The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, rejected claims for exemption from Countervailing Duty (CVD) under Central Excise Notification No. 04/2006-CE, holding that imported manganese ore, which had undergone washing, sizing, and removal of waste, constituted “concentrate” and not “ore.”

The appellants had imported manganese ore lumps and claimed exemption from CVD, arguing that the goods were raw ores under Tariff Item 2602 00 10. The department contended that the imported goods had undergone washing, sizing, and screening processes amounting to concentration and thus manufacture under Chapter Note 4 to Chapter 26.

Appellants, Hira Power and Power & Steels Ltd, contended that the imported goods were manganese ore lumps falling under Chapter Heading 2602, not concentrates, and thus eligible for exemption under Notification No. 04/2006-CE. They argued that routine processes such as crushing, sizing, and screening are standard mining operations and cannot be equated with beneficiation or “special treatments” that convert ore into concentrate.

Also pointed out that they relied on earlier CESTAT rulings in their own favour (Final Order No. A/31006-31046/2017), which had attained finality, asserting that the Revenue could not take a contradictory stand in identical circumstances. They also cited the Supreme Court’s decision in UOI v. Kaumudini Narayan Dalal to argue that once the department accepted a ruling, it could not contest the same issue in another case.

Supporting their claim, the appellants produced certificates of analysis, load port reports, and commercial invoices to demonstrate that the goods were ores.

On the other hand, revenue argued that it had defended its denial of a CVD exemption by asserting that the imported manganese ore had undergone washing, sizing, and removal of waste, which constituted “special treatments” converting the ore into concentrate. Citing Chapter Note 4 to Chapter 26, the department argued that such conversion constitutes “manufacture” under the Central Excise Tariff, rendering the goods ineligible for exemption under Notification No. 04/2006-CE.

They stated that the imported goods were not in their Run-of-Mine (ROM) state but had been processed to meet the appellants’ specifications. also contended that the burden of proof lay with the appellants to establish eligibility for exemption, and that mere production of certificates or invoices did not override the statutory deeming provisions.

The Tribunal noted that the imported goods were not Run-of-Mine (ROM) ores but had been processed to meet contractual specifications. It held that such activities, including washing and removal of overburden, constituted “special treatments” that converted ore into concentrate, thereby attracting excise duty.

Unclear Whether Excise Duty can be Demanded on Alleged Diversionof Goods when Duty already Paid: CESTAT Rejects Appeal [Read Order]

Rejecting the appellants’ reliance on earlier favourable orders and CBIC circulars, the bench pointed out the binding nature of the Supreme Court’s ruling in Star Industries v. CC (Imports), Raigad, which clarified that conversion of ores into concentrates amounts to manufacture and that concentrates are distinct from ores for exemption purposes.

The bench of A K Jyotishi and Angad Prasad held that “Once the process is deemed manufacture under Chapter Note 4, concentrates fall outside the scope of Notification No. 04/2006-CE, which exempts only ores.”

Accordingly, the appeals were dismissed, and the demand for CVD was upheld.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates