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Lakhanpal National Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC822DTri(Delhi)
AppellantLakhanpal National Ltd.
RespondentCollector of Customs
Excerpt:
.....'all other articles not otherwise specified'. the customs authorities classified wolfram ore in powder form under item 87 and not 26 as claimed by the importers. "we are wholly unable to comprehend how in order to fall under item 26 the ore has to be mined. there is a good deal of force in the argument of mr. setalvad for the appellant that the normally acceptable merchantable quality of wolfram or tungsten contains a minimum 65% wos. this is the usable ore and it is in that sense that it is commercially understood. wolfram ore when mined contains only .5 to 2 per cent wos and in order to make it usable and merchantable ore with minimum 65% wos, concentration is necessary. if items 26 of the import tariff is to be restricted to wolfram bearing material containing .5 to 2 per cent wos.....
Judgment:
1. This is a Revision Application (hereinafter called appeal) to the Central Government against Order-in-Appeal No. C/48-261/76R dated 15-12-1976, passed by Sh. B.K. Doshi, Appellate Collector of Customs, Bombay, which stands transferred to this Tribunal under Section 131-B of the Customs Act, 1962 (hereinafter called Act), for disposal, as if it were an Appeal presented before it.

2. The appellants through. Minerals & Metal Corporation of India imported 70 tons of 'Manganese Dioxide' Ex. S.S. Giorgis Mathmthees.

Vide B.E. No. 2142 dt. 11-7-1974, the goods were classified under Item 28 of I.C.T. as it then stood and appropriate duty realised. The appellants claimed refund of duty on the ground that the imported goods are unprocessed ore and should have been classified under Item 26, I.C.T. The Assistant Collector of Customs, Refund, by his order dated 18-12-1975, rejected the claim for refund as untenable on the ground that the imported goods were found to be coarse powder composed of about 95 manganese dioxide. In appeal, the Appellate Collector of Customs, Bombay by his Order dated 15-12-1976 held that the goods being in the form of coarse powder and not lumps, it was evident that these had undergone further processing after extract. They could not therefore be considered as Ore but could be considered only as chemicals N.O.S. classifiable under Item 28 of I.C.T. with these findings, he dismissed the appeal and upheld the Assistant Collector's order. Aggrieved with the orders, the appellants filed Revision Application to Government of India which, as already pointed out above, stands transferred to this Tribunal to be disposed of as an appeal presented before it.

3. At the hearing, Sh. C.L. Beri, learned Advocate for the appellants, reiterated the grounds set out in the Revision Application. He submitted that the import was through the M.M.T.C. and therefore, there was no cause for suspicion. The documents would show that the appellants had ordered for 'High Grade Manganese Dioxide Ore quality Moanda'. The suppliers of the ore had confirmed that the Manganese Dioxide Ore supplied by them is in conformity with the specifications of the Contract. They had also produced certificate that the ore in question is unprocessed and is not a manufactured or processed material. The ore had not been subjected to any chemical or physio-chemical process such as roasting or treatment with chemicals.

It had been subjected only to the normal process of crushing, washing and separation of the extraneous matter which are universally adopted for mining any ore. Crushing is only a physical process and reduction of the particle size by crushing cannot change the basic composition of the material from Ore to Chemical. The Assistant Collector and Appellate Collector were not justified in treating Ore as Chemical simply because it was in the form of powder. Sh. Beri, in support of his arguments relied on M.M.T.C. v. Union of India and Ors, AIR 1972 SC 2551 and Government of India's decision dated 3-3-1972.

4. On behalf of the Department, Sh. A.K. Jain, S.D.R. submitted that the imported Ore was battery grade; it means it has undergone special treatment for the purpose. He supported the order of the lower authorities.In Minerals & Metals Trading Corporation of India v. Union of India and Ors., on which the appellants have relied, the Supreme Court was concerned with Wolfram Ore WO3-a Metallic Ore. Item 26 of the Tariff Act, 1934 covered Metallic Ores, all sorts except Ochres and other pigment ores and antimony ore and Item 87 of the Tariff Act, 1934 covered 'all other articles not otherwise specified'. The Customs authorities classified Wolfram Ore in powder form under Item 87 and not 26 as claimed by the importers.

"We are wholly unable to comprehend how in order to fall under item 26 the Ore has to be mined. There is a good deal of force in the argument of Mr. Setalvad for the appellant that the normally acceptable merchantable quality of Wolfram or Tungsten contains a minimum 65% WOs. This is the usable ore and it is in that sense that it is commercially understood. Wolfram ore when mined contains only .5 to 2 per cent WOs and in order to make it usable and merchantable ore with minimum 65% WOs, concentration is necessary. If items 26 of the Import Tariff is to be restricted to Wolfram bearing material containing .5 to 2 per cent WOs it would be mainly rock which can neither be imported in large quantity and which will have no market.

The separating of Wolfram ore from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process.

The important test is that the chemical structure of the ore should remain the same. Whether the ore imported is in powder or granule form is wholly immaterial. What has to be seen is what is meant in international trade and in the market by Wolfram ore containing 60% or more WOs. On that there is preponderating weight of authority both of experts and books and of writing on the subject which show that Wolfram ore when detached and taken out from the rock in which it is embedded either by crushing the rock and sorting out pieces of Wolfram or by washing or magnetic separation and other similar and necessary process it becomes a concentrate but does not cease to be ore. Unless the ore is roasted or treated with any chemical it cannot be classed as processed." 6. From the aforesaid decision of the Supreme Court, it would be seen that the authorities were not justified in classifying the Ore under Item 28 of ICT only on the ground that Ore was in the form of powder and not lumps.

7. Shri A.K. Jain strenuously argued that the imported Ore was Battery grade Ore; therefore, it must be held that it had undergone special process for the purpose. We do not accept this contention. The orders of the lower authorities show that the only ground on which they rejected the appellants' claim for re-assessment was that the Ore was in the form of powder and not lumps. This ground does not stand in view of Supreme Court's decision. Besides, there was no evidence or suggestion before the lower authorities that the Ore was roasted or treated with any chemicals or subjected to a process which would make it a "manufactured" chemical as distinct from a "mined" product or metallic ore. It had not ceased to ore merely because it had been converted in the form of powder. The contention now raised by Sh. Jain before us is a new argument which cannot be taken into consideration.

8. There is also order dated 3-3-1972 by the Government of India in which Battery Grade Manganese Dioxide was also held classifiable under Item No. 26 of the I.C.T. and not Item No. 28 of the I.C.T. This would further weaken the case of the Department.

9. In view of the foregoing discussion, we allow the appeal, set aside the orders of the lower authorities and direct that Manganese Dioxide be classified under Item 26 of the I.C.T. as it then stood and consequential refund.


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