Custom, Excise & Service Tax Tribunal
Maithan Alloys Ltd vs Visakhapatnam-Cus on 9 January, 2026
(1)
C/21916/2014, C/21338/2015,
C/30455 & 31110/2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Customs Appeal No. 21916 of 2014
(Arising out of Order-in-Appeal No. 34/2014-VCH dt.03.03.2014 passed by Commissioner of
Customs, Central Excise & Service Tax (Appeals), Visakhapatnam)
M/s Sarda Energy & Minerals Ltd
Industrial Growth Center, Siltara, ......Appellant
Raipur, Chhattisgarh - 493 111
VERSUS
Commissioner of Customs
Visakhapatnam - CUS
Port Area, Visakhapatnam,
......Respondent
Andhra Pradesh - 530 035 WITH Customs Appeal No. 30455 of 2016 (Arising out of Order-in-Appeal No. 60/2015-VCH dt.12.04.2016 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam) M/s Sarda Energy & Minerals Ltd Industrial Growth Center, Siltara, ......Appellant Raipur, Chhattisgarh - 493 111 VERSUS Commissioner of Customs Visakhapatnam - CUS Port Area, Visakhapatnam, ......Respondent Andhra Pradesh - 530 035 WITH Customs Appeal No. 21338 of 2015 (Arising out of Order-in-Appeal No. 220/2014-2015-VCH dt.09.03.2015 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam) M/s Maithan Alloys Ltd Kalyaneshwari, Burdwan District, ......Appellant West Bengal - 713 369 VERSUS Commissioner of Customs Visakhapatnam - CUS Port Area, Visakhapatnam, ......Respondent Andhra Pradesh - 530 035 AND Customs Appeal No. 31110 of 2016 (Arising out of Order-in-Appeal No. VIZ-CUSTM-000-APP-056-16-17 dt.31.08.2016 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam) M/s Indsil Energy & Electrochemicals Ltd Sector-C, Plot No.114-122, Urla Industrial Area, ......Appellant Raipur, Chhattisgarh - 493 111 VERSUS Commissioner of Customs Visakhapatnam - CUS Port Area, Visakhapatnam, ......Respondent Andhra Pradesh - 530 035 (2) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 Appearance Shri Akhilesh Kangsia, Ms. Apoorva Parihar, Ms. Nandita Reddy, Ms. Shreshtha Singh & Ms. Prerna Jain Kala, Advocates for the Appellants. Shri A. Rangadham & Shri V.R. Pavan Kumar, ARs for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30013-30016/2026 Date of Hearing: 10.09.2025 Date of Decision: 09.01.2026 [Order per: A.K. JYOTISHI] M/s Sarda Energy & Minerals Ltd (hereinafter referred to as the appellants/importers), are in appeal against OIA dt.03.03.2014 & OIA dt.12.04.2016, vide Appeal Nos. C/21916/2014 & C/30455/2016 respectively. M/s Maithan Alloys Ltd (hereinafter referred to as the appellants/importers), are in appeal against OIA dt.09.03.2015, vide Appeal No. C/21338/2015 and M/s Indsil Energy & Electrochemicals Ltd (hereinafter referred to as the appellants/importers), are in appeal against OIA dt.31.08.2016, vide Appeal No. C/31110/2016.
2. The appellants are, inter alia, importers of Manganese ores. While importing the same, the department denied them the exemption from payment of CVD in terms of S.No.4 of Notification No.04/2006-CE dt.01.03.2006 on the ground that the imported goods were not 'Manganese ores' as the said goods have undergone washing, removal of waste, sizing, etc., and therefore, they are 'Manganese Ore Concentrate' and accordingly, not covered under the said exemption notification. After due assessment of Bills of Entries (BEs), the Original Adjudicating Authorities have confirmed the demands by denying the exemption under S.No.4 of Notification No.04/2006-CE. On appeal before the Commissioners (Appeals), the orders passed by the Original Adjudicating Authorities have been upheld and the appeals filed by the appellants were dismissed. The main ground taken by the appellants before the Adjudicating authorities and the Commissioners (Appeals) is that mere cleaning, washing and removal of mud, earth and sizing does not amount to concentration and the process is normal to the metallurgical industry. They also, inter alia, said that Manganese ore is sold (3) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 as ore only and it is universal practice in the mining industry to undertake the process of crushing, sizing, etc., and the same is not treated as manufacture in India and no Excise duty is being charged on the mined ores. They have also submitted that concentrate of ores are generally obtained by treatment, which alter the chemical composition, crystallographic structure of the constituent minerals and texture of the ore gets totally changed to make it a different product, whereas, mere washing, sizing, etc., of ore cannot be treated as process of concentration. Further, even if the imported goods are considered as concentrate, it does not disqualify them from the benefit of exemption notification as the popular meaning should be adopted and the benefit of CVD exemption should be allowed. Moreover, in the absence of any chemical report to support that it is concentrate, the finalization of provisional assessment cannot be made on the basis of assumptions that the imported goods were subjected to any special treatment as mentioned in the HSN explanatory notes.
3. The Commissioners (Appeals) have examined these grounds and after considering the provisions under Chapter Note 4 to Chapter 26, which was inserted vide Finance Act, 2011, observed that ores and concentrates are two distinct products. He has also relied on the provisions under HSN and also the fact that certain amount of processing was undertaken like washing, removal of waste, sizing, etc., and held that benefit of exemption notification is not admissible to them and therefore, dismissed their appeals.
4. Learned Advocates, appearing for the appellants, have broadly taken the following grounds in support that they are entitled for the benefit of the said notification.
a) That the contract is for purchase of Manganese ore with Manganese content of minimum 36%.
b) That the imported goods have been classified under Tariff item 2602 00 40, which covers 'Manganese ore' (35% or more but below 40%) and there is no dispute insofar as classification of Manganese ore, as claimed by them and the Manganese concentrate, as proposed by the department.
c) That no sample has been drawn nor has any testing been done in respect of imported consignments.(4)
C/21916/2014, C/21338/2015, C/30455 & 31110/2016
d) That there is no evidence that the imported goods were subjected to any special treatment and the only allegation is that the imported goods were subjected to washing, removal of waste, sizing, etc., which admittedly are not considered as special treatment, as clarified by CBIC vide circular dt.17.01.2012.
5. They have relied on HSN explanatory notes to Chapter 26, which provides the meaning of the term 'ore' and 'concentrate'. The relevant portion is as under.
"The term 'ore' applies to metalliferous minerals associated with the substances in which they occur and with which they are extracted from the mine; it also applies to native metals in their gangue (e.g. metalliferous sands).
Ores are seldom marketed before 'preparation' for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores.
For the purposes of headings 26.01 to 26.17, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport.
Processes to which products of headings 26.01 to 26.17 may have been submitted include physical, physico-chemical or chemical operations provided they are normal to the preparation of the ores for extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal.
The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric 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, calcination, roasting to oxidise or magnetize the ore, etc., (but not roasting for purposes of sulphating, chloridating, etc.)"
6. In view of the above, learned Advocates have submitted that ores undergo processes normal to metallurgical industry, whereas, concentrates are the ores which have undergone special treatments. They have also relied on Circular F.No.332/1/2012-TRU dt.17.01.2012. The relevant paras of the circular are as under.
"For the purposes of Headings 2601-2617, 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 (5) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 subsequent metallurgical operations or with a view to economical transport.
From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have clarified that no special treatment is involved in the crushing and screening of ore and the end-product can be termed as a concentrate only when the grade of ore is sufficiently improved through beneficiation. Federation of Indian Mineral Industries have also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, flotation & concentrate thickening have to be undertaken for ores to be converted into concentrate.
3. Hence it is clarified that the levy of excise duty is attracted only in cases where the products meet the definition of concentrate as per HSN notes, that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'."
7. The above circular was issued pursuant to introduction of Chapter Note 4 to Chapter 26 and it clearly clarifies that no special treatment is involved in crushing and screening of ore and the said circular is binding on the department, as held by Hon'ble Supreme Court in the case of Paper Products Vs CCE [1999 (112) ELT 765 (SC)]. Further, taking into account the said circular, the Coordinate Benches in series of decisions extended benefit of exemption in cases where ores are subjected to only washing, crushing and screening processes and it was also held that these processes will not be considered as special treatment and the imported goods will be considered as ores only and not concentrate. They have relied on the following judgments.
a) Andhra Ferro Alloys Vs Visakhapatnam-Cus [2017 (8) TMI 89 - CESTAT Hyderabad]
b) Sharp Ferro Alloys Vs CCT, Visakhapatnam-GST [Final Order No. A/30299/2024 dt.09.05.2024]
c) CC Vs Mahendra Kumar Darewala [2016 (340) ELT 277 (Tri-Mum)]
d) Universal Electrical Industries Vs CCE [1994 (70) ELT 279 (Tri) - Affirmed by Hon'ble Supreme Court at [2003 (153) ELT 266 (SC)]
e) CCE Vs Gadgets India [1994 (71) ELT 835 (Tri)]
f) Endeka Ceramics India Vs CC [2021 (10) TMI 251]
g) Amba River Coke Vs CC [2022 (6) TMI 217]
h) Vishwa Glass & Ceramics Vs CC [2024 (11) TMI 843] (6) C/21916/2014, C/21338/2015, C/30455 & 31110/2016
i) Supreme Glazes Pvt Ltd [OIO No.05/ADC/AV/HAZIRA (IMPORT)/2024- 25 dt.04.02.2025]
j) Krishna Ceracoats Industries [OIO No. 09/ADC/AB/HAZIRA (IMPORT)/ 2024-25 dt.27.02.2025]
8. Learned Advocates have also relied on the BIS standard i.e., IS 11895:2006, prescribing specification for Manganese ore where specification for different types of Manganese ores has been provided and in respect of Manganese ore, the minimum content of Manganese is 35% and above, which is applicable to the present case and therefore, their product is Manganese ore and not Manganese concentrate. They have also highlighted the term 'concentrate' and 'ore' defined in Kirk-Othmer's Encyclopedia of Chemical Technology, as under.
'Concentrate' - An action to intensify in strength or purity by the removal of valueless or unneeded constituents, i.e., separation of core or metal from its containing rock or earth. The concentration of ores always proceeds by steps or stages. Liberation of mineral values is often the initial step. Concentrate also means a product of concentration i.e., enriched ore after removal of waste in a beneficiation mill.
'Ore' - A mineral or aggregate of minerals from which a valuable constituent, especially a metal, can be extracted profitably.
9. They have also relied on the judgment of Hon'ble Supreme Court in the case of Mineral and Metals Trading Corporation of India Vs UOI [1983 (13) ELT 1542 (SC)], wherein, inter alia, it was held that concentrate would also get covered in the expression 'ore'. Similarly, they have also relied on the judgment of Coordinate Bench in the case of CC Vs Hindustan Gas and Industries [2006 (202) ELT 693 (Tri-Mum)], wherein, eligibility of imported 'molybdenum concentrates' to avail Additional Duty of Customs (ADC) exemption benefit in terms of Notification No.05/1998-CE dt.02.06.1998 was examined and it was concluded that concentrates satisfy all the requirements of being called an ore. They have also submitted that reliance placed on Note (4) to Chapter 26 is bad in law in view of Circular No.09/2012-Cus dt.23.03.2012, wherein, it was clarified that concentrate suffers Central Excise duty being a manufactured product. Similarly, they have also submitted that interest cannot be demanded relying on the judgment of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Ltd Vs UOI [2022 (10) TMI 212 (Bom)], wherein, it was held that in the absence of specific provisions for levying of interest or penalty due to (7) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 delayed payment of tax, the same cannot be levied/charged unless the statute makes a substantive provision in this behalf. This judgment was affirmed by the Hon'ble Supreme Court at [2023 (8) TMI 135 (SC)]. They have also relied on the order of Coordinate Bench in the case of Acer India Vs CC [2024-VIL-503-CESTAT-CHE-CU]. Further, the interest cannot be demanded when the BEs have been provisionally assessed. In this regard, they have relied on the following judgments.
a) AS Syndicate (Warehousing) Vs CC [2011 (267) ELT 469]
b) CC Vs Exotic Fashions [2010 (262) ELT 651]
10. On the other hand, learned ARs have mostly submitted that benefit of exemption notification has been rightly denied to the importers/appellants as the Manganese ores imported by them had admittedly undergone certain specified processes like washing, removal of waste, sizing, etc., as per the requirements of the appellant/importer. Further, in terms of provisions under Note (4) to Chapter 26, w.e.f. 01.03.2011, it provides that in relation to products of this chapter the process of converting ores into concentrate shall amount to 'manufacture'. They have also invited our attention to explanation for Heading 26.01 to 26.17 in the HSN. They have relied on various judgments, as under.
a) CC, Nhava Sheva I, Mumbai Vs Malu Electrodes Pvt Ltd [2024 (12) TMI 1253 - SC]
b) M/s Star Industries Vs CC (Imports), Raigad [2015 (10) TMI 1288 - SC]
c) M/s MOIL Ltd Vs CCE & ST, Jabalpur [2018 (1) TMI 984 - CESTAT New Delhi]
d) Swaraj Mazda Ltd Vs CCE, Chandigarh [1995 (77) ELT 505 (SC)]
e) CCE, Bangalore Vs Srikumar Agencies [2008 (232) ELT 577 (SC)]
11. Further, they have also submitted that burden to establish as to whether a product is covered by an exemption notification or otherwise is on the appellant, as held by Hon'ble Supreme Court in catena of judgments, as under.
a) M/s Mangalore Chemicals & Fertilizers Ltd Vs Dy CCT & Ors [1991 (55) ELT 437 (SC)] (8) C/21916/2014, C/21338/2015, C/30455 & 31110/2016
b) Novopan India Ltd Vs CCE & C, Hyderabad [1994 (73) ELT 769 (SC)]
c) Tata Iron & Steel Co Ltd Vs State of Jharkhand [Civil Appeal No. 1912/2004]
d) CC (Import), Mumbai Vs Dilip Kumar & Co. [2018 (361) ELT 577 (SC)]
12. Since the issue involved in all these appeals is identical and the arguments undertaken by the learned Advocates appearing for the appellants and learned ARs for the department are also identical, we intend to take up all these appeals together for hearing and disposal.
13. Heard both sides and perused the records.
14. The core issues to be decided in all these appeals are as under.
A. Whether the imported goods are to be treated as manufactured goods in terms of deeming provision inserted vide Chapter Note 4 to Chapter 26 w.e.f. 01.03.2011 or otherwise.
B. Whether the admitted activity of washing, removal of waste, sizing, etc., would lead to conversion of ore into concentrate or otherwise keeping in view the provisions under HSN.
C. Whether the exemption under S.No.4 of Notification No.04/2006-CE is applicable or otherwise even if the goods are deemed to be concentrate.
D. Whether the ratio of certain judgments, cited by the appellants, covering identical goods can be relied upon or otherwise in the face of other compelling and relevant judgments cited by the department.
15. Before we proceed further, we need to take into account the admitted facts common to all these appeals. It is an admitted fact that post 01.03.2011, the samples of the imported goods were not specifically subjected to any test by the department; that admittedly certain processes were undertaken on the ore as excavated in the mines abroad (called Run- of-Mine ore i.e., ROM ore, as referred in metallurgical industry) before being exported to the appellants like washing, removal of waste, sizing, etc. It is also not disputed that Chapter Note 4 to Chapter 26 is valid in view of the provisions of section 2(f)(ii) of Central Excise Act, 1944 for treating certain processes as amounting to manufacture. It is also not in dispute that the notification specifically exempts 'ore'. With these admitted positions, we now (9) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 proceed to highlight some of the statutory provisions before we take up the factual aspect of the case. The explanations given in the HSN in respect of Headings 26.01 to 26.17 are cited below, for ease of reference.
Chapter 26 Ores, slag and ash Notes.
1. ...............
2. For the purposes of headings 26.01 to 26.17, the term 'ore' means minerals of mineralogical species actually used in the metallurgical industry for the extraction of mercury of the metals of heading 28.44 or of the metals of Section XIV or XV, even if they are intended for non- metallurgical purposes. Headings 26.01 to 26.17 do not, however, include minerals which have been submitted to processes not normal to the metallurgical industry.
GENERAL Headings 26.01 to 26.17 are limited to metallic ores and concentrates which:
(A) ..................
(B) Have not been submitted to processes not normal to metallurgical
industry.
The term 'ores' applies to metalliferous minerals associated with the substances in which they occur and with which they are extracted from the mine; it also applies to native metals in their gangue (e.g., metalliferous sands).
Ores are seldom marketed before 'preparation' for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores.
For the purposes of headings 26.01 to 26.17, the term 'concentrates' applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport.
Processes to which products of headings 26.01 to 26.17 may have been submitted include physical, physico-chemical or chemical operations, provided they are normal to preparation of the ores for the extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal.
The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, flotation, 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, calcination, roasting to oxidise, reduce or (10) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 magentise the ore, etc. (but not roasting for purposes of sulphating, chloridating, etc).
The chemical processes are aimed at eliminating the unwanted matter (e.g., dissolution).
Concentrates of ores obtained by treatments, other than calcinating or roasting, which alter the chemical composition or crystallographic structure of the base ore are excluded (generally Chapter 28). Also excluded are more or less pure products obtained by repeated physical changes (fractional crystallisation, sublimation, etc.) even if there has been no change in the chemical composition of the basic ore.
16. Therefore, what is to be understood is whether the processes undertaken on the ore in the present factual matrix resulted in emergence of concentrate or otherwise keeping in view the statutory provisions and Explanatory Notes or otherwise. While Chapter note provides that the process of conversion from ore to concentrate shall amount to manufacture, it does not given any idea as to what would be the processes involved in such conversion. In order to understand that, recourse has to be taken to the explanation given in the HSN. Moreover, reading of the explanation would indicate that the term 'ore' applies to metalliferous minerals associated with the substances in which they occur and with which they are extracted from mine and that it also applies to native metals in their gangue (e.g., metalliferous sand). Therefore, 'ore', as such, is the one which occurs naturally in natural state along with other minerals and substances with which they are extracted from the mine. In other words, this is what is referred to in mining industry as ROM ore. The ROM ores are the ores which are extracted from the earth or from the mines and it will contain various impurities like mud, stones as well as certain different metals in some cases, which may or may not be suitable for use as such for a particular industry or end use. Some of the impurities are not suitable for the metallurgical purposes and its removal becomes essential, while some of the impurities like mud, stone, etc., are required to be removed for its economical transportation as well as for enriching the ore percentage. The ores are also, after removal of various other associated impurities and naturally occurring substances at the time of excavation like stones, mud, etc., further subjected to screening and sizing not only to remove such impurities and unwarranted materials from ore but also to provide 'ore' of a particular (11) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 specification in terms of size and concentration, as desired by the ultimate customer in view of intended end use.
17. A great deal of reliance has been placed on the term 'special treatment' by the appellants to justify that such activities would not tantamount to special treatment and more so, in view of the clarification issued by the Ministry, vide circular dt.17.01.2012. A perusal of explanation would say that such ROM are seldom marketed before preparation and most important preparatory processes are those aimed at concentrating the ore. It also clarifies that the term 'concentrate' applies to ores which have had a part or all of the foreign matter removed by special treatment either because such foreign matter might hamper subsequent metallurgical operations or with a view of economical transport. In the given factual matrix of the present appeals, all the activities and processes undertaken on the ROM ore before it was shipped to India were obviously preparations before ROM ore was marketed or sold and the purpose of such preparation and concentration is to remove foreign matters like mud, stone, other impurities/unwanted materials, etc., and to supply ore of specified concentration only. In this context, the term 'special treatment' has to be understood as any treatment, which is undertaken to remove such foreign materials, by whatever means so as to meet the given objectives i.e., suitability for intended metallurgical use and economic transportation. It is not in dispute that the aforesaid activities and processes undertaken were intended for removal of foreign materials from ROM ore. The objective for such removal was also to make it compatible for metallurgical processes for which it has been imported by the appellants and incidentally, it also helped in reducing the shipping cost, as such foreign material would have led to higher shipping cost.
18. Learned Advocates have tried to distinguish that such activities cannot be brought under the ambit of special treatment keeping in view the Board's clarification as well as some of the judgments cited by them. We will come back to that aspect a little later in this order. We note that the processes to which such product i.e., ROM ore, can be subjected include physical, physico-chemical or chemical operations, provided they are normal to preparation of ores for extraction of metal and that such operation must not alter the chemical composition of basic compound which furnishes the (12) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 desired metal. In this case, it is not necessary that these processes should have all kinds of processes i.e., physical, physico-chemical or chemical. Depending on the properties of the ore, metallurgical requirement of the customer and inherent properties of the naturally occurring ore, the processes can be a simple physical process like cleaning, washing, sizing, etc., or it can be a complex process like chemical operations. However, irrespective of one or all of these processes, except where the chemical composition changes, those processes have to be treated as processes, essentially aimed at removing the foreign matters and improving the concentration of metallic content in ROM ore and making such ore compatible for the intended metallurgical use, as also, for economical transport.
19. Having understood the scope and context of HSN explanatory notes and having held chapter note 4 to Chapter 26 has been inserted to create a deeming fiction by treating certain processes as amounting to manufacture, we now proceed to analyse various citations relied upon by both sides. The reliance has been placed by the learned Advocates for the appellants on Andhra Ferro Alloys Vs Visakhapatnam-Cus (supra), wherein the Tribunal dealt with similar issue in respect of Manganese ore and, inter alia, held that the Revenue has not been able to bring on record or state categorically that Manganese ore, which is imported by these appellants, has undergone special treatment to hold said goods, as concentrate. Therefore, in the absence of anything to indicate that the goods, which are imported, were, in fact, put through any special treatments, Revenue cannot take their case any further. In the case of Sharp Ferro Alloys Vs CCT, Visakhapatnam-GST (supra), the Coordinate Bench, by majority decision, inter alia, has extended the exemption benefit holding that the process of crushing, sizing, screening, etc., will not amount to special treatment and goods will qualify as ores only. In Endeka Ceramics India Vs CC (supra), wherein, similar view was taken that there was no evidence to show that subject goods have undergone any special treatment and mere washing, cleaning and drying cannot be considered as special treatment. It was also observed that in such case, the importers had filed test report of the exporter and there was no expert evidence adduced by the department to rebut the chemical analysis report. In the case of Amba River Coke Vs CC (supra), the Coordinate Bench (13) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 held that if no special treatment has been undertaken on the ore, so as to remove a part or whole of the foreign matter, it would not be considered as concentrate. This view has essentially emerged from the CBEC circular dt.23.03.2012, wherein, inter alia, it was noted that HSN explanatory notes do not specify as to what would constitute to be a special treatment by which the foreign matter is removed from the ore but after consultation with the Ministry of Mines, it was clarified that crushing, screening and mere preparatory processes do not constitute special treatment contemplated in the explanatory notes by which, part or all of foreign matters are removed. In the case of Vishwa Glass & Ceramics Vs CC (supra), a sample was drawn and subjected to test, as per which, it was held to be Boron ore and hence, considered as eligible for exemption.
20. On the other hand, Revenue has highlighted the Hon'ble Supreme Court's decision in the case of M/s Star Industries Vs CC (Imports), Raigad (supra), which was in the context of similar notification and chapter note, though the ore was that of Molybdenum. The Hon'ble Supreme Court, inter alia, held that said ore has to be necessarily treated as concentrate, which is deemed as manufactured product and once conversion of ore into concentrate takes place, it will be considered as manufacture and therefore, liable for Central Excise duty and once it is liable for levy of Central Excise duty, exemption from Notification No.04/2006-CE has to be interpreted accordingly and since, Notification No.04/2006-CE exempts only ores, therefore, concentrate automatically falls outside the purview of the said notification.
21. We also find that in the case of CC, Nhava Sheva I, Mumbai Vs Malu Electrodes Pvt Ltd (supra), the Hon'ble Supreme Court, while examining the issue of chapter note 2 and chapter note 4 of Chapter 26, in the similar context, inter alia, held that the judgment of the Tribunal, against which the Revenue had come in appeal, has not considered the observations and the order of the Hon'ble Supreme Court in the case of M/s Star Industries Vs CC (Imports), Raigad (supra) at para 28, 29 & 31, which are cited below.
"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.(14)
C/21916/2014, C/21338/2015, C/30455 & 31110/2016 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-Othmer's 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. ............
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 (15) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 construction of exemption notification is now deeply ingrained in various judgments of this Court taking this view consistently."
22. Thus, the ratio and the principle laid down by the Hon'ble Supreme Court in the case of M/s Star Industries Vs CC (Imports), Raigad (supra) has to be followed by the Tribunal to arrive at the conclusion as to whether goods are ore or concentrate keeping in view the deeming provisions. We find that the various judgments of Coordinate Benches cited by the learned Advocates in support that processes undertaken on the ROM ore are not special treatments and therefore, it would not amount to conversion of ore to concentrate, have not considered or taken into account the judgment of Hon'ble Supreme court in the case of M/s Star Industries Vs CC (Imports), Raigad (supra), and therefore, we do not find ourselves inclined to follow the ratio laid down by such judgments in support that the processes undertaken were not amounting to special treatments. We have already made it clear that the term 'special treatment' has not been defined and it has been considered only in terms of Board's circular dt.17.01.2012. However, on crucial analysis and plain reading of explanatory note, it is obvious that any activity, which is carried out on the ROM ore with an intent to remove foreign matters, either partially or fully, so as to make it useful for metallurgical purposes or for economic transport, the said process itself would amount to conversion and therefore, the said activities, per se, will have to be considered as amounting to conversion and therefore resulting into deemed emergence of new excisable goods i.e., ore concentrate. We also find that the circular of CBIC is based on a clarification issued by the Ministry of Mines, where certain processes of crushing and screening were treated as mere preparatory processes and were not treated as special treatments as contemplated in the explanatory notes. We find that while the circulars are binding on the department, however, if it is patently against the obvious stated provisions then it need not be followed. That apart, in the present appeals, it is not only a question of crushing and screening, etc., but washing is also involved for removal of foreign material partly or fully. Therefore, what might have been clarified in the context of iron ore, need not be true for all types of ores or end use, as they have different impurities and intended uses requiring different kinds of preparatory processes.
(16)C/21916/2014, C/21338/2015, C/30455 & 31110/2016
23. Therefore, both on account of cited judgments having not taken into account the observations of the Hon'ble Supreme Court in the case of M/s Star Industries Vs CC (Imports), Raigad (supra) as also the fact that circular itself has not been correctly applied in the given factual matrix, the cited judgments are not relevant and are distinguished. There is another ground taken that similar activities are being performed in respect of Manganese ore extracted and sold in India, where such activities have not been treated as amounting to manufacture. However, per contra, learned AR has relied on the case of M/s MOIL Ltd Vs CCE & ST, Jabalpur (supra), wherein, the issue examined by the Tribunal was whether various processes such as crushing, screening, sorting by hydraulic machines and washing with high pressure water, resulting into emergence of concentrate in terms of Chapter Note 4 to Chapter 26 and therefore, leviable to Central Excise duty is distinct from ore or otherwise. After considering the factual matrix and statutory provisions including Board Circular dt.17.02.2012, inter alia, it was held that the process of crushing, grinding, screening, grading of iron ore would result into 'manufacture' of, inter alia, 'concentrate' in terms of clause
(ii) of section 2(f) read with Chapter Note 4 to Chapter 26. Thus, as the identical processes in India were held to be amounting to manufacture in terms of Chapter Note 4 to Chapter 26, it would be obvious that similar process undertaken abroad would also be amounting to deemed manufacturing resulting into a distinct product i.e., concentrate. Incidentally, in this case also, it is Manganese Ore and most of the users of Manganese ore, who are also included in these appeals, are simultaneously buying such ore from MOIL, which has been held to be leviable to Central Excise duty as concentrate.
24. Therefore, keeping in view the observations of Hon'ble Supreme Court in the case of M/s Star Industries Vs CC (Imports), Raigad (supra), when the goods are subjected to a similar activity and therefore, denied exemption in India and charged to Central Excise duty, similar goods having undergone similar processes when imorted would also be not entitled to CVD exemption. We also find force in the citations of the learned AR in the case of Beach Minerals Company Vs CC, Tuticorin [2023 (9) CENTAX 148 (Tri- Mad)]. In this case, it was the case of the department that the appellants have not undertaken any beneficiation process to make the mined sand into (17) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 processed/upgraded Ilmenite. The Tribunal relied on the definition of the word 'beneficiation' under Rule 3(d) of Mineral Conservation and Development Rules, 1988, as under.
"12. The major objection but forward by the Department is that the appellants have not undertaken any beneficiation process to make the mined sand into processed/upgraded Ilmenite. The appellant has produced the flow chart showing the various processes undertaken before the goods are exported. It may be true that the mine sand has not undergone any chemical treatment or roasting. It has to be seen that the said flow chart has been approved by the Mining Department as well as the Atomic Energy. Further in the Tariff heading reproduced above, the word "beneficiation" has not been explained. Rule 3(d) of Mineral Conservation and Development Rules, 1988 defines "beneficiation". The said rule reads as under:
"4.5 Mineral Conservation and Development Rules, 1988.
3. Definitions.- In these rules, unless the context otherwise requires -
3(d) "beneficiation" means process 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."
25. Therefore, it was held that any process, which is done for the purpose of regulating size of desired produce, removal of unwanted constituents and improving quality, purity or assay grade of desired product, would be treated as beneficiation process. The Tribunal also relied on the decision in the case of VV Minerals Vs CC [2016 (332) ELT 888 (Tri)], wherein the Tribunal has relied on the judgment of Hon'ble Supreme Court in the case of Tata Steel Ltd Vs UOI [2015 (3) SCALE 759], wherein, the Hon'ble Supreme Court examined the question as to what the consequence of beneficiation is and observed very briefly that the consequence of beneficiation of coal is upgrading or improving its quality from ROM coal. Thereafter, it was, inter alia, held that beneficiation process (dense media gravity separation and froth flotation) 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. The findings of the Tribunal at para 15 are relevant and is cited below for ease of reference.
(18)C/21916/2014, C/21338/2015, C/30455 & 31110/2016
15. Our view is supported by the decision of the Tribunal in the case of VV Minerals Vs. Commissioner of Customs (supra). The Tribunal analyzed the issue in detail and observed as under:
"11. We have also seen the sample of both unprocessed and the final product i.e. upgraded Ilmenite and perused the certificate dated 1-3-2013 issued by the Department of Geology & Mines, Government of Tamil Nadu which clearly confirms that appellants are licensed by the Government of Tamil Nadu to export processed/upgraded Ilmenite. Both adjudicating authority and the LAA relied the website literature of another company i.e. Kerala Minerals Ltd. and based their decision only on the issue of roasting and acid wash or chemical treatment. The department also contends that beneficiated ore should be high % of TiO2 which is 'Synthetic Rutile'. We find that the classification of 'Rutile' is separately classified under CH 2614 00 31. Therefore, the department's contention for classifying under Chapter 2614 00 10 is not based on valid reasons and relying another firm's website details cannot be taken as authentic evidence. It might be the process undertaken by the said company.
12. The Hon'ble Supreme Court in the case of Tata Steel & Others v. UOI (supra) while discussing the entitlement of refund of royalty on the Mines & Minerals has discussed the 'beneficiation' and the benefits. The relevant paragraphs of Apex Court is reproduced as under :-
"26. The question that, therefore, arises is what is the consequence of beneficiation? Very briefly, the consequence of beneficiation or coal is upgrading or improving its quality from ROM coal. In the Convenience Volume handed over to us, with reference to beneficiation or coal, it is stated by Tata Steel as follows :
The crushed raw coal (ROM) has ash percentage varying from 22% to 40% and moisture of 3% to 5%. 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 for 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 whereas, less than 0.5 mm 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%).(19)
C/21916/2014, C/21338/2015, C/30455 & 31110/2016 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.
Referring below a flow chart [not relevant] ..... From the quantity related table, it is also quite evident that due to addition of water during wet beneficiation, the summation of beneficiated coal product quantity is higher than fed ROM coal quantity."
The Apex Court in the above decision clearly spelt out that beneficiation processes are only related to physical separation. The ratio of the Apex Court decision though it was held with respect to coal, the same squarely is applicable to the present case as the principle of beneficiation is same. Further the Hon'ble High Court of Patna in the case of Indian Aluminium Co. Ltd. and Anr. v. State of Bihar & Ors. (supra) while deciding the constitutional validity of collection of fees on ores under Mines & Minerals Act, 1980 relied the definition of beneficiation given under MCD Rules, 1988. Further, we find that the Board's circular dated 17-2-2012 had clarified chapter note of Chapter 2601 - 2617 and by beneficiation process the end product of ore is concentrate or upgraded ore. The extract of circular is reproduced as under :-
"*** From the above definition, it is clear that removal of part or all of foreign material is envisaged for conversion of ores into concentrates. Ministry of Mines have clarified that no special treatment is involved in the crushing and screening of ore and the end-product can be termed as a concentrate only when the grade of ore is sufficiently improved through beneficiation. Federation of Indian Mineral Industries have also pointed out that several processes (in addition to crushing and screening) such as milling, hydraulic separation, magnetic separation, floatation & Concentrate (20) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 thickening have to be undertaken for ores to be converted into concentrate.
3. Hence it is clarified that the levy of excise duty is attracted only in cases where the product meets the definition of concentrate as per HSN Notes, that is, 'ores which have had part or all of the foreign matter removed by special treatments either because such foreign matter may hamper subsequent metallurgical operations or with a view to economical transport'."
The above clarification covers the appellant's export product which is covered under 2614. The above circular and the ratio of the Hon'ble Apex Court and High Court decisions (supra) are squarely applicable to the present case. The department relying on the Tribunal decision in the case of Kerala Minerals & Metals Ltd. (supra) is on the manufacture and excisability of the product and not on beneficiation or classification. The same is not applicable to the present case as the issue here is on charging export duty on Ilmenite Upgraded (beneficiated). The definition of "beneficiation" given in Mineral Conservation and Development Rules, 1988 is more authentic than the website literature relied by department. Both Apex Court decision and High Court decision on 'beneficiation' are applicable to the present case. While classifying the goods whether for import or export the descriptions used in the chapter headings and sub-headings are to be literally applied and no other meaning or assumption can be made. The sub-heading 2614 00 20 only describes Ilmenite upgraded (beneficiated Ilmenite) without any specification. As evident from the findings of LAA the Revenue's trying to put the "Synthetic Rutile" under the above heading is incorrect and not acceptable. Therefore, by respectfully following the Apex Court and High Court decisions referred above, we are of the considered view that the product "Ilmenite" exported by the appellant is rightly classifiable under CH 2614 00 20 of CTH as "Ilmenite upgraded (Beneficiated Ilmenite) and chargeable to appropriate export duty and not under 2614 00 10 of CTH.
13. Accordingly, the impugned order is set aside and the appeal is allowed with consequential benefit."
26. Thereafter, the Tribunal held that goods, which were upgraded/ processed Ilmenite are classifiable under 2614 00 20 and set aside the Revenue appeal. Therefore, in this case also, simple physical process of segregating or washing certain foreign materials have been treated as leading to upgradation of quality, etc., and keeping in view the definition of 'beneficiation' process, it was held that resulting product is beneficiated product.
27. There are some other incidental grounds taken by appellants that no testing was conducted or expert opinion relied upon to arrive at the conclusion that such activities led to conversion of ore into concentrate. We find that while prior to insertion of deeming provision, the tests were being conducted to distinguish between concentrate and ore for deciding whether (21) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 they are eligible for exemption or otherwise. However, post this insertion of Chapter Note, in view of the deeming provision, there was no necessity to conduct any test as long as it is established and admitted that certain activities were undertaken on ROM ore before it was shipped to India. The only issue that required to be seen is that whether these activities undertaken prior to its shipment could be considered as process leading to removal of impurities and foreign material so as to make it suitable for metallurgical purposes or for economical transportation. It is also not necessary that it should be some detailed process involving physical, physico-chemical and chemical operations, as even simple physical process like washing, crushing, sizing, etc., depending on requirement and the nature of ore, would enhance its value and purity and compatibility with intended end use. In all these appeals, it is not in dispute that they have received ore of certain concentration and admittedly they are above 35%. The scheme of classification of Manganese ore is that Chapter Heading 2602 00, which covers both Manganese ore and concentrates, including ferruginous manganese ores and concentrates with a manganese content of 20% or more, calculated on dry weight. The scheme is reproduced below:
Tariff Item Description of goods Unit Rate of
duty
2602 Manganese Ores and Concentrates, including
Ferruginous Manganese Ores and Concentrates with a Manganese Content of 20% or more, calculated on the dry weight 2602 00 Manganese ores and concentrates, including ferruginous manganese ores and concentrates with a manganese content of 20% or more, calculated on the dry weight:
2602 00 10 Manganese ore (46% or more) Kg. 12.5%
2602 00 20 Manganese ore (44% or more but below 46%) Kg. 12.5%
2602 00 30 Manganese ore (40% or more but below 44%) Kg. 12.5%
2602 00 40 Manganese ore (35% or more but below 40%) Kg. 12.5%
2602 00 50 Manganese ore (30% or more but below 35%) Kg. 12.5%
2602 00 60 Ferruginous (10% or more but below 30%) Kg. 12.5%
2602 00 70 Manganese ore sinters, agglomerated Kg. 12.5%
2602 00 90 Other Kg. 12.5%
(22)
C/21916/2014, C/21338/2015,
C/30455 & 31110/2016
28. Thus, for different Manganese content in the ore, different sub- classification has been made. A logical question would be if someone imports ore with Manganese content of 20% and someone imports ore of Manganese content of 35% or above, will they be same. In our opinion, this sub-classification clearly indicates that Manganese ore can have different Manganese content, either naturally occurring or by way of subjecting it to certain process to arrive at desired percentage. The lowest percentage for Manganese ore and concentrate had been accepted at 20%. Thus, any improvement in the content itself, where there is clearly admitted fact that it has undergone certain process, would indicate that there has been an improvement in the quality. Therefore, on this count also, it can be said that the subject processes undertaken on ROM ore has resulted into emergence of concentrate, which is a distinct excisable goods in view of deeming provisions.
29. Insofar as their submission of non-applicability of interest in the facts of the case is concerned, citing certain judgments, supra, we find that statutory provisions are quite clear and when there is delay in payment of duty due, applicable interest is required to be paid. It is to be noted that in the instant case the Bills of Entries, after provisional assessment, were finally assessed denying exemption benefit. In this regard, the Hon'ble Supreme Court Larger Bench in the case of Steel Authority of India Ltd Vs CCE, Raipur [2019-TIOL-204-SC-CX-LB], dealt with a case where the issue was whether interest is payable on the differential excise duty or otherwise, on the basis of escalation clause. In the said case, value of goods was provisional at the time of clearance and later the value was finally determined due to escalation clause and therefore, the final value, so determined, was held to be retrospective to the time of removal and hence it is held that interest is payable on such differential duty between provisional and final determination of values from the date of provisional determination. The Customs Tariff Act (CTA), 1975 vide Section 3(8), prescribed that the provisions of Customs Act, 1962 and the Rules and Regulations made there under, apply to the duty chargeable under this Section as they apply in relation to the duties leviable under that Act. Section 3(8) nowhere excludes the applicability of provisions relating to (23) C/21916/2014, C/21338/2015, C/30455 & 31110/2016 charging of interest etc., including the power to recover duty due, as available under the Customs Act. It appears that the decision of the Hon'ble Supreme Court Larger Bench in the case of Steel Authority (supra) was not brought to the notice of Hon'ble Bombay High Court in the case of Mahindra & Mahindra (supra). The above legal position is further clarified by way of Section 3(12) of CTA, 1975, wherein the provisions of the Customs Act, 1962 and all rules and regulation made there under, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offenses and penalties, shall apply, as they apply in relation to duties leviable under the Customs Act or all Rules or regulation made there under. The above said clarification was provided by way of substitution vide Finance (No. 2) Act, 2024. The Hon'ble Supreme Court in the case of GOI Vs Indian Tobacco Association [2005 (187) ELT 162 (SC)], held that substitution could have retrospective effect and as a remedy to remove absurdity occurring in the legal provisions and bring the same in conformity with what the legislature really intended. It was also held that "Where a statute is passed for the purpose of supplying an obvious omission in a former statute, the subsequent statute relates back to the time when the prior Act was passed [See Attorney General v. Pougette (1816) 2 Price 381:
146 ER 130]." Reliance is also placed on the decision of Hon'ble Jharkand High Court in the case of Madhu sudan Mittal Vs UOI, reported in 2023 (70) G.S.T.L. 124 (Jhar.)
30. In view of the above discussion and findings, we do not find any merit in the appeals filed by the appellants and accordingly, all the appeals are dismissed.
(Pronounced in the Open Court on 09.01.2026)
(A.K. JYOTISHI)
MEMBER (TECHNICAL)
(ANGAD PRASAD)
Veda MEMBER (JUDICIAL)