Minerals & Metals Trading Corporation of India Ltd. v. Union of India & Others

Judgment

MINEl{ALS & METALS TRADING CORPORATION OF INDIALTD. UNION OF INDIA & OTHERS August 24, 1972 [K. S. HEGDE, A. N. GROVER AND D. G. PALEKAR, JJ.J /11dian Tariff Act-Import Tariff-A nnexure L-Entries 26, 70(7} & 81-Wolfranz Concentrate H'ith 6S(j;. W03 co11centration-Whether Jmporttlble, duly /re"-' <S Metallic .ore~Nor111n/ly ncct'ptable n1erchm1tahlc quality of 'ore·· alone relevant. Jnterpretalion of statute.<i-Taxiug statutes-Meaning in conunercial sense and not' in sc~·e1Uific sense should be jollo1red. The appellant imported 200 metric tons of wolfram concentrate, under a contract which prescribed minimum contents of 65% of W03 in 1he concentrate. Tue Customs authorities levied duty at the rate of 00% amount under item 87 of the First Schedule. The appellant claimed refund on 1hc ground that no duty was leviable as the goods imported was an "ore" and fell under item 26 or 70(7) of the Import tariff.

Tue Aosislant Collector of Customs held that the appellant was not entitled to rerund because the tern1 'ore' mentioned in the text of item 26 is confined to articles which are in form and condition in which they are mined and not as wolfram ore concentrate in powder form as in the present case. On appeal by the appellant the Appellate Collector held that the goods in question were in the monufacturcd form made by special specifications by dressing and v.;ere thus not "ores'''. The Central Government rejected the revision application filed by the appellant holding that the examination by the Chemists showed that the uniform granules of the material were not only separated fron1 rock_ hut also from various impurities· and had been sub.1ccted to such processing as \vouttl take them· out of the category of 1nctallic ore 1ncntioned in entry 26.

In appeal 10 this Court the appellant contended that for the purp06es ,,f levy of duty under entry 26 the norma)ly acceptable merchantable quality of wolfram (containing a minimum 65% W03) is relevant nnd not wolfram in mined form. Allowing the "ppeals, HELD : Wolfram ore when mined contains only 5 to 2 per cent WOJ aml in order to make it usable and merchantable ore with minimum 65 % W03; concentration is necessary. If item 26 of the Import Tariff is to be re~tricti::d to wolfram being n1aterial containing 5 to 2 per cent W03. H would be mainly rock which can not be imported in large quantity and it will have no market. Jt is only usable ore with 65lJO W03 concentration that is relevant for levy of duty. What bas to be seen is what is meant in International trade and in the market by Wolfram ore containing 65% or n1ore W03. ·The s::iid concentrate is achieved by seiecti,-e mining and \Vashing or magnetic separation.

It docs not involve any manufacturing or processing \Vith chemical for removing impurities. The concentrate, therefore. d1Jes not cease to be an 'ore) \vithin t:he 1neaning of Hem 26. [1002C.F] HELD. further, that in interpreliug items in trucing statutes resort 'hould be had not 10 the scientific or technical meaning buno the meaning attached to them hy those dealing in them in their commercial sense. fl002H] · [1973] l S.C.R. ClVIL APPELLATE JURISDICTION : C.A. Nos. 877-879 of 1967. Appeal by speciat Jea.ve under Article 136 ( 1) of the Cousti· tution of India· from the order No. 2846-2848 of 1966, dated 25th and 29th November, 1966 of the Govt. of India, Ministn of Finance in Custom Revision Application. ll M. C. Setalvad, B. Sen, M. K. Banerji, /ihartari, Ravinder Narain, D. N. Misra, J. B. Dadachandji, for the appellant. L. N. Sinha, Solicitor-General of India, S. N. Prasad, B. D. Sharma and S. P. Nayar, for the respondents. S. V. Gupte, D. B. Engineer, I'. C. Bhartari and Ravindcr t\'araii1, for the interveners.

The Judgment of •the Court was delivered by Grover, 1. These appeals by special leave are from an order of the Government oi India passed in Novem®r 1966 refusing to refund the duty charged on 200 metric tons of Wolfram Ore imported by the appellant Corporation from the US.S.R. The facts are not in dispute. In October 1953 the appellant entered into a contract with a Moscow concern for the purchase of 200 metric tons of Wolfram Concentrate. The chemical composition of the good~ apart from other components was to contain W03 1he minimum percentage being 65%. The Office of the. Chief Controller of Imports and Exports, Government of · India, granted an import license on November 21, 1963 permitting import of the aforesaid Wolfram Ore. The goods arrived in Bom'bay on January 14, 1964. It appears that certain tests were carried out by the Deputy Chief Chemist of Customs.

The ' customs authorities levied duty under item 87 of the First Schedule-Import Tariff, at the rate of 60% amounting to Rs. 4,13. 796.24. The appellant paid that amount under protest. The appellant ~!aimed refund on the ground that no duty was leviable as the goods imported fell either under item 28 or' 70(7) of the said SchecluJe. On September 14, 1964 the Assistant Collector of Customs (Refund Section) held that the "goods imported were in powder form and were found to be mainly composed of Tungston Oxide with small portion of iron and manganese ,pxides. The !erm 'ore' mentioned in the text of item 26 T.C.T. is confined to articles which are in the form of condition in which they are mined. As such, ores in powder form cannot qualify for assessm~nt u:i 26 J.C.T. as they are not in the condition in which they are mined. Further the goods imported are Wolfram Ore· Concentrate and not Wolfarm Ore as mixed.

Concentration of ore i, considered a manufacturin~ process which will exclude its as- ~essment u/i 26 l.C.T." ll M.M.T.C. i-. UNION (Gro1•er, !.) Three orders were passed by the Assistant Collector because the goods had been imported in three consignments. The matter was taken in appeal to the Appellate Collector of Customs. He disposed of the matter in January 1965. Before him a good deal of evidence was produced both from authoritative bpoks and in the. shape of certificates from experts that the goods were metallic ore. The Appellate Collector, however, held that the "goods in question were not subjected to simple washing with water but 'were made of special specifications by "dressing" and are therefore not classifiable as 'ores' ". The appellant then took the matter in revision to the Government. The order of the Government was passed by the Joint Secretary on. November 25, 1966.

According to his view examination of the sample of goods showed that the goods were in the form of fairly uniform granules. Further they had been separated !!IOt only from the rock but also from various other impurities and had been subjected to such processing as would1 take them out of the category of metallic re. Thus the correct position was that the good> imported were intermediary articles between ore and metal and had been correctly assessed under item 8 7. The relevant entries in the Import Tariff contained in Annexure-L o.f the special leave petition may be set out : Item Na111e of Article Nature of Sta"ndard No. dl1ty rate of• * MINERAL PRODUCTS 26. M'!tallic ores all sorts except ochres and other pig· ments ores and antimony ore '70(7) Cobalt chromium tungsten magnesiu1n and aii other non.ferrous virgin metals not othern:isl! spe- Free x cified. Free SECTfON xxn (ARTfCLES NOT OTHERWISE srECJFIED) 87. All other articles not otherwise specified Revenue GO percent ad valerein"

The short question that has to be decided is whether' Wolfram Ore W03 65 % falls within item 26 which covers metallic ores of all sorts with the exceotions mentioned •therein. It is and cannot be disputed that Woifram ore which was imported does not fall within the exceptions. All that had, therefore, to be determined by the authorities was whether such ore was a metallic ore. In Stro11d's Judicial Dictionary, Vol. 3 pa;;e 2020. It is stated that "ore" is a metal in its crude state seoarated from the rock. In the well known treatise on TUNGSTEN, its Metallurgy, Properties and Applications by Colin J. Smithells 3rd Edition., it is stated that Tungsten ores rarely occur in 1~assive [1973] l S.C.R. form. These ores are usually found in narrow veins. "The tungsten content of the ore as it is mined is usually 0.5 to 2 per cent .. although it amounts to 6 per cent. in rare inS'lances.

The concentration of tungsten ores depends chiefly on gravity methods. taking advantage of. the high density of the metal, although floatation methods are also used. The concentrates, which contain 60-70 per cent W03" . , ...... " On page 12 of .Smithells' book it is stated that tungstens are sold in Europe under Contracts A and B given in Appendix I. The form of Contract A in the f_ppendix reads as follows :- "Messrs We have this day. . . . . . . . . . . . . . . . . . . . you the following Chinese Wolfram Ore of good· merchantable quality, containing minimum 65% W03 .... The certificate dated January 13, 1965 of Derby & C01npan' co11tains the· following sta1ement : "in accordance with International Wolfram Ore Contract 'B' which is the standai.d fom1, on which the vast majority oi. Wolfram ore concentrates are based, such ore of normally acceptable merchantable quality contains a minimum of 65% W03.

Wolfram bearing material as mined, contains frequently less than 0.5% of W03 and asmuch as a content of 2 % of W03 is rare. In order to produce a usable or>:o concentration operations are necessary whkh involve cmshing, washing and similar process separating the useless gangue to bring it ~o a minimum 65% W03 content without which it is not regarded as an acceptab\le wolfram ore or wolfram concentrate and useless to consuming industries. Basic operations bringing the material to such a standard are not a manufacturing process but form part oi. normal wolfralllite mining activities". According to a letter dated February 3, 1965 from the Director of . National Metallurgical Laboratory to 1he Controller of Custom> wolfram ore is always selectively mined in the technical terminology. The selectively mined tungsten contains about 7% W03. Such selective mining does not constitute a manuc facturing process.

Unless selective mining is done the tungsten ore cannot be exp'1rted or even sold in the country of its origin. Thus the import of selectively mined tungsten ore containing 65% W03 or more should not be regarded as the import of a product which has been manufactured overseas and M.M.T.C. v. UNION (Grover, J.) has passed through the manufacturing process. The expression "selectively mined" means that the wolfram ore is detached and taken out from the rock in which it is embedded and this is done by crushing the rock and sorting out pieces of wolfram either by hand or by washing or magnetic separation. The appellant produced certificates from well known analytical Consulting & Technical Chemists. According to R V. Briggs & Co who claim to have been analysing various ores and minerals including wolframite for 'Over sixty years this ore is always concentrated as part of the 'mining operations. The normal method is by washing the crushed ore, there~ freeing the mineral from the gangue.

The certificate from Derby & Co. London has already been referred to. Alongwith the appellant's statement of the case an extract from the Brussels Tariff nomenclature has been attached as annexuie A. In Chapter XXVI with the heading Metallic Ore etc. para 26.01 deals with Metallic Ores and Concentrates ....... . The ,eleva11t and material portions from these extracts may be reproduced : "Ores are seldom marketed before "preparation" for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores. For the purposes of the present hearing, the term "concentrates" applies to ores which have had part or all of ·th.c foreign matter removed by special treatments, either because such foreign matter ·might hamper subsequent metallurgical operations or with a view to economical transport.

Processes to which products, physic-chemiool or chemical OJJ'.!rations, provided that they are normal to the preparation of the ores for the extraction of metal ':\Tith the ~xception .·of changes resulting from calcina'. t;on, roasting or firing (with or without agglomeration), such operations must not alter the chemical compos!tion of the basic compound which furnishes the desrred metal. The physical or physico-chemical operations mcl~de crush!ng, grindi~g, magnet~c separation, gravimetn~ separat10n, floatation, screemng, gradin11:, agelomerahon of powers (e.g., by sintering or pelleting) into g~ins, balls or briquettes (whether or not with the ad- ~1tion of ~mall qua!1t!ties of binders), drying, calcinatton, roa~tmg to ox1d1se or magnetise the ore, etc. (but not roastmg for purposes of sulphating, chloridatine ·The chemical processes are aimed at eliminating the unwanted matter (e.g. dissolution)."

Among the ores specifically mentioned to which the !above statement applies is Tungsten "or Wolfram". As against this the only evidence put in by the revenue consisted of the test -report of the Deputy Chief Chemist lAnnexure E). After giving the necessary 8 particulars it was stated by him that the samples were not ore as mined. We are wholly unable to comprehend how in order to fall under item 26 the ore has to be ias 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 c contains a minimum 65% W03. This is the unable ore and it is in that sense that is commercially understood. Wolf11am ore when mined contains only S to 2 per cent W03 and in order to make it usable and merchantable ore with minimum 65% W03, concentration is necessary.

If items 26 of. the Import Tariff is to be restricted to Wolfram being material containing 5 to 2 per cent W03 it would be mainly rock whicr 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% 0r more W03.

On th&t there is a preponderation weight of authority both of experts and books and of writings on the sub_ject which show that wolfram. ore when detached and taken out from the rock in which it is embedded either bv crmhing the rock and s0rting out pieces of wolfram or by washing or magnetic separation and other sirriilar 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 cannCl't be classed as processed. It is common ground that the wolfram ore which was imported by the appellant.s was never sub.iected to any process of roasting or treatment with chemicals to remove the impurities. It \ thus remained wolfram ore concentrate containing 65 % W03 which was of the merchantable quality and was known commercially as such and imported as ore.

Apart from all this it must be remembered that in interpreting items in Taxing Statutes resort should be had not to the scientific or technical meaning but to the meaning attached to them bv those dealing in them in their commercial sense. There can, therefore. be ·no manner of doubt that the goods imported by the appellants fell within item M.M.T.C. v. UNION (Grover. J.) I 003 26 of the Import Tariff and no duty was leviable on them. The ::\ppellants were entitled to the refund of the amounts which were paid by them by way of duty. For the reasons given above the . appeals are allowed with costs and the impugned orders including that of the Central Government dated 25 /29th November 1966 are hereby set aside. The respondents are directed to make appropriate orders for refunding the amounts collected from the appellants by way of duty on the goods in question. One hearing fee. Appeals allowed. S.B.W.