Commissioner of Customs Vs BDG Metal & Power Ltd. (CESTAT Kolkata)
CESTAT Kolkata held that benefit of notification no. 4/2006-CE dated 01.03.2006 is available on imported manganese ore lumps, crushed, screened, washed having ‘Mn’ content of 43%/45% (approx).
Facts- M/s. BDG Metal and Power Ltd. imported manganese ore lumps, crushed, screened, washed with manganese content of 43%/45% approximately vide seven and three Bills of Entry during the period July to October 2011. The said Bills of Entry were assessed finally at NIL rate of CVD under notification no. 4/2006-CE dated 01.03.2006 and were cleared for home consumption thereafter. Department contended that the manganese ore imported by the respondent importer was concentrate and therefore the imported goods were not eligible for benefit of CVD under notification no. 4/2006-CE dated 01.03.2006
Commissioner (Appeals) held that the appellant in the present matter was eligible for the benefit of Notification 4/2006-CE dated 01.03.2006. being aggrieved, revenue has preferred the present appeal.
Conclusion- In the instant case the appellant has imported “Manganese Ore Lumps, crushed, screened, washed having ‘Mn’ content of 43%/45% (approx)” and the lower authority did not dispute the item to be ‘Ore’. The physical processes of crushing, screening and washing in any way are not such as would contribute to enriching the Manganese percentage in the natural product mined. That as we have noticed in the Apex Court’s decision cited in para 8 supra is undertaken by processing the mined products in a Concentrator Plant. The imported goods have certainly not been subjected to any operation in the Concentrator Plant prior to their import. The various modes of Ore Dressing could include handpicking, sorting, screening, washing, jigging, magnetic separation, crushing, grinding, etc. By way of these processes there is no change in the chemical composition and properties of a mined product. The operations carried out before and after processing/dressing are only to make it saleable and for ease of handling in transport. It is important to point out that mineral/dressing of ore cannot be said to leading to formation of a concentrate.
Held that the lower authority at the time of assessment and examination has not disputed nor have they subjected the imported goods to chemical analysis thus we are of the view that the order of the learned Commissioner (Appeals), cannot be faulted upon. We therefore find no merit in the appeal filed by the revenue.
FULL TEXT OF THE CESTAT KOLKATA ORDER
Revenue has filed the impugned appeal assailing the Order in Appeal Passed by the learned Commissioner of Customs (Appeal), Kolkata bearing Order in Appeal No. KOL/CUS(PORT)/AA/1279–1280/2018 dated 03.07.2018.
2. The facts of the case are that M/s. BDG Metal and Power Ltd. imported manganese ore lumps, crushed, screened, washed with manganese content of 43%/45% approximately vide seven and three Bills of Entry during the period July to October 2011. The said Bills of Entry were assessed finally at NIL rate of CVD under notification no. 4/2006-CE dated 01.03.2006 and were cleared for home consumption thereafter. It is submitted by the department that according to Harmonised System of Nomenclature (HSN) to qualify for classification under chapter heading 2601 to 2617 processes of ore concentration allowed include physical, physio-chemical operation provided they are normal to the preparation of the ore for the extraction of metal and such operation must not alter the chemical composition of the basic compound. Such operations include crushing, grinding, magnetic separation, gravimetric, separation and floatation. It is stated that by virtue of chapter note 4 to chapters 26 of the Central Excise Tariff Act, (1985 with effect from 01.03.2011) the activity of processing/conversion of ore into concentrate (washing, crushing, screening, drying etc.) in relation to items of this chapter amounts to manufacture. It is therefore the contention of the department that the manganese ore imported by the respondent importer was concentrate and therefore the imported goods were not eligible for benefit of CVD under notification no. 4/2006-CE dated 01.03.2006
3. The learned Commissioner (Appeals) vide his order referred to supra has however, held that the appellant in the present matter was eligible for the benefit of notification no. 4/2006-CE dated 01.03.2006, vide serial number 4 thereof and accordingly directed the lower authority to reassess the impugned goods, allowing the duty exemption benefit under notification ibid.
4. The learned Authorised Representative submitted that the imported goods in fact were concentrate and not ore as they had undergone processes to render the goods, derived upon mining, as marketable and which processes amount to manufacture, converting the ore to concentrate as per explanatory notes and Board’s Circular No. 9/2012 dated 23 March 2012. He submitted that in relation to products Chapter 26, the process of converting Ores into Concentrates amounts to manufacture, hence exemption under Sl. No. 4 of Central Excise notification no. 4/2006-CE dated 01.03.2006 could not be straight away applied to the products of Chapter 26. According to HSN, as already stated, to qualify for classification under heading 2601 to 2617, the process of ore concentration allowed include physical, physio-chemical or chemical operations provided they are normal to the preparation of the ores for the extraction of metal and such operation must not alter the chemical composition of the basic compound. Such operation includes grading, crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, drying, calcination, roasting to oxidize, reduce or magnetize the ore etc. He impressed that Chapter Notes are a statutory part and parcel of the tariff schedule, and assist the right interpretation and classification of goods. Thus as the ore has undergone processing to increase the marketability of the product and the percentage of Manganese in the processed ore is definitely a higher percentage. All marketable Manganese ore would compulsorily go through the process of grinding, crushing, washing etc. converting the ore to concentrate as per definition of manufacture under Section 2(f) of the Central Excise Act 1944. The relevant part of the definition is as under:
Section 2 (f) of the Central Excise Act, 1944 read as under:
2(f) “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;
(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods…………..
5. Repudiating the arguments of the department, the learned Advocate Shri N.K Chowdhury for the appellant submitted that the department’s claim were without any basis, that they had imported manganese ore only and were therefore rightly eligible for claiming the benefit of the exemption notification no. 4/2006-CE dated 01.03.2006. The same has therefore been rightly allowed to them, by the learned Commissioner (A). He also pointed out that the department could not point out any discrepancy at the time of the examination of the imported goods, as the imported goods were examined thoroughly by the examining officer, nor did the department, undertake any test of the said goods to substantiate their case. Further, he vehemently argued that when an expression in the exemption notification is clear and there is no ambiguity, nothing can be interpreted beyond the plain words of the notification. That the language of the said notification is quite clear and the Sr. No. 4 of the notification covers the goods imported by them, in the instant case with Nil condition. He further added that the lower authority in his order in original had not disputed that the item is not ore but was a concentrate. The learned Advocate submitted that the ore at the time of mining is required to be crushed, screened and washed before shipment can be affected. Such physical processes cannot be considered as amounting to manufacture, moreover, no purity percentage had been prescribed vide the impugned notification. He added that the department was not able to supply any evidence to dispute the purity of the imported product. Apart from the above the learned Advocate also submitted that there was no cut- off limit of mineral content in the ore, that the department did not challenge the importation after that final assessment of Bill of Entry and therefore the demands were not maintainable. He finally added that in any case the entire exercise was revenue neutral.
6. We have heard the two sides and perused the case records. The facts of the case are not much in dispute. It is settled law that there is no scope for intendment in interpretation, as long as the wordings in the exemption notification were clear and unambiguous and that nothing can be interpreted beyond the plane wordings of the notification. For ready reference, the impugned notification is extracted hereunder below:
“[Notification No. 4/2006-CE., dated 1-3-2006]
Exemption and effective rate of duty for specified goods of Chapters 25 to 49
In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification and the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid.
Explanation.- For the purposes of this notification, the rates specified in column (4) of the said Table are ad valorem rates, unless otherwise specified.
