were passed, are no longer in existence. Taking this into consideration, the Hon'ble Delhi High Court in the case of Micromax Informatics Ltd vs Union of India 2016 (335) ELT 446 (Del) held that 12 .An important change that has been made is that a person can now claim refund of any duty or interest as long as such duty and interest was paid or borne by such person. The conditionality of such payment having been made pursuant to an order of assessment does not exist. Secondly, once an application is made under Section 27(1) of the Act, it is incumbent on the authority concerned to make an order under Section 27 (2) determining if any duty or interest as claimed is refundable to the applicant.,,
11. The law and the High Court judgements referred by us clearly hold the issue in favour of the appellant. That there is no question of unjust enrichment in the case of exports is a well-established legal principle. In view of the legal pronouncements and the change in law regarding refund with effect from 8-04-2011, we hold that the appellant is entitled to the refunds claimed by them.
12. Appeals allowed with consequential benefit of refund.
(Order pronounced in open court on )
MADHU MOHAN DAMODHAR
MEMBER (TECHNICAL)
M.V.RAVINDRAN
MEMBER (JUDICIAL)
Neela Reddy
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