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10.4 He has also submitted that all activities of crushing/grinding/screening of iron ore in Appellants mines are undertaken by contractors and assuming without admitting that the activities results into manufacture then the contractors who discharged Service Tax on the same services are bound to be treated as manufacture and Central Excise duty should be recovered from them.

11. Shri S.C.Jana, ld.Spl.Counsel appearing for the Revenue rebutting the arguments advanced on behalf of M/s Rungta Mines Ltd. & M/s.Rungta Sons. Pvt.Ltd. submitted that as per chapter note 4 of chapter 26 of CETA any process of converting ores into concentrates shall amount to manufacture; process of concentration of ores even though not mentioned in CETA, 1985 are elaborated in detail in the HSN notes. It is his contention that as per HSN notes, even physical or physico-chemical processes, which include crushing, screening etc. could be called as processes of concentration of ores. It has been clearly stated that even if any process is conducted on the ores to remove part or all of the foreign matters, whether to make such ores fit for economic transport or for subsequent metallurgical operations, such process would merit to be called as the process of concentration of ores, therefore, the plea of the appellant is devoid of merit, when chapter note 4 of chapter 26 of CETA read with HSN notes, the processes of crushing and screening conducted on the ores has definitely led to the manufacture of concentrates from ores, even if such processes have been conducted only for the purpose of economic transportation of the ores.

15.10 The next decision on which heavy reliance was placed is CCE vs. SAIL. The facts involved in the present case in relation to Appeal No. EA-71306/13 filed by M/s.SAIL are more or less similar, therefore, not repeated. 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 :

15.25 In our view, the processes mentioned under the definition of beneficiation 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 as enumerated under the scope of beneficiation, 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. There has been no serious argument nor any contradiction of the fact that after carrying out the process of crushing, grinding, washing, grading with the particular size, the treated Ores are not made fit to be used directly for metallurgical operations. In our opinion, there is no necessity to examine whether by employing such processes, the Fe every content of the Ores has improved or the relevancy of all the processes categorised under the benefication method, become necessary for ores of having Fe content 40% or 60%. Neither, in our opinion, it is relevant to adopt the meaning of concentration and Levy of royalty under the Mines and Minerals(Regulation and Development Act),1957 and the Rules made thereunder to arrive at the conclusion that processes resulted into manufacture and the resultant product is iron Ore concentrate and chargeable duty. On the contrary, it is safe and prudent to look into the meaning of the concentrate in the HSN than to Mines and Minerals(Regulation and Development Act),1957 and the Rules made thereunder 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 on 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 Iron 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.

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. 15.30 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 process of benefication is applied on Ores, the resultant cannot be called as a Iron Ore concentrates and accordingly the processes of crushing, grinding, screening, grading and washing of 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 its Fe 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. The broad and detail tariff entry has been introduced with effect from 200506 classifying ores having different Fe content assigning different sub-headings. Therefore, in absence of an increase in the Fe content by benefication or any other 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 processes of crushing, grinding, screening and washing and grading of iron ore, converts it into iron ore concentrates and accordingly in view of the chapter note 4 of chapter 26 becomes manufacture and leviable to Excise duty.