1. This is a revision application filed by M/s. Uranium Corporation of India Ltd. (Government of India Enterprise), before the Government of India, Ministry of Finance (now transferred to the Appellate Tribunal under Section 35P of the Central Excises and Salt Act, 1944) against the Order-in-Appeal No. 207/BR/80 dated 22-7-80 issued under C.No.V/68/2/207- XAP/BR/79/8200-A dated 3-12-80 pased by the Appellate Collector of Central Excise, Calcutta.
2. The facts of the case as are apparent from the record are that the appellants are producing copper concentrates, Molybdenite concentrates and Magnetite from mines owned by them. After the introduction of Tariff Item No. 68 with effect from 1st March, 1975 the Appellants paid the excise duty on the Copper Concentrate, Molybdenite concentrates and Magnetite under Item 68 of the C.E.T. The Appellants in their letter dated 19th April, 1979, intimated the Assistant Collector, Central Excise, Jamshedpur that these items were not dutiable under Item 68 of the C.E.T. and that they were stopping payment of duty and would arrange for claiming the refund separately. The Excise authorities, however, did not accept this contention of the appellants company and held that there was a distinct change in character of the concentrates found from the Ore and so the same attract Tariff Item 68 on manufacture.
3. Not satisfied with the said order of the Assistant Collector, Central Excise, Jamshedpur, appellants company preferred an appeal on 23-8-79 contending inter alia that the recovery of copper, molybdenite concentrate and Magnetite minerals from the uranium ore did not involve any manufacturing operation as understood and contemplated in the Excise Law. It was also mentioned that the copper minerals as upgraded was sold to M/s. Hindustan Copper Limited, the only concern having necessary facilities to make copper metal. The said company was in due course paying excise duty as payable on the copper metal produced including the copper concentrate sold by the appellants company to them. The appeal was not entertained and it was rejected on the ground that a distinct change in character of the concentrate was found from the ore and so, excise duty under Tariff Item 68 was attracted.
4. Aggrieved by the said order of the authority below, the appellants company filed a revision application before the Government of India which now stands transferred to this Tribunal and is treated as an appeal.
5. We have heard Shri Ramesh Chander alongwith Shri M.R. Bheema Rao, employees of the appellants company and Shri S.N. Khanna, J.D.R. for the department and have gone through the record.
6. As per the contention of Shri Ramesh Chander, an officer of the appellants company, Uranium ore containing copper, molybdenum and magne- tite minerals, no doubt, undergo a process by which the low grade of these minerals are upgraded but the minerals as such do not change their characteristics and no new product emerges even though the upgraded minerals are saleble commodities. The authority below has erroneously equated a "process" with "manufacturing". A mere processing would not amount to manufacture as understood in the excise law. The process adopted by the appellants Company to upgrade the copper, molybdenum and magnetite minerals from the very low percentage to a higher percentage to market the products cannot, in view of the clear judicial pronouncements, be treated as "Manufacture" and levy of excise duty on these products is thus not justified. He cited a well known case of British King's Bench reported in (1906) 2 K.B. page 352 in support of his contention that mere processing does not amount to manufacture. According to Shri Ramesh Chander, the decision of the British King's Bench has been adopted by a number of Indian High Courts and recently by the Bombay High Court in the case of Commissioner of Sales Tax v. Dunkan Coffee Manufacturing Company. He also pointed out that this view also finds support from the authoritative decision of the Supreme Court in the case of Union of India v. Delhi Cloth & General Mills Limited (1978 E.L.T. J 121) wherein Justice Das Gupta speaking for the Bench observed :- "It is only with a limited purpose that the legislature, in our opinion, inserted this definition of the word 'manufacture' in the definition section and not with a view to make 'processing' of goods as liable to excise duty." 7. The well-settled fact and law would thus appear to be that a mere processing would not amount to manufacture as understood in the excise law,, The process adopted by the appellants company to upgrade the copper, molybdenum and magnetite minerals from the very low percentage to high percentage to market the product cannot, in view of the clear judicial pronouncement be treated as 'manufacture' and levy of excise duty on these products is thus not justified. No manufacturing process is involved in conversion of copper ores to copper concentrates. Copper ore concentrate is still copper ore and there is no change in the chemical composition of the basic ore. The essence of the term 'manufacture' is changing of one object intoanother for the purpose of making it marketable. The definition of the term 'manufacture' as per Section 2(f) of the Central Excises and Salt Act, 1944 would broadly imply a change in the raw materials and also something more viz. there must be such a transformation of a product (raw material) that a new and different Article must emerge having a distinct name, character or use. In the case of copper mineral concentrates produced by appellants company, the content of ore is merely upgraded. The process of upgrading the copper content of the ore cannot be stated to be a process of manufacture; Copper mineral concentrates so upgraded cannot also be termed as manufactured goods under the excise law as the identity of copper ore has not been altered or transformed. At best the copper mineral concentrates can be called an inter- mediate product which requires to be further manufactured for production of copper, an item covered by the Central Excise Tariff. The copper minerals concentrate as produced by the appellants company is sold to M/s.
Hindustan Copper Limited for production of copper metal and latter company pays excise duty on the finished product i.e. copper metal and, therefore, there will be double taxation.
8. The Departmental representative countered the arguments of ShriRamesh Chander and submitted that the essence of the term 'manufacture' is changing of one object into another for the purpose of making it marke- table. For the purpose of ascertaining whether it is a different thing or not, one has to see, whether thing made is a distinct entity for commercial purpose. According to Shri Khanna copper concentrate is a distinct entity for commer- cial purposes inasmuch as, as per own admission of the appellants, they are selling this product to M/s. Hindustan Copper Limited as copper concentrate. According to Shri Khanna, copper concentrate as upgraded by the Appellants company is a marketable commodity and is being sold as such and, therefore, as per the decision of the Hon'ble Supreme Court in Delhi Clouth & General Mills Limited (supra), it is liable to excise levy under Item 68 C.E.T.He further submitted that there is no question of double taxation in this matter because it is copper mineral concentrate which has been made subject to excise levy under Item 68 C.E.T. and after further concentration by M/s. Hindustan Copper Ltd. who purchases the same from the appellant company, it is the metal copper which is levied to excise duty under the Central Excise Tariff; copper concentrate and copper metal are two different commodities which are subject to excise levy under two different tariff items. Shri Khanna, however, submitted that it might be accepted that copper concentrate is an intermediate product in the ultimate process of extraction of copper, but it is not the case of the appellants company that the copper concentrate is removed under Rule,56B of the Central Excise Rules, 1944. They are selling the copper concentrate in question to M/s. Hindustan Copper Limited and as such it is a marketable commodity and therefore subject to excise levy under Item 68 C.E.T. The concentrate of copper, admittedly, contains 25% of copper and the ore from which such concentrate is obtained by chemical process, contains about 1 to 2 per cent of copper. So, the copper content of the copper concentrate and ore differs substantially, apart from the other ingredients contained in the original ore and in the copper concentrate obtained from the ore. On the basis of these facts, Shri Khanna submitted that copper concentrate and the ore from which such cocentrates are obtained are not identical materials in all respect and, therefore, copper concentrates are subject to excise levy under Item 68 of Central Excise Tariff.
9. As far as the facts are concerned, there is no dispute that the appellants are producing copper concentrates, from the ores obtained from the mines owned by them. There is also no dispute that uraninm ore mined contains a small percentage of copper, molybdenum and magnetite minerals and the company has established indigenous technology to recover a small part of the said minerals. In the ore, the percentage of copper is about 1 to 2 per cent and the concentrate of copper which is the product in dispute, admit- tedly, contains 25 per cent of copper and it is copper concentrates which is sold as such to M/s. Hindustan Copper Limited. For the purpose of ascertaining whether it is a different thing or not, one has to see whether thing made is a distinct entity for commercial purposes. The Hon'ble Supreme Court in Delhi Cloth & General Mills case (supra) cited the meaning of the word 'goods' and held that to become goods an Article must be something which can ordinarily come to the market to be bought and sold. Here, admittedly, the copper concen- trate, the product in dispute, is something which can ordinarily come to the market to be bought and sold, and actually this product is sold by the appel- lants company to M/s. Hindustan Copper Limited as copper concentrates. No doubt, there might be some force in the contention of the representative of the appellants that copper concentrates is an intermediate product and the copper is ultimately extracted from this copper concentrate by the Hindustan Copper Limited to whom they sell this product, but it is not the case of the appellants that they are removing this product under Rule 56-B of Central Excise Rules, 1944 and are entitled to the benefit of set-off procedure. What they claim is that it is not a new product which has come into existence and it cannot be made subject to excise levy. They cannot succeed in this claim. Copper concentrates (product in dispute) admittedly, contain 25 per cent of copper and the ore from which such concentrate is obtained by chemical process contains about 1 to 2 per cent of copper. Copper concentrate is a product which has come into existence out of the copper ore and it cannot be said to be the same product. This product ca be bought and sold in the market and is having a distinct name, so it is liable to excise under Item 68 of Central Excise Tariff.
10. We find no reasons to interfere with the findiugs of the authority below and, therefore, reject this appeal.
11. I have tried very hard to persuade myself that a copper concentrate would be a product different from copper ore from which it is made, and that this difference qualifies it for assessment under Item 68, but I have failed. I will take the Appellate Collector's order for the purpose of this discussion as it contains more details than the Assistant Collector's order.
12. The Appellate Collector says that the Uranium Corporation submit- ted that it obtained the concentrate by grinding and washing the ore, removing most of the gangue thus producing a concentration of 25% copper. He said that the contention of the party that this process did not produce a marketable commodity appeared to have some force as copper (ore) concentrate was an intermediate semi-finished product in the ultimate process of extraction of copper. But he found fault with the factory because the copper concentrate did not move under Rule 56B of Central Excise Rules, 1944. This is totally irrelevant. Rather surprisingly, the Appellate Collector declared further down that the concentrate had been obtained by chemical process. I am not able to determine how he received this information.
13. A concentrate is obtained by a mechanical process of removing the non-copper gangue material. I am not aware of a chemical process by which this is done. The concentration of copper even to the extent of 25% leaves the ore still an ore, even if much richer in its metal content. The ore concentrate has only one use-the extraction of the metal. There is no difference between the unconcentrated ore and the concentrated ore in character, use, behaviour or even content. The concentrate does not have a utility not possessed by the raw ore.
14. The department holds that the concentrate has a market, thereby im- plying that either the ore does not have a market or that the market for concen- trate is different from the market for the ore. It is not so; both have markets and are sold. And, if it comes to market, anything can be sold, even cow dung, earth, rock, waste products. It only needs a man who has a use for it and you have a buyer and, therefore, a market. A market is created by the presence of a buyer, not only by the manufacturer. When there is a seller and a buyer for a thing, we have a market. But because the concentrate is bought does not set it up as a commodity different from the ore. Both are bought and sold: the two actions must not lead us to conclude that one is different from the other. The department's counsel argued that the DCM judgment would make this con- centrate liable to excise duty under Item 68. This is a misunderstanding of that epochmaking judgment. The Supreme Court said only that before you clamp down excise duty on a product, you must satisfy yourself that the produce was so excisable according to the law. Was the oil an oil excisable under the head under which the tax authorities wanted to tax it Did it meet all the standards of that commodity which the tax authorities thought it was These were the questions the Court's attention was on.
15. Here the problem is different. There is no head for the concentrate. The central excise say that because it had been obtained by a process of concentrating, it becomes dutiable. But under what head Item 68 Now to say that a concentrate has become a commodity assessable under Item 68 is doubtful proposition. A (refined) oil has a definite head in the excise tariff and so the question "Has this oil become an oil assessble as a refined oil ?" is a pertinent and valid question. But the question "Has this concentrate become a goods not 'otherwise specified ?" is not at all a valid question-principally be- cause, as I have already discussed, the concentrate is nothing but the ore, though with a higher content of metal. Even unconcentrated, the ore is sold, just like the concentrate. The latter commends a better price, but the marketability is not a bit different. The difference, if there is one, is only the difference between the customer appeal of a better or superior product and an inferior one. The DCM judgment is true for a case when a heading looms before a commodity for purposes of excisability under the Central Excise Tariff; it is not true for the purpose of saying that something, no matter what has been done to it, ceases to be that thing and it should pay excise, and if there is no specific heading for it, it should be excised under Item 68, the residuary, non-specific item. The judg- ment is not to enable us to say, "This thing has undergone some process, there- fore, it is no longer what it was before the process". It is meant to be a test for determining if something has appeared for the purpose of excise.
16. I am of the opinion that the concentrate has not acquired excise liability. It remains what it was-a copper ore. That it has a market is a merit it shares with its source, the (unconcentrated) ore. There is no item in the tariff for "copper ore concentrates" or "metallic ore concentrates" to draw it into its cover. The so-called change is not such as to convert it into a non-ore, to make it a commodity that has no affinity with the ore and which should be freshly excised under Item 68. The metal obtained from it, copper is certainly a commodity that rates as a totally new, different and distinct commodity and one that stands apart from its ore. Its uses are not those to which the ore is put. We cannot say this of the concentrate. I wonder if anyone will say that brine with a 20% salt content and obtained by boiling a brine with a lower salt content, was different from its original source and, therefore, not a brine. If the concentrate is an ore, and there is no doubt it is an ore, it is not different from the (unconcentrated) ore.
17. The appeal deserves to be allowed. However, as the majority has decided contrarily, it is dismissed.