The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that processing of beach sand minerals results to form processed ilmenite and it attracts 5% on Free On Board(FOB) value as per Customs Notification.
The appellant M/s. Beach Minerals Company who is the holder of the Importer Exporter Code filed the following shipping bills through their Custom House Agent, M/s. Barath Marines Company, Tuticorin for the export of “Ilmenite upgraded (processed)”, and classified the goods under Tariff Item 2614 00 20.
The CHA vide letter dated 09.03.2013 stated that the appellant had exported Ilmenite for the past 15 years. They had declared the classification of the Ilmenite exported by them as ‘2614 00 10’. It was noted by the department that as per Notification No.15/2013 dated 01.03.2013 export of Ilmenite unprocessed comes under Sl. No.24-C of Notification No.27/2011 dated 01.03.2011 and the export duty at the rate of 10% on FOB.
The Ilmenite which is upgraded (beneficiated Ilmenite) processed comes under Sl. No.24 D at the rate of 5% on FOB with effect from 01.03.2013. The appellant had filed shipping bills describing the goods as ‘processed Ilmenite’ and classifying it under Customs Tariff heading 2614 00 20.
After due process of law, the original authority ordered the classification of the Ilmenite upgraded (processed) under Customs Tariff Act 2614 00 10. On appeal, the Commissioner (Appeals) held that the Ilmenite sand exported is unprocessed and has to be classified under CTH 2614 00 10 of CTA, 1975.
The appellant is an entity involved in the process, manufacture and export of garnet, rutile, etc., During the period from March 2013 to April 2013, they had exported 58 consignments of Ilmenite upgraded (processed) classifying the goods under CTH 2614 00 20. The export duty in respect of such goods comes under Sl. No.24 D at the rate of 5% on FOB value as per Notification No.27/2011-Cus dated 01.03.2011 as amended by Notification No.15/2013 dated 01.03.2013, whereas, the Department has held the classification to be under CTH 2614 00 10 under Sl. No.24 C of the said notification. The export duty for the said heading is at 10% FOB value.
The mining, refining and processing of beach sand minerals results in the processed Ilmenite which has a minimum of 51 to 52% TIO2 content. Besides the flow chart, the appellant had also submitted to the Department, a Certificate issued by the Geology and Mining Department (State of Tamil Nadu) dated 01.03.2013 in which it is stated that the appellant has a license to export processed/upgraded Ilmenite and that they have been doing so over many years.
Ignoring these documents, the department has held that the process undertaken by the appellant on beach sand mineral does not bring into existence any new product/commodity/goods with a distinct identity from the initial ore.
A two-member bench comprising Ms Sulekha Beevi C S, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) held that “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.
The authority allowed and set aside the impugned order.
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