2015 Supreme(SC) 957

SUPREME COURT OF INDIA
A.K. SIKRI, ROHINTON FALI NARIMAN, JJ.
M/S STAR INDUSTRIES – APPELLANTS
VERSUS
COMMISSIONER OF CUSTOMS (IMPORTS), RAIGAD – RESPONDENTS
CIVIL APPEAL NO. 6088 OF 2013
Decided On : 07-10-2015

IMPORTANT POINT
Chapter Note added to Chapter 26 of Excise Tariff act, 1985 treats process of obtaining concentrates from mineral ore as manufacture and the Exemption notification exempts only ores, therefore imported concentrates do not qualify for exemption.

Headnote:(a) Central Excise Tariff Act, 1985 – Chapter 26 – Tariff Item 2601 to 2617 – Tariff Item 2613, Molybdenum ores and concentrates – Exemption Notification No.4/2006 issued under sub-section (1) of Section 5A of the Central Excise Act, 1944 – Customs Tariff Act, 1985 – Section 3 – Levy of CVD – Presumption of imported product having been manufactured in India for determination of rate of central excise duty – The rate will be Nil in two conditions – First, the process of obtaining concentrate from ore does not amount to manufacture in India – Second, the goods manufactured or produced in India are exempt – Amendment of 2011 adding Chapter Note 4 – Treating the process of converting Ores into Concentrates as 'manufacture' – by the Therefore, concentrate would not be covered by the exemption notification. (Para 15, 28, 29, 31, 33, 34)

       1994 (73) ELT 769 (SC); 2015 (319) ELT 194 (SC) – Relied upon

       (1999) 5 SCC 15; (1972) 2 SCC 620 – Distinguished

       (b) Central Excise Tariff Act, 1985 – Chapter 26 – Chapter note 2 and 4 – Have to be read harmoniously – So read, it would mean that in those cases when Note 4 applies and Ores becomes a different product, it ceases to be Ores under Note 2. (Para 30)

       Facts of the case:

       The assessee has been regularly importing Ore Concentrate and claiming the benefit of the Notification No.4/2006-CE.

       Examination of the goods revealed that in respect of B/E No.4567406 dated September 06, 2011, the bags in which the goods were packed contained labels/marking which read as 'Roasted Molybdenum Concentrate'. In respect of B/E No.4551981 dated September 05, 2011, the markings were 'Molybdenum Sulfide (MoS2) Roasted. Samples of the products under importation were drawn and sent for chemical examination to Chemical Examiner, CRCL, Vadodara. On that basis, the goods/consignment was seized on September 26, 2011 under the provisions of Section 110 of the Customs Act, 1962 on the reasonable plea that they are liable to confiscation under Section 111 of the said Act.

       Shri Babu Khandelwal, Partner of the assessee-firm admitted that the goods under import were Roasted Molybdenum Ore Concentrates which they procured from M/s Glencore, Switzerland and M/s Thompson Creek Metals, USA. He further admitted that natural ores and ore concentrates are distinct commodities in terms of composition and concentrates are value added products and the Molybdenum content in the roasted molybdenum ore is in the range of 56% to 65%. He further stated that they have declared the goods as Roasted Molybdenum Ore as per the description given in the invoices. Shri Khandelwal stated that since ores include concentrates, he had claimed the exemption. He also agreed to pay the CVD involved in respect of the imports made under the aforesaid Bills of Entry. The seized goods valued at Rs.6,12,60,943/-were released provisionally to the assessee on execution of a bond for the said value and bank guarantee of Rs.61,26,200/-. The assessee also paid the differential duty of Rs.66,61,664/-on October 04, 2011. The investigation further revealed that the assessee had imported identical goods earlier also under 14 B/Es by declaring the goods as 'Molybdenum Ore/Roasted Molybdenum Ore' and availing CVD exemption totally amounting to Rs.3,10,73,035/-during the period March, 2011 to July, 2011.

       The Department, thereafter, issued a show cause notice dated March 09, 2012 to the assessee proposing to confiscate 59,000 kgs. of Roasted Molybdenum Ore Concentrate seized on September 26, 2011 valued at Rs.6,12,61,048/-and 275000 kgs. of the said goods valued at Rs.28,57,49,418/-imported earlier under 14 Bills of Entry, under the provisions of Sections 111(d) and 111(m) of the Customs Act, 1962. The notice also proposed to demand differential duty amounting to Rs.66,61,664/-on the seized goods and Rs.3,10,73,035/-on the goods imported earlier, under the provisions of Section 28(1) of the Customs Act along with interest thereon under Section 28AA apart from penalties on the assessee under Sections 114A and 112(a) of the Customs Act.

       After adjudication, order was passed confirming the demand raised in the show cause notice.

       The importation seized and realised earlier provisionally was confiscated under Sections 111(d) and 111(m) of the Customs Act with an option to redeem the same on payment of fine of Rs.1 crore under Section 125 of the said Act and those imported earlier was liable for confiscation under the same provisions in respect of which differential duty demand of Rs.66,61,664/-and Rs.3,10,73,035/-were confirmed by denying the benefit of CVD exemption along with interest under Section 28AA of the Customs Act. A penalty of equivalent amount was also imposed on the assessee under Section 114A of the said Act.

       The CESTAT has concurred with the opinion of the adjudicating authority on the merits of the case. However, partial relief is granted only to the effect that confiscation of goods under Section 111(d) of the Customs Act was improper and order to that extent is set aside with consequential order of setting aside the imposition of redemption fine under Section 125 and penalty under Section 112(a)/114A of the Customs Act.

       Finding of the Court:

       Tribunal has taken a correct view.

       Result: Appeal dismissed with cost.