Tarini Prasad Mohanty Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
The appeal challenged an order confirming central excise duty of ₹8,50,65,540 along with interest and an equal penalty under Section 11AC of the Central Excise Act read with Rule 25 of the Central Excise Rules, 2002. The appellant, engaged in mining iron ore and manganese ore under a mining lease granted by the Government of Odisha, extracted high-grade iron ore that required no beneficiation or concentration. The iron ore was subjected only to crushing and screening for size reduction and segregation into lumps and fines according to industrial requirements. These operations were carried out by an independent contractor, who treated them as taxable mining services and discharged Service Tax.
The Department issued five show cause notices covering the period from March 2011 to March 2015 after insertion of Chapter Note 4 in Chapter 26 of the Central Excise Tariff Act, 1985 with effect from 1 March 2011. It alleged that crushing and screening converted iron ore into “iron ore concentrate” classifiable under sub-heading 26011150, amounting to manufacture and attracting excise duty. The Commissioner confirmed the demand, interest and penalty, holding that any process making iron ore fit for use or transport constituted manufacture and that exemption available to “ores” under Notification No. 4/2006-CE and Notification No. 12/2012-CE was unavailable.
