Custom, Excise & Service Tax Tribunal
M/S. Indian Rare Earths Ltd vs Cce & St, Bbsr-I on 29 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. E-70833/13
(Arising out of Order-in-Original No.CCE/BBSR-I/12/2013 dated 3.4.2013 passed by the Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar-I.)
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s. Indian Rare Earths Ltd.
Applicant (s)/Appellant (s)
Vs.
CCE & ST, BBSR-I
Respondent (s)
Appearance:
Shri P.Paranjpe, Adv. for the Appellant(s) Shri S.C.Jana, Spl.Counsel for the Revenue CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Honble H.K.Thakur, Member(Technical) Date of Hearing :- 27.01.2016 Date of Pronouncement :- 29.02.2016 ORDER NO.FO/75215/2016 Per Dr.D.M.Misra.
The present Appeal is filed against Order-in-Original No.CCE/BBSR-I/12/2013 dated 3.4.2013 passed by the Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar-I.
2.1 Brief facts of the case are that the appellant is manufacturer of Iron Oxide, Synthetic Rutile, Titanium Di-Oxide Sludge and Thorium Nitrate on which they discharge duty. They are also engaged in separation of various minerals like Ileminite, Sillimenite, Rutile, Zircon and Garnet falling under chapter heading No.26140020, 26179000, 26170031, 26151000 and 26179000 respectively of the Central Excise Tariff Act, 1985, from the beach sand which they clear without payment of duty.
2.2 The activities/processes undertaken by the appellant comprises of dredging of beach sand. Dredged sand is taken to the beach washing plant (i.e. wet concentrator) where washing through a series of spiral separators, exploit the differences in mineral specific gravity. In the process, heavies (i.e. sand containing the specified minerals which is heavier than quartz) are separated from the quartz and the quartz (also known as gangue) is discarded/removed. Also, in the process, two types of concentrates i.e. Concentrate A and B containing 92% of heavy mineral mainly, Ileminite, Rutile, Zircon, Monazite and a part of Silliminite with Garnet and Concentrate B containing about 50% heavy minerals, mostly, Silliminite and Garnet are obtained respectively. Concentrates are passed through the High Heavy Upgradation Plant whereby conducting minerals like Ileminite, Rutile are separated from the non-conducting minerals i.e. Garnet, Silliminite, Monazite and Zircon. Thereafter, the individual minerals are subjected to magnetic separation to separate each other.
2.3 After insertion of Chapter Note 4 to Chapter 26 of CETA, 1985, two show cause cum demand notices dated 16.03.2012 and 22.08.2012 were issued to the appellant alleging that the appellant has manufactured the concentrates of ores and cleared the same without payment of duty of Rs.19,46,91,408/-. On adjudication, the same demand was confirmed and recovery of interest under Section 11AB/11AA of Central Excise Act, 1944 has been directed. Hence, the present Appeal.
3.1 Ld.Advocate Shri P.Paranjpe appearing for the Appellant submitted that for the period prior to 01.3.2011, this Tribunal by order dated 27.9.2011 in their own case reported at 2002(139)ELT 352(Tri.-Kol) had held that the processes/activity carried out by the Appellant did not amount to manufacture and the ore sand used as raw materials by the Appellant remained ore (of minerals) and did not bring into existence any concentrates. He submits that since then there has been no change in the process of mineral separation by the Appellant. He has contended that the ratio laid down in the said case was followed by this Tribunal in the case of Classic Microtech (P) Ltd. vs. CCE, Ahmedabad reported in 2012 (285) ELT 418(Tri-Ahd.) and the benefit of exemption no.4/2006-CE exempting the ores from central excise duty was granted to the imported zirconium sands considering the same as ore. He submits that the decision in the case of Classic Microtech (P) Ltd. was followed by the Commissioner of Customs, Pune (in case of Ruby Ceramics (P) Ltd. vide order-in-original dated 19.3.2013). It is submitted that the ld.Commissioner while passing the order has considered chapter note 4 of chapter 26 of CETA and held that no conversion of zircon sand into zirconium concentrate has taken place. In Para 27 of the Order it is stated that the Honble Tribunal decision in the case of Classic Microtech (supra) has been accepted by the department.
3.2 It is further submitted that this Tribunal in case of M/s.Indian Rare Earths Ltd. 2008 (228) ELT 213(Tri.Del.) has held that the resultant minerals sands arising out of the process of their separation from the ordinary sands are not the ore concentrates as the process of separation was not one of concentrating the mineral sand from the beach sand.
3.3 Similarly, in the case of CCE, Jamshedpur Vs. Steel Authority of India Ltd. 2003 (154) ELT 65(Tri.-Kol), M/s. SAIL were subjecting the mined Ores to crushing, grinding, screening and washing. It was alleged that the process of crushing, grinding, screening and washing with a view to remove foreign materials from ores (gangue) increase the Fe content (i.e. iron content), hence such process would qualify as concentrates as defined in explanatory notes of HSN and liable to duty. The Tribunal at para 7 of the judgment observed that removing of foreign matters would not, in the present case, bring into existence a new and different article having distinctive name, character or use. The use of iron ore after the process undertaken by the assessee remains same i.e. to be used in metallurgical industry or the extraction of metal. The Tribunal relied upon its decision reported in Indian Rare Earths case(supra) and observed that at the end of the processes, the mineral sands do not undergo any transformation, they remain in the same condition in which they remained along with ordinary sand on the sea beach. No upgradation or augmentation of their purity takes place. The chemical structure of the ore remain the same. The processes are not any special treatment which would take the ores out of the stage of plain and simple ores. Accordingly, it is held that the processes undertaken by the assessee do not result in the manufacture of different commercial commodity. The Honble Supreme Court has confirmed the order reported in 2012 (283) ELT A-112(SC) passed by the Tribunal and rejected the Appeals filed by the Revenue.
3.4 It is submitted that the reliance on chapter note 4 of chapter 26 of CETA is misplaced as the basic raw material for the appellants is beach sand covered under chapter sub-heading 25059000 of CETA. It is their submission that since Note 4 is inserted to chapter 26, the same will not be applicable when admittedly the raw material processed by the Appellant is covered by Chapter 25.
3.5 It is further submitted that the various test reports and the technical opinions suggests that mineral separated from sand beach are ores as under:-
(i) Report dated 25.3.2003 of the National Institute of Technology, Rourkela, and Report dated 2.7.1997 of the department of Atomic Energy, Hyderabad, describes the separated minerals as naturally occurring ores.
(ii) The test Report dated 21/22.10.2002 Regional Research Laboratory(CSIR) described the samples to be concentrate. However, on re-examination vide report dated 17.2.2003 they confirm that minerals separated from sand beach have not undergone any crystallographic transformation or chemical changes and appears to be obtained from the raw beach sands by the physical methods of separation.
(iii) Opinion of CSIR Institute of Minerals and Material Technology, Bhubaneswar dated 9.9.2013 states that in the separation process carried by M/s.IREL, i.e. the appellant, no chemical activity is involved either to add value to the minerals present in the beach sand or to manufacture any new product. However, this minerals can be further processed to attain desired grade for specific application.
(iv) Certificate dated 5.9.2013 from Geominetic Library and certificate dated 12.9.2013 from Deptt. of Atomic Energy state that the process carried out by IREL leads to separation of minerals from the ordinary sands and do not bring about any upgradation or augmentation of purity in the mineral sands separated from the ordinary sand.
(v) National Institute for Interdisciplinery Science and Technology (NIIST) in their Test report dated 4.7.2014 states that on analysis by optical microspocy and x-ray diffraction studies, there is no change with respect of mineral phase, colour, shape and size in the minerals present in raw sand and HUS output supplied by IREL OSCOM and the individual mineral supplied by them per se. Illeminite, Rutile, Zircon, Silliminete and Garnet present in the feed (raw sand samples) are ores/minerals and they remain same in terms of mineral phase, shape, colour an size even after individual separation from feed sample. Illeminite, rutile, zircon, silliminite and garnet are ores/minerals.
(vi) National Centre for Earth Science and Studies and their certificate dated 24.6.2014 describes the separated minerals as ores/minerals but not concentrates.
(vii) Certificate dated 11.7.2014 from Atomic Minerals Directorate for exploration and research states that based on petrographic studies, XRF and XRD analysis of seven samples received from OSCOM, it is clafified that there is no change in mineralogy or morphology of the minerals present in raw sand, HUS output and samples of individual minerals per se that even after individual separation they remain as ore/mineral that the processes carried out by M/s.IREL involved physical separation of minerals and do not bring about upgradation of purity of minerals per se. In other words the final product Illeminite, rutile and zircon are ore and Silliminite and garnet are minerals.
(viii) Report dated 10.7.2014 from Atomic Minerals Directorate for Exploration and Research in respect of raw sand reported that it contains quartz, traces of albite, almandite, hornblende, ilmenite, monazite, rutile, sillimanite and zircon. As regards the various minerals separated from the raw sand, it reported then to be ilmenite(with traces of rutile and hematite), rutile, zircon, sillimanite and minute traces of zircon and garnet (almandite).
3.6 The ld. Advocate has submitted that various test reports and the technical opinions indicate that minerals separated from the beach sand are ores and not concentrates. Referring to the meaning of ore prescribed in Note 2 to Chapter 26 of CETA, 1985 and the meaning of concentrate in the HSN Explanatory Notes, it is his contention that the process that carried out does not result into removing part or all the foreign materials present in the ore. The processes carried out by them only results improving the content of the particular ore in a given quantity of sand. The actual gain of the ore will continue to posses some quality as prior to processing by the appellant which establishes the fact that no concentrates of the ores takes place.
3.7 It is further submitted that as per HSN, in order to qualify as concentrates, part or all of the foreign metals in the ore needs to be removed. In the Appellants case, the processes carried out by them does not result in removing the foreign metals (to quote) Illeminite and ore of Titanium when cleared from the appellants premises after due processes will still contain foreign materials mainly iron in form of FeO and Fe2O3. Similarly, Zircon ore of Zirconium will have Silica as foreign metal. Thus, the Appellant does not indulge in the process of removing foreign metals from the ore and therefore the process carried in their premises does not bring into existence any concentrate as envisaged in the HSN.
3.8 Further referring to the CBEC Circular dated 17.02.2012 the ld.Advocate submitted that since in the present case the resultant product is not concentrate as held by the Tribunal in their own case for earlier period and supported with technical reports, the definition of concentrate as per HSN would not be applicable to their products and hence not liable to excise duty.
3.9 The appellants submit that it is a settled principle of law that the onus to claim classification of a particular item under a particular entry, is on the department. To support this proposition they have relied upon the following case laws:-
(a) Hindusthan Ferodo Ltd.v.CCE-1997 (89) ELT 16(SC)
(b) Nanya Imports & Exports Enterprises v. CC 2006(197)ELT 154(SC)
(c) CCE v. Calcutta Steel Industries 1989 (39) ELT 175 (SC) 3.10 It is their submission that in the present case except for the bald assertions, the department has not been able to rebut factual submissions made by the Appellants or the findings of the test reports produced by the appellants to substantiate that what they cleared is not a concentrate.
3.11 It is submitted that this Tribunal in case of M/s.Classic Mecrotech Pvt.Ltd. reported in 2012 (285) ELT 418(Tri-Ahmeadabad) had an occasion to consider Chapter Note 4 of Chapter 26 and held that since the department has not rebutted any opinion produced by the importer in the said case, the item imported was an ore.
3.12 The Appellants submits that in the case of Silliminite and Garnet, the same are directly covered under Chapter Sub-heading 25085032 and 25132030 of CETA respectively attracting nil rate of duty. Since these products are directly covered in the given tariff entries and are not used by the industry as such, i.e. without further concentrating, an attempt to classify them under chapter 26 as ores of minerals is not sustainable. These two minerals do not fulfill the requirement for classifying as ores as defined in note 2 of chapter 26 of CETA as they are not used in the metallurgical industry for extraction of metal. While garnet is used as an abbressive mineral in sand blasting, water jet cutting etc., Silliminite is used for making refractories, ceramic wool etc. 3.13 Without prejudice to the submissions on merits as above, the appellants submit that under Notification No.63 of 1995 dated 16.3.1995 as amended, all goods other than following under heading 2701, 2702, 2703, 2704 and 2706 are exempted from excise duty when manufactured in a mine. It is submitted that the activity that appellants carried out is indeed in a mine as certified by Govt.of India, Ministry of Labour, Director General of Mines Safety and a certificate dated 28.8.2014 from the Secretary to the Ministry of Labour and Employment, Govt.of India has been produced before this Bench to the said effect. The Ld. Advocate submitted that the said certificate could not be produced before the Ld. Adjudicating authority.
4.1 The ld.Spl.Counsel for Revenue submitted that while holding that the process undertaken by the Appellant amounting to concentration of ores, the ld.Commissioner has relied upon HSN explanatory notes.
4.2 He submits that (i) ores are metaliferous mineral associated with the substances in which they occurred and with which they are extracted from the mine. Those are the native metal in their gangue (example metaliferous sands). (ii) Ores seldom marketed before preparation for subsequent metallurgical operations. (iii) Most important preparatory processes are those aimed at concentrating the ores, (iv) Ores becomes concentrates when the foreign metal embedded/associated to the ore i.e. gangue metals are completely or partly removed by special treatments, (v) Such removal required because such foreign metal might hamper subsequent metallurgical operations. (vi) such removal is also required as it will help for economical transport.
4.3 He further submits that the re-examination report dated 17.2.2003 of Regional Research Laboratory (CSIR), confirms that while the raw beach sand contains the discreet particles of the impugned minerals along with quartz(quartz 74.85%, Silliminite 3.46%, Elleminite 9.18%, Rutile 1.15% and Zircon 0.88%, Garent 6.65% of the sand beach), the quartz which is a major constituent in the raw sand is removed by the process undertaken by the appellant which makes the separated minerals fit for subsequent metallurgical operations and to facilitate their transportation. As such the process undertaken by the Appellant results into emergence of the concentrates from the ore (raw sand beach). In view of this, the said process amounts to manufacture as per chapter note 4 to chapter 26.
4.4 The term special treatments to which the ores are subjected to get the concentrates are not defined. However, it is observed that various processes to which the goods falling under chapter 2601 to 2617 are subjected to are mentioned in the HSN explanatory notes such as physical, physico-chemical or chemical operations namely crushing, grinding, magnetic separation, gravi-metric separation, flotation, screening grading, agglomeration of powder (e.g. by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small quantities of binders), drying, calcinations, roasting to oxidize or magnetise the ore etc. 4.5 He submits that the appellant dredged the natural sand form the sea bed/beach and obtain sand slurry. It is the ores conglomerate of various metallurgical product of ore like Ileminite, Sillimenite, Rutile, Zircon and Garnet along with other rock particles like quartz, feldspar, pyroxene, shells fragments (Organic matters) and sline. He submits that the ld.adjudicating authority has observed that the ordinary beach sands contain all these ores/minerals along with other particles and it confirm the definition of ores as per the tariff read with HSN clarificatory notes. The minerals supported their sand beach ore concentrates.
4.6 As regards Tribunals decision in their own case, the ld.Spl.Counsel submits that it relates to the period prior to the introduction of chapter note 4 to chapter 26 w.e.f. 01.3.2011 and therefore the said decision will not hold good after 01.3.2011 when the conversion of ores to ore concentrates has been defined as manufacture. He submitted that the judgement of Classic Microtech (supra), is no more good law in view of the recent decision of Honble Supreme Court in the case of Star Industries Vs. Commissioner of Customs(Imports),Raigad 2015 (324) ELT 656(SC).
4.7 In response to the argument of the Appellant on the classification of two of the impugned goods i.e. Silleminite and Garnet under chapter 26 of the CETA, 1985, he has submitted that the sub-heading 250850 and 251320 referred to Silleminite and Garnet in different form, but not in the form of ores of Silliminite and Garnet. The chapter 26 deals with different minerals and therefore the impugned ore of Silliminite and Garnet and their concentrates classifiable under chapter 26 of CETA, 1985.
4.8 The Ld. A.R has submitted the demand notices issued to their other Unit at Chavara,Kolam, on the same issue, have been adjudicated by the jurisdictional Commissioner of Central Excise,Trivandrum vide Order-in-Original No.TVM-EXCUS-00010-13-14 dt.30.12.2013, where under the Ld. Commissioner has confirmed the demand Notice observing that the processes carried out by the Appellant resulted into conversion of Ores into concentrate, hence manufacture in view of chapter note 4 of chapter 26 of CETA,1985. The Ld. A.R has fairly accepted that the Ld. Adjudicating authority has allowed the benefit of exemption Notification No.63/95 CE dt.16.03.1995 to the assessee. The said Order has been accepted by the department as well as the assesse.
4.9 As regards the contention of the appellant that they are eligible for exemption under Notification No.63/95-CE dated 16.3.1995, since the goods have been manufactured in the mines, it is his contention that before the adjudicating authority the appellant could not produce a certificate signed by the Secretary to the Central Govt. as required under the said notification and therefore their claims for the exemption under Notfn.No.63/95-CE was not considered by the adjudicating authority. Now since, the certificate has been produced he has no objection in remanding the case for verification of the said certificate by the ld.Commissioner.
5. Heard both sides and perused the records. The core issue involved in the present case for determination is: whether various processes undertaken by the Appellant result into manufacture in view of chapter note 4 to chapter 26 of CETA,1985 inserted w.e.f 01.03.2011,accordingly leviable to duty CETA, 1985.
5.2 The contention advanced on behalf of the Appellants is that on application of the aforesaid processes to ores, it does not convert/result into concentrates, hence no manufacture is involved and therefore, the resultant is not liable to duty. To support their contention, they have referred to the judgements of this Tribunal in their own case and M/s SAILs case(supra), the meaning of concentrate as per the HSN , and the clarifications issued by the Central Board of Excise and Customs. The Revenues contention on the other hand is that after insertion of chapter note 4 to chapter 26 a legal fiction has been created, whereby conversion of ores into concentrates becomes manufacture and the processes carried out by the appellants on the Ore sand, satisfy the meaning of concentrate prescribed in the HSN, accordingly chargeable to duty.
5.3 The contention of the Revenue is that w.e.f. 01.03.2011, the chapter note 4 has been added to chapter 26 which reads as follows:-
4.In relation to products of this Chapter, the process of converting ores into concentrates shall amount to manufacture.
5.4 It is the Revenues argument that application of various processes to ore sand converts it into concentrates and becomes manufacture w.e.f 01.3.2011, which activities were earlier held by this Tribunal as not amounting to manufacture. It is vehemently argued on behalf of the Appellant that the processes carried out by them results into obtaining mineral ores and not concentrates unless some special treatment, is carried out on the sand ores to improve the mineral content so as to call the resultant as ore concentrates and the Tribunal earlier in their case had observed that application of the very same processes to sand Ores had not resulted into concentrates, accordingly, no manufacture took place.
5.5 Thus, the sheet anchor of the argument rests on the principle of law laid down in two judgements of this Tribunal, namely Indian Rare Earth Ltd. vs. CCE and CCE vs. SAIL (supra). Before proceeding to analyse and apply the ratio of the said judgments, it is relevant to keep in mind the guidelines laid down by the Honble Supreme Court in this regard. Striking a note of caution against indiscriminate application of the case laws as precedent in a given case their Lordships in the case of Collector of C.Ex.,Calcutta Vs. Alnoori Tobacco Products 2004 (170) ELT 135(SC) observed as:
11.Courts? should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclids theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed :
The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge.
12.In? Home Office v. Dorset Yacht Co. [1970 (2) All ER 294] Lord Reid said, Lord Atkins speech is not to be treated as if it was a statute definition. It will require qualification in new circumstances. Megarry, J in (1971) 1 WLR 1062 observed: One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament. And, in Herrington v. British Railways Board [1972 (2) WLR 537] Lord Morris said :
There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case.
13.Circumstantial? flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.
14.The? following words of Lord Denning in the matter of applying precedents have become locus classicus :
Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) 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. ***?????????????***??????????***??
Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 5.6 In Indian Rare Earth Ltd.s case the facts are that the appellant, a Central Govt. Undertaking is engaged in separation of valuable mineral sands from the sand available on sea beach. Rare minerals separated by them are Ilmenite, Rutile, Zircon, Sillimanite, Garnet and Monazite. The process carried out by the appellant are that the sand is dredged from the sea beach and sand slurry is subjected to spiraling and as a result the heavier minerals are separated. By this process about 80% of the lighter sand is eliminated, the remaining 20% are brought to the Mineral Separation Plant by pumping the slurry through pipe. There the individual minerals are separated by processes like drying, electro-static separation, magnetic separation and gravity separations. The final recovery of minerals is less than 10% of the sand dredged from the sea of shore. The department sought to levy duty on these minerals considering the process of extraction of such minerals amounts to manufacture as defined under Section 2(f) of Central Excise Act, 1944. Considering the findings of the Commissioner, the argument advanced by both sides and the case laws on the subject, the Tribunal recorded its finding as follows:-
8.It is clear? from the facts of the case that mineral sands freely occurred on sea beach along with ordinary sand. Most of the sand on the sea beach is ordinary sand only. Mineral sands constitute less than 10% of the total quantity of sand on the sea beach dredged out by the appellants. Sand as it occurs on the sea shore cannot be called mineral ores. Such sand is also not bought and sold as mineral ores. The processes carried out by the appellants lead to separation of valuable rare mineral sands from the ordinary sand. The processes are physical and mechanical in nature. No special processes including rosting or chemical treatment is carried out. The processes do not bring about any upgradation or augmentation of purity in the mineral sands separated from ordinary sand. It is also on record that the resultant mineral sands are bought and sold as ores only and not as concentrates of ores. It is clear from note 2 of Chapter 26 of the Central Excise Tariff that only ores which have been submitted to processes, not normal to the metallurgical industries are excluded from ores. Thus, ores which have been subjected to special treatment go out of the scope of ores. No such special treatment is carried out in the present case.
9.The Apex? Court has held in the case of Hyderabad Industries and Ors. v. Union of India & Ors. that no manufacture of a new or distinct commodity takes place on account of the processes of separation of naturally occurring asbestos from asbestos rocks. In the earlier case of Minerals & Metals Trading Corporation of India Ltd., the Apex Court held that the separating of wolfram ore concentrate from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test according to the Apex Court is that the chemical structure of the ore should remain the same. Thus, the principle of law is clear that basic operations carried out to produce usable ore would not amount to manufacture of a new product. In the instant case, the appellants are carrying out certain physical and mechanical processes to separate mineral sands from ordinary sea shore sand. At the end of the processes, the mineral sands do not undergo any transformation. They remain in the same condition in which they remained along with ordinary sand on the sea beach. No upgradation or augmentation of their purity takes place. The chemical structure of the ore remained the same. The processes are not any special treatments which would take the ores out of the stage of plain and simple ores.
10. From what has been stated above, it is clear that no manufacturing is involved in the present case justifying demand of excise duty. The impugned order which has confirmed excise duty demand is set aside and the appeal filed by M/s. Indian Rare Earths Ltd. is allowed, with consequential relief, if any. 5.7 From the aforesaid observation, the Appellant has argued that the Tribunal has held in their case that removal of foreign materials from the sand Ores does not result into concentrates and accordingly no manufacture is involved, consequently no duty is leviable on such mineral sands extracted by employing the processes listed in the said order.
5.8 The next decision on which heavy reliance was placed is CCE vs. SAIL. In that case the mined Ores were subjected to the process of crushing, grinding, screening and washing. This Tribunal referring to the HSN Explanatory Notes, following its earlier decision in Indian Rare Earth Ltd.s case and other materials recorded as:-
6.We have? considered the submissions of both the sides. Heading 26.01 of the Central Excise Tariff applies to Iron Ore and concentrates, including roasted iron by rites. The Revenue wants to levy duty on the ground that the mined iron ore is subjected to crushing, grinding, screening and washing and it becomes iron ore concentrate which is covered by Heading 26.01 of the Tariff. The Revenue has placed heavy reliance on the Explanatory Notes of HSN according to which the term concentrates applies to ores which have had part or all of the foreign matter removed by special treatment. On the other hand the Respondents have contended that the processes undertaken by them do not convert iron ore into iron ore concentrates as no special treatments are undertaken by them nor Fe content increases after the processes undertaken by them. The learned Advocate for the Respondents has emphatically contended that the activities of crushing, grinding, screening and washing do not amount to manufacture of any goods attracting levy of Central Excise duty. It is settled law that the activity or process in order to amount to manufacture must lead to emergence of a new commercial product, different from the one with which the process started. In the landmark judgment in the case of U.O.I. v. Delhi Cloth & General Mills, 1977 (1) E.L.T. (J 199) (S.C.), the Apex Court has held that manufacture is generally understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance. The Court has held that ... something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. The Supreme Court has laid down a two fold test for determining whether the process is that of manufacture in J.G. Glass Industries Ltd. v. U.O.I., 1998 (97) E.L.T. 5 (S.C.) as under :
First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; Secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity, which was already in existence, will be of no commercial use but for the said process. ?7. Applying the test laid down by the Apex Court we observe that the process undertaken by the respondents remove extraneous, unwanted material from the ore and as such is devoid of gangue which adheres to the blasted ores. From this it has been claimed by the Revenue that the constituents of the final product are distinctly different from that of the blasted ore. The Revenue then applying the Explanatory Notes of HSN has come to the conclusion that iron ore has become a new commodity known as iron ore concentrates which is no more exempted from payment of duty as Notification No. 19/88-C.E., dated 1-3-88 has been rescinded by Notification No. 19/96-C.E., dated 23-7-1996. We find ourselves unable to agree with the Revenue that on account of the processes undertaken by the Respondents, a new and different article has emerged on which Central Excise duty can be levied and collected. Even according to HSN the term concentrates applies to ores which have had part or all of the foreign matters removed either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport. In our view, removing of foreign matters would not, in the present matter, bring into existence a new and different article having a distinctive name, character or use. The use of iron ore as mined or iron ore after the process undertaken by the respondents remains same that is to be used in metallurgical industry for the extraction of metals. In Indian Rare Earths case, supra, the Appellants were removing gangue materials from the sand. It has been held by this Tribunal that at the end of the processes, the mineral sands do not undergo any transformation. They remain the same condition in which they remained along with ordinary sand on the sea beach. No upgradation or augmentation of their purity takes place. The Chemical structure of the ore remained the same. The processes are not any special treatment which would take the ores out of the stage of plain and simple ores. The learned Advocate has also relied upon the decision in the case of Super Engineering Co. 1996 (82) E.L.T. 539 wherein the Tribunal has held that the process of pulverizing, washing and cleaning of brass/ash does not result into emergence of a new marketable commodity with a separate, distinct name having separate physical, chemical composition or characteristic. Similar views were expressed in the case of Seth Liladhar Biyani & Sons v. CCE Jaipur, 2001 (129) E.L.T. 423 (T) relied upon by the learned Advocate. In view of this we hold that the processes undertaken by the Respondents do not result in the manufacture of a different commercial commodity. Hence no Central Excise duty is leviable. Accordingly, all the appeals are rejected.
5.9 It is vehemently argued on behalf of the Appellants that the processes narrated in the said decision of this Tribunal remained unchanged and the Tribunal considering such processes has held that Ores subjecting to process of crushing, grinding, screening and washing with a view to remove foreign materials would not result into concentrate, therefore, no manufacturing process involved and accordingly, duty is not leviable on resultant concentrate. It is their further contention that even after insertion of Chapter Note 4 to Chapter 26, since the processes employed to ore does not result into concentrate, therefore, the said Chapter Note 4 is not applicable to their case.
5.10.The Revenue on the other hand argued that the Tribunal has not recorded any finding nor required also in these two cases that with application of such processes to ore, whether the Ore is converted into concentrate or other wise, but the question and finding centered around the issue whether the processes of crushing, grinding, screening, grading etc. resulted into manufacture as defined under Sec2(f)(i) of CEA,1944 as no new commercial commodity came into existence as a result of such process.
5.11 What we find on reading these judgments is that in Indian Rare Earth Ltd.s case this Tribunal has referred to the ratio laid down Minerals & Metals Trading Corporation of India Ltd. vs. Union of India 1983 (13) ELT 1542(SC) and Hyderabad Industries Ltd. & Anr. Etc. v. Union of India 1995 (78) ELT 641 on the meaning and concept of manufacture. Recording reasons at para 9 this Tribunal has held that the principle of law laid down in these two decisions is clear to come to the conclusion that the basic operations carried out to produce usable ore would not amount to manufacture as no new product having distinct name use and character emerged. Proceeding further this Tribunal observed that physical and mechanical process carried out to separate mineral sands from ordinary sea-shore sands no transformation occur to mineral sands and the sand remained in the same content along with ordinary sand on the sea beach; also no upgradation or augmentation of their purity takes place. The chemical structure of the ore remained the same. Finally, the Tribunal reached at the conclusion that no special treatments were applied whereby the ores were taken out of the stage of plain and simple ores.
5.12. More or less similar line of interpretation and observation has been recorded by this Tribunal in M/s. SAILs case. The Tribunal referring to the Tariff Heading 26.01 as was in force prior to 2005-06 observed that in order to accept the processes of crushing, grinding, screening of ores be called as manufacture, it is necessary that the resultant product should be a new commercial commodity having distinct name character and use, different from the one on which the processes were employed and referred to the classic judgement on manufacture i.e. UOI vs. Delhi Cloth and General Mills 1977 (1) ELT J-199. Thereafter, applying the test laid down in the said judgement of the Honble Supreme Court, this Tribunal concluded that the process undertaken by M/s.SAIL to remove extraneous unwanted material from the ore and as such is devoid of gangue which adheres to the blasted ores and rejected the contention of the Revenue that the constituent of the final product are distinctly different from that of the blasted ore. Further, it is observed that on account of the processes undertaken by M/s.SAIL, no new and different article has emerged on which Central Excise duty could be levied and collected. Referring to the meaning of concentrate as in HSN this Tribunal observed that mere removal of foreign matters would not bring into existence a new and different article having a distinctive name, character or use. The use of iron ore as mined or after the process undertaken by M/s.SAIL remains the same, that is, to be used in metallurgical industry for the extraction of metals and finally they observed that the process undertaken by M/s.SAIL do not result of manufacture of different commercial commodity hence no Central Excise duty is leviable.
5.13 A careful reading of the aforesaid decisions, we do not find anywhere in these judgements this Tribunal has held that after application of processes viz. washing, magnetic separation, gravimetric separation, in the first case and crushing, grinding, washing, grading etc. on ores in the second case, the resultant is not concentrate, hence not amounting to manufacture . This follows from the issues raised before this Tribunal for determination, and to resolve the issues, the principle of law referred to and followed by the Tribunal. There is no doubt of the fact that in both these cases this Tribunal has been confronted with the sole question whether the processes employed on the Ores would result into manufacture within the meaning and scope of the definition of section 2(f)(i) of Central Excise Act, 1944. Consequently, the Tribunal referring to the principles in relation to concept of manufacture laid down by the Honble Supreme Court, concluded that the processes of crushing, grinding, washing, grading of iron ores does not satisfy the test of a new commercial commodity having distinct name, character and use so as to qualify the definition of manufacture as prescribed under section 2(f)(i) of CEA,1944. Thus, the claim of the appellant that the issue now raised has been decided in the aforesaid two cases does not carry weight and accordingly does not impress us. Consequently, it is necessary to examine the issues raised in the present appeals de hors the observations made in the aforesaid decisions of this Tribunal.
5.14 In order to find an answer, whether application of processes to sand Ores results into Ore concentrate it is necessary to understand the meaning of the words, namely, ores & concentrates.
5.15 The ores has been defined under chapter note 2 of Chapter 26 of CETA,1985 which reads as follows:-
2. For the purposes of headings 2601 to 2617, the term ores means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury, of the metals of heading 2844 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. Headings 2601 to 2617 do not, however, include minerals which have been submitted to processes not normal to the metallurgical industry. 5.16 The word concentrates has not been defined under the CETA, but its meaning has been explained in the HSN Explanatory notes along with term ores as:-
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 the present heading, 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 this heading may have been submitted include physical, physico-chemical or chemical operations, provided that they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcinations, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal.
The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading, agglomeration of powders (e.g., by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small quantities of binders), drying, calcinations, roasting to oxidise or magnetise the ore, etc. (but not roasting for purposes of sulphating, chloridating, etc.) 5.17 The meaning of benefication as per Mc Graw-Hill Dictionary of Scientific and Technical Terms(6th Edition) is as follows:
benefication(minExi) See Mineral processing.
Mineral processing(Min Exi). Crushing, grinding,sizing classification or separation of oreinto waste and value by chemical,electrical,magnetic,gravity and physicochemical methods. First stage Extraction Metallurgy.
beneficiation [MET] Improving the chemical or physical properties of an ore so that metal can be recovered at a profit. Also known as mineral dressing. 5.18 After introduction of the chapter note 4 to chapter 26, the Board has issued Circular bearing No.332/1/2012-TRU dated 17.02.2012. In the said Circular at para 3, it is clarified as :-
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 the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport. 5.19 Both sides heavily relied on the meaning of concentrate prescribed under the HSN. It is Revenues argument that when the ores are subjected to physical, physico-chemical or chemical operations which are normal to the preparation of the ores for extraction of the metal then the resultant is concentrate. It is their further argument that the physical or physico-chemical operations mentioned in the said explanation of concentrates under the HSN include, crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading agglomeration of powders etc. . It is the contention of the revenue that on application of any one or more of the 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 concentrates.
5.20 The appellant on the other hand strenuously argued that the process undertaken by them only improves the content of particular ores in a given quantity of sand, hence the resultant cannot be called as ore concentrates.
5.21 In the backdrop of above rival arguments, it is necessary to consider the implication of the new Chapter Note 4 which has been inserted in Chapter 26 w.e.f. 01.03.2011. In the said Chapter Note, it has been laid down that process of converting ores into concentrates shall amount to manufacture. The meaning of ores has been laid down in Chapter 2 of the said Chapter 26. The term concentrate is applicable to ores which are made free from impurities through the application of certain processes by which part or all of the foreign matters are removed for the reason that such foreign matter might hamper subsequent metallurgical operations or such foreign matter would not help in economical transport.
5.22 In our view, the processes carried out by the Appellant are also included in explaining the term concentration under HSN. It is laid down that the physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening etc. which are normal to the preparation of the ores for the extraction of metals. While explaining the meaning of concentration, it is also mentioned that ores are seldom marketed before preparation for subsequent metallurgical operations. Hence, the Ores are to be subjected to special treatment. The Revenue had argued that all the processes narrated under the category of beneficiation or under the HSN need not be applied on the extracted Ore; even if by the application of few processes, with an objective for removal of impurities or for economical transportation, definitely, covered under the scope of concentration. We find force in the contention of the Revenue. The Appellant has though argued that after the processes carried out by them there would still contain foreign matters in the form of FeO and Fe2O3, but it cannot be denied that by application of various processes on the Ore sand the unwanted matters like quartz etc. are discarded and the treated Ores are not made fit to be used for metallurgical operations. In our opinion, there is no necessity to examine whether by employing such processes, the content/purity of the Ores has improved or other wise as opined in the various test reports of different laboratories. On the contrary, it is safe and prudent to look into the meaning of the concentrate in the HSN in view of the principle laid down by the Honble Supreme Court in a catena of cases including in the case of Commissioner of Customs & Central Excise, Goa vs. Phill Corporation Ltd. 2008 (223) ELT 9(SC) that for classification of the manufactured goods, HSN is a safe guide. Therefore, since the processes undertaken by the appellant like washing, magnetic separation, gravity separation to remove unwanted matters on sand ores, and the resultant satisfies the meaning of concentrate as explained in the HSN, hence in our considered opinion, it should be considered as manufacture as per Sec.2(f)(ii) of CEA,1944 in view of the chapter note 2 of Chapter 26 of CETA,1985 and the resultant Ore concentrate is dutiable. There is a significant difference between clause(i) and clause(ii) of the definition of manufacture laid down under sec.2(f) of CEA,1944. The processes which are considered not manufacture in the ordinary sense under clause (i), if mentioned in the relevant Section or chapters of CETA,1985 as amounting to manufacture, such processes will fall under the definition of manufacture.
5.23 Needless to emphasize, the Honble Apex Court in S.D. Fines Chemicals case 1995 (77) ELT 49 has laid down that if a process is declared as amounting to manufacture under the relevant Chapter Notes or Tariff Heading then applicability of the test of emergence of new and distinct commodity having different use and character after the processes applied to a commodity becomes irrelevant. Their Lordships at para 13 of the order observed as:-
13.The decisions aforesaid make it clear that the? definition of the expression `manufacture under Section 2(f) of the Act is not confined to the natural meaning of the expression `manufacture but is an expansive definition. Certain processes, which may not have otherwise amounted to manufacture, are also brought within the purview of and placed within the ambit of the said definition by the Parliament. Not only processes which are incidental and ancillary to the completion of manufactured product but also those processes as are specified in relation to any goods in the section or chapter notes of the Schedule to the Central Excise Tariff Act, 1985 are also brought within the ambit of the definition. 5.24 In the case of O.K Play (India) Ltd. Vs. Commissioner of C.Ex.,New Delhi 2005 (180) ELT 291(SC), the question came up before the Honble Supreme Court was whether powdering of Low Density polyethylene(LDPE) and High Density polyethylene granules(HDPE) into moulding powder manufacture in view of note 6(b) of chapter 39 of CETA,1985. In that context, emphasising the relevance of cl(ii) of Sec.2(f) of CEA,1944, their Lordships observed as:
11.Section? 2(f) contains two clauses and instead of setting out the activities in respect of different tariff items, Clause (ii) simply states that any process, which is specified in section/chapter notes of the Schedule to the Tariff Act shall amount to manufacture. Under Clause (ii), the Legislature intended to levy excise duty on activities that do not result in any new commodity. In other words, if a process is declared as amounting to manufacture in the section or chapter notes, it would come within the definition of manufacture under Section 2(f) and such process would become liable to excise duty. The effect of this definition is that excise duty can be levied on activities which do not result in the production of a new commodity or where the raw material does not undergo such a transformation as to loose its original identity.
12.At this? stage, we quote Note 6 to Chapter 39 of the 1985 Act which reads as under :
In heading Nos.?6(a). 39.01 to 39.14, the expression primary forms applies only to the following forms :-
(i) Liquids and pastes, including dispersions (emulsions and suspensions) and solutions;
(ii) Blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms.
Notwithstanding anything contained in?(b) Note 3 to this Chapter, heading Nos. 39.01 to 39.14 shall also include primary forms obtained from conversion of another primary form, falling under the same heading, and such-conversion shall amount to manufacture.
13.Reading? Note 6(b), it is clear that blocks and powders are two different primary forms and if the block is pulverized into powder, the activity would amount to manufacture in terms of Clause (ii) of Section 2(f). By the very language of Note 6, conversion from granules into moulding powder would result in manufacture. Therefore, as a consequence of the new definition of manufacture in terms of Section 2(f), the activities which otherwise do not amount to manufacture can now be treated as manufacture and made liable to duty. 5.25 These judgements are later followed in the case of Commissioner of Customs & Central Excise, Goa vs. Phill Corporation Ltd. 2008 (223) ELT 9(SC), wherein their Lordships observed as follows:-
25.The? learned Additional Solicitor General contended that the deeming provision of Section 2(f) (ii) was squarely raised at all levels of the proceedings. In the show cause notice, Section 2(f) has been invoked. Similarly, in the order in original, the Commissioner has categorically relied upon Chapter Note 3 of Chapter 20 and Section 2(f)(ii) and referred to various documents to strengthen his case. The learned Additional Solicitor General has also submitted that the Constitution Bench judgment of this court in Delhi Cloth and General Mills (supra) is not applicable in the instant case as the deeming provisions of section 2(f)(ii) were not at all enacted during the relevant period. Section 2(f)(ii) was incorporated/substituted in the Central Excise Act with effect from 28-2-1986 vide MF (DR) Notification No. 10 of 1986-Central Excise dated 5-2-1986.
26.It was submitted? by the learned Additional Solicitor General that the judgment of the Delhi Cloth and General Mills (supra) was rendered on 12-10-1962 much before enactment of the deeming provisions of Section 2(f)(ii). In these circumstances, this judgment can be of no avail to the respondent assessee.
27.The learned? Additional Solicitor General further submitted that the learned tribunal in the impugned judgment has not at all considered the effect of section 2(f)(ii) of Chapter Note 3 of Chapter 20. He also contended that the Sales Tax judgments relied upon by the tribunal in the impugned judgment are not at all relevant in deciding the issues in the present case. According to him, the tribunal has not considered the issue of classification. According to his submission, in view of the HSN notes and the judgment of this court in Amrit Agro Industries (supra), the classification of the products in question ought to be made only under Chapter 20.
28.We have heard the? learned counsel for the parties at length and carefully analysed the judgments cited at the Bar. The Central Excise Tariff Act is broadly based on the system of classification from the International Convention called the Brussels Convention on the Harmonised Commodity Description and Coding System (Harmonised System of Nomenclature) with necessary modifications. HSN contains a list of all the possible goods that are traded (including animals, human hair etc.) and as such the mention of an item has got nothing to do whether it is manufactured and taxable or not.
29.In a number of? cases, this court has clearly enunciated that the HSN is a safeguide for the purpose of deciding issues of classification. In the present case, the HSN explanatory notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN explanatory notes to Chapter 20 also categorically state that its products are excluded from Chapter 8 as they fall in Chapter 20. In this view of the matter, the classification of the products in question have to be made under Chapter 20.
30.The legal position? has been clearly crystallized in S.D. Fine Chemicals Pvt. Ltd. (supra) and other judgments of this court that certain processes which may not otherwise amount to manufacture have been deemed to be manufacture by the Parliament under section 2(f)(ii). Relevant portion of this judgment has already been extracted in the preceding paragraphs.
31.In deciding the? cases of this nature, the courts have to make serious endeavour to ascertain spirits and intention of the Parliament in enacting these provisions and once the legislative intention is properly gathered, then the bounden duty and obligation of the courts is to decide the cases in consonance with the legislative intention of the Parliament. 5.26 The said Chapter Note 2 to Chapter 26 inserted from 01.03.2011 has been recently considered by the Honble Supreme Court in Star Industries Vs Commissioner of Customs(Imports), Raigad 2015 (324) ELT 656, while considering the eligibility of Notification 4/2006, wherein their Lordships observed as:-
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 manufacture. Therefore, it cannot now be argued that roasting of ores and converting the same into concentrates would not be manufacture. For the same reason, the judgment in MMTC becomes inapplicable and reliance upon Kirk-Othmers Encyclopedia becomes irrelevant. With the addition of Note 4, a legal friction is created treating the process of converting ores into concentrates as manufacture. Once this is treated as manufacture, all the consequences thereof, as intended for creating such a legal friction, would automatically follow. Following shall be the inevitable implications :
(a) It is to be treated that Molybdenum Ore is different from concentrate. That is inherent in treating the process as manufacture inasmuch as manufacture results in a different commodity from the earlier one. Section 2(f) defines this term as under :
manufacture includes any process, -
(i) incidental or ancillary to the completion of a manufactured product;
(ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or
(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.
(b) The purpose of treating concentrate as manufactured product out of ores is to make concentrates as liable for excise duty. Otherwise, there was no reason to deem the process of converting ores into concentrates as manufacture.
29.?Once the aforesaid legal repercussions are taken note of, as a fortiori, it becomes obvious that Notification No. 4/2006-C.E. which exempts only ores would not include within itself concentrates also because of the reason that after the insertion of Note 4, concentrate is to be treated as a different product than ores, in law for the purposes of products of Chapter 26.
30.?This brings us to the effect of Chapter Note 2 which is retained even after insertion of Chapter Note 4. No doubt, as per Chapter Note 2, ores means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury, of the metals of Heading 2844 or of the metals of Section XIV or XV, even if they are intended for non-metallurgical purposes. As per this note, metals of Section XV would be included in the term ores. However, after the insertion of Chapter Note 4, these two Notes, namely, Note 2 and Note 4 have to be read harmoniously. If we accept the submission of the learned counsel for the assessee predicated on Note 2, then Note 4 even after its conscious inclusion, would be rendered otiose which cannot be countenanced. Therefore, Note 2, when seen along with Note 4, has to govern itself in limited territory. On the basis of deeming fiction created by Note 4, once we arrive at the conclusion that process of roasting of Ore amounts to manufacture and it creates a different product known as Concentrate, for the purpose of exemption notification, which exempts only Ores it is not possible to hold that Concentrate will still be covered by the exemption notification. Therefore, harmonious construction of Note 2 and Note 4 would lead us to hold that in those cases when Note 4 applies and Ores becomes a different product, it ceases to be Ores.
31.?We, thus, are of the opinion that in the impugned judgment, the Tribunal has rightly arrived at the conclusion that by virtue of Note 4, concentrate has to be necessarily treated as different from ores which is deemed as manufactured product after Molybdenum Ores underwent the process of roasting. Once we keep in mind that conversion of ores into concentrate is considered as manufacture and, therefore, becomes liable for central excise levy, exemption Notification No. 4/2006-C.E. is to be interpreted in this light as the Legislature has intended to treat ores and concentrates as two distinct items and Notification No. 4/2006-C.E. exempts only ores, concentrates automatically falls outside the purview of said notification. It is rightly argued by the learned senior counsel for the Revenue that exemption notifications are to be construed strictly and even if there is some doubt, benefit thereof shall not enure to the assessee but would be given to the Revenue. This principle of strict construction of exemption notification is now deeply ingrained in various judgments of this Court taking this view consistently. 5.27 A cumulative reading of the ratios of the above judgements, the chapter note 4 of chapter 26 and the relevant tariff entry, makes the legislative intention and object clear that the processes which on application on ores held by the courts/tribunal earlier as not amounting to manufacture, by virtue of the chapter note, a legal fiction has been created bringing such processes into the fold of the definition of manufacture, which otherwise in common parlance would not be considered as manufacture. The contention of the appellant that unless the content of Ores improves, the resultant cannot be called as a concentrates and accordingly the physical/mechanical processes carried out by them like washing, magnetic separation, gravity separation etc. to sand Ores would not fall under the definition of manufacture, in our opinion, is the result of misunderstanding and incorrect interpretation of the relevant tariff entry, the chapter note 4 and clause (ii) of Sec.2(f) of CEA,1944. In view of the judgements of this Tribunal if on application of processes on Ores sand its purity/content increases and its use, commercial identity and character is different from the ore, then the resultant would be considered as manufactured and accordingly dutiable. Therefore, in absence of an increase in the purity content by any method, if there cannot be a manufacturing process, the chapter note 4 inserted with effect from 01.3. 2011 defeat the very purposes and becomes otiose. Such a situation, in our opinion, cannot be the intention of the legislature. Therefore, in our considered opinion application of various processes to ore sand, converts it into concentrates and accordingly in view of the chapter note 4 of chapter 26 becomes manufacture and leviable to Excise duty.
5.28 The appellant has submitted that Silliminite and Garnet are directly covered by chapter heading 25085032 and 25132030 of the CETA respectively attracting nil rate of excise duty, We however find that while chapter 25 covers mineral products which are in the crude state or which have been washed, ores of various minerals are covered under chapter 26. We also notice that while chapter 26 excludes the products of chapter 2517 and 2519 no such exclusion is provided in case of chapter 2508 and 2513 and therefore we are not convinced to the plea taken by the appellant that the impugned products being classifiable under chapter 25 are exempt.
5.29 The appellants have made an alternate submission that even otherwise the goods manufactured by them are exempted from payment of duty under Notification No.63/95-CE dated 16.3.1995 since the goods have been manufactured in the mines. In this regard we observe that in the impugned order the ld.Commissioner did not accept the appellants claim as the certificate produced by the appellant was not signed by the Secretary to the Central Govt. as required under the Notification. We find that now a certificate dated 28.8.2014 of the Secretary to the Govt. of India has been produced and therefore we direct the Commissioner to consider the request of the appellant afresh as to whether they are eligible for the benefit of the above Notification. The ld.AR for the Revenue fairly accepted that in relation to their other unit at Chavara, Colam, the adjudicating authority vide order dated 30.12.2013 though observed that the conversion of ores into concentrates involving similar minerals result into manufacture, but extended the benefit of Notification No.63/95-CE dated 16.03.1995. Also, the said order has been accepted by the department as communicated by the Commissioner of Central Excise, Thiruvananthapuram through their letter dated 18.01.2016.
5.30 To sum up: (i) the processes carried out on sand Ores result into conversion of ores to concentrate accordingly manufacture under clause (ii) of section 2(f) read with Chapter Note 4 to chapter 26 of CETA,1985 (ii) the eligibility of benefit of exemption notification 63/ 95 CE dt.16.03.95 be examined by the adjudicating authority.
5.31. In the result, the Appeal is remanded to the Adjudicating authority only for the purpose of examination of eligibility of Notificaiton No.63/95 CE dt.16.03.1995 and determination of liability thereafter. The Appeal is disposed of accordingly.
(Pronounced in the open court on 29.02.2016.)
SD/ SD/
(H.K.THAKUR) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL)
sm
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Appeal No. E-70833/13