Process Of Crushing And Screening Of Iron Ore Are Classified As Iron Ore Fines: CESTAT Allows Benefit Of Exemption From Payment Of CVD

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the benefit of exemption from payment of countervailing duty (CVD) on the grounds that the process of crushing and screening of iron ore is classified as iron ore fines.The two-member bench headed by Justice Dilip Gupta (President) and C.J. Mathew (Technical Member) has held that iron ore concentrate refers to an ore that has been subjected to special processes for removal of all or part of the foreign matter, i.e., gangue contained in the ore, with which it naturally occurs. The appellant was engaged in the manufacture of iron ore pellets. One of the raw materials required is iron ore fines. The dispute relates to the 18 consignments of iron ore fines imported by the appellant from Vale International SA, Switzerland, which had described the goods as iron ore carajas sohar (iron ore fines). The appellant classified the iron ore fines under CTI 2601 11 31 and claimed exemption from payment of CVD in terms of the notification dated 17.03.2012, which grants complete exemption from payment of excise duty to "ores". In the course of the investigation, statements of the personnel of the appellant and the Custom House clearing agent were recorded. A show-cause notice was issued stating that the appellant was not entitled to exemption under entry no. 56 of the notification dated 17.03.2012. The department stated that the ores and concentrates are two distinct excisable goods by virtue of Chapter Note 4 to Chapter 26 of the Tariff Act. According to the Chapter Note, the process of converting ores into concentrates is considered manufacturing.The ore, after being crushed and screened, is shipped by Vale International SA, Switzerland from Brazil to their other facility in Oman, where blending is undertaken to produce Iron Ore Carajas Sohar. The Iron Ore Carajas Sohar is an outcome of the blending or grading after having already undergone the crushing and 17-cycle screening process at Carajas, Para, Brazil. It is evident from the webpage of Vale that washing of ore is undertaken at Carajas, Para, and Brazil mines, so as to remove the impurities of mu, slag, gangue, and other impurities. The appellant filed a reply to the show cause notice. The appellant submitted that the CBIC had by Circular dated 17.2.2012 clarified that the process of converting ore into concentrates involved removal of whole or part of the foreign matter. The process of crushing and screening did not result in the removal of whole or part of the foreign matter. It is only when the processes such as milling, hydraulic separation, magnetic separation, floatation, and concentrate thickening are undertaken that It could be said that the ores were converted into concentrates. The ore at Carajas, Para, Brazil only underwent the process of crushing and screening, which, as clarified by the CBIC, did not result in the concentration of the ore. Also, the process of blending 90–95% of iron ore with 5–10% of iron ore concentrate also did not result in the removal of part or whole of the foreign matter so as to qualify as a concentrate. The issue raised was whether the process of crushing and screening undertaken on the iron ore after it was mined at Carajas, Para, Brazil and its subsequent blending at Oman would result in the goods imported being classifiable as iron ore concentrate, as opposed to iron ore fines. Whether the benefit of the exemption from payment of CVD at Serial No. 56 of the notification was available to the imported goods. The department contended that the imported iron ore was not the one that was naturally extracted but an ore that was subjected to processes of crushing, screening, and blending to make it fit for direct use in pellet making. The CESTAT noted that the CBIC clarified in its Circular dated February 17, 2012, that crushing and screening are merely preparatory processes and do not equate to ore concentration. The CESTAT confirmed the assessee's classification as correct while setting aside the order passed by the Principal Commissioner. Case Title: M/s Amba River Coke Ltd. Versus Principal Commissioner of Customs (Preventive) Citation: CUSTOMS APPEAL NO. 85365 OF 2017 Dated: 03.06.2022 Counsel For Appellant: Advocates Vipin Jain, Vishal Agarwal and Abhishek Kapadia Counsel For Respondent: Special Counsel S.K. Mathur Click Here To Read/Download Order

Process Of Crushing And Screening Of Iron Ore Are Classified As Iron Ore Fines: CESTAT Allows Benefit Of Exemption From Payment Of CVD

Mariya Paliwala

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