By TIOL News Service

CHENNAI, JAN 13, 2016: THE dispute relates to whether the Ilmenite exported by the assessee attracts duty at 5% as Ilmenite, upgraded (beneficiated ilmenite including ilmenite ground) or 10% as Ilmenite, unprocessed, as per the Notification No 15/2013 Cus dated 01.03.2013.

The appellants are manufacturer and exporter of processed Ilmenite. They had filed shipping bills for export of "Ilmenite upgraded (processed)" by classifying them under chapter Heading No.26140020 of Customs Tariff Act, 1975 and paid duty @ 5% in terms of Notification No.15/2013-Cus. dt. 1.3.2013. Prior to 8.3.2013, the appellants claimed classification under Chapter Heading 26140010 whereas subsequently they sought for reclassification under 26140020. The adjudicating authority in terms of OIO dt. 18.4.2013 finally assessed all the 85 shipping bills and ordered for classifying the goods under CTH 26140010 as Ilmenite unprocessed as per Section 18 of the Customs Act. Against this, appellant preferred appeal and Commissioner (Appeals) in the impugned order rejected the appeal and upheld the OIO. Hence the present appeal.

The appellants contended that they are exporting "Ilmenite upgraded" and the issue in this appeal is of classification goods exported whether "Ilmenite, unprocessed" falling under 26140010' or "Ilmenite, upgraded (beneficiated Ilmenite including Ilmenite ground) falling under 26140020". The department's contention is that the process carried out by the appellant is only physical and mechanical process and does not involve roasting or chemical treatment and there is no enrichment or augmentation of mineral content. They submitted that these contentions are incorrect as the process undertaken by them like spiralling processing, magnetic separator, cross flow separator, hydro cyclone processing, wet table dryer is process of beneficiation.

After hearing both sides, the Tribunal held:

+ Rule 3 (d) of Mineral Conservation and Development Rules 1988 defines "beneficiation" and as per the statutory definition of "beneficiation" is for 3 purposes either for regulating the size of desired produce or removing unwanted materials for the purpose of easy transportation and also for improving the quality, purity of the product. Anyone or all the 3 activities carried out on ore/mineral is known as "beneficiation". On perusal of flow chart of various process of beneficiation plant of the appellant which is duly approved by Ministry of Mines & Department of Atomic Energy clearly confirm the appellant's carrying out the activities stipulated under Rule 3 (d) of Mineral Conservation and Development Rules. By this process the unprocessed ore becomes upgraded Ilmenite.

+ The Apex court's decision in case of Tata Steel & Others clearly spelt out that beneficiation processes are only related to physical separation. The ratio of the Apex Court decision though it was held with respect to coal, the same squarely is applicable to the present case as the principal of beneficiation is same. Further the Board's circular dt. 17.2.2012 had clarified chapter note of Chapter 2601 - 2617 and by beneficiation process the end product of ore is concentrate or upgraded ore.

Accordingly, the Tribunal set aside the impugned order and allowed the appeal.

(See 2016-TIOL-141-CESTAT-MAD)