The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) has held that the Mineral/Dressing of ore is not Important to the Formation of Concentrate and upheld the taxability of ore under the Excise Act, 1985.
M/s. BDG Metal and Power Ltd, the respondent assesee imported manganese ore lumps, crushed, screened, and 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 the NIL rate of CVD under Notification No. 4/2006–CE dated 01.03.2006 and were cleared for home consumption thereafter.
It was submitted by the department that according to the Harmonised System of Nomenclature (HSN) to qualify for classification under chapter heading 2601 to 2617 processes of ore concentration are allowed to include physical, and 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 chapter note 4 to chapter 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.) about 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 concentrated and therefore the imported goods were not eligible for the benefit of CVD under Notification No. 4/2006 – CE dated 01.03.2006.
The Commissioner (Appeals) 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 the notification.
It was submitted that the imported goods 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.
It was evident that the CBIC has itself in the Circular dated 17-2-2012 clarified that crushing and screening are mere preparatory processes and do not tantamount to concentrating an ore, as there is no special treatment involved in the same and that it is only through the additional process of milling, hydraulic separation, magnetic separation, floatation and concentrate thickening that a part or whole of the foreign matter is removed, to concentrate an ore.
The imported goods have certainly not been subjected to any operation in the Concentrator Plant before their import. As such we notice striking similarities in the present matter with the enunciation of law as held by the co-ordinate bench of this Tribunal in the case of Amba River Coke Ltd. supra. It certainly cannot be subjected to the rigours of a concentrate.
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 the mineral/dressing of ore cannot be said to lead to the formation of a concentrate.
A two-member bench of Mr Ashok Jindal Member (Judicial) And Mr Rajeev Tandon Member (Technical) viewed that the order of the Commissioner (Appeals), cannot be faulted upon. While dismissing the appeal, the CESTAT upheld the order of the Commissioner (Appeals).
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