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PETITIONER: INDIAN HARD METALS (P) LTD.

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT30/11/1978

BENCH: SARKARIA, RANJIT SINGH BENCH: SARKARIA, RANJIT SINGH TULZAPURKAR, V.D. SEN, A.P. (J)

CITATION:  1979 AIR  397            1979 SCR  (2) 469  1979 SCC  (4) 155

ACT:      Indian Customs Tariff Act, 1934 (32 of 1934), Item Nos. 26, 70(7) and 87-Wolfram ore containing tungsten ore of 75%- Whether assessable  under Item  26 or  Item 70(7)  or  under residuary Item 87.

HEADNOTE:      The  appellant   imported  wolfram   ore.  The  Customs Authorities classified the said ore under the residuary Item 87 of the Indian Customs Tariff and charged duty at the rate of 60%  ad valorem.  Metallic ores  (Item  26)  and  cobalt, chromium, tungsten  magnesium  etc.  [Item  No.  70(7)]  are allowed to be imported free of duty.      The  aforesaid   classification  was   upheld  by   the Assistant  Collector  of  Customs  and  the  appeal  to  the Commissioner  of  Customs  was  dismissed.  The  appellant’s revision petition  under s.  131 of  the Customs  Act to the Government was also dismissed. n      In the  appeal to this Court it was contended on behalf of  the   appellant  that   the  imported  ore  contained  a concentrate of  74% of  tungsten from  wolfram and  the rest were impurities,  that the  concentration was  the result of ’selective mining’  process which involves crushing, washing and magnetic  separation that  in  better  quality  ore  the content may  be as  high as  79% and  that even  after being subjected to  such process,  the ore  concentrate  does  not cease to  be tungsten ’ore’ within the contemplation of Item 70(7) of the Indian Customs Tariff.      Allowing the appeal, ^      HELD: 1.  The goods  imported had  to be  classified as imported ore,  falling either under Item 26 or Item 70(7) of the Import  Tariff, and  no duty  was leviable  on them. The appellants are entitled to refund of duty paid by them. [475 E]      2. The mere fact that the percentage of tungsten in the ore concentrate  in the  instant case  is about 75% does not take the  case out  of the ratio of this Court’s decision in Minerals &  Metal Trading Corporation of India Ltd. v. Union of India & Ors., [1973] 1 SCR 977. [471 H]      3. There  is ample  authority for  the  view  that  the

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tungsten content  in the  wolfram ore  of marketable quality may vary  from 60  to 79%,  and a concentration within these limits of  the metal  in the ore can be attained simply by a process of a "selective mining", that is by physical process not involving  any chemical  change in the metal. Wolframite of ordinary  merchantable quality  contains  60  to  70%  of tungsten, while  wolframite ore of better commercial quality contains 75 to 79% of the metal. [473 C, 475D]      "Tungsten"    by    C.J..    Smithells    Chapman-Hall- Introduction. referred      4. The  finding of  the appellate  Collector of Customs that such  a high  degree  (75%  )  of  the  tungsten  metal virtually free  from impurities  in the  material, could  be attained only by some chemical manufacturing process and not merely by 470 crushing, washing  or magnetic  separation, is  not based on any evidence  whatever. It  is contrary  to the  opinion  of experts and  authorities on  the subject, which were brought on the record. [475B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 571 of 1969.      Appeal by  Special Leave  from the  Order dated the 6th September, 1968/26th  October  1968  of  the  Government  of India,  Ministry  of  Finance  (Department  of  Revenue  and Insurance) bearing No. 5262 of 1968.      J. L.  Nain, Mrs.  A. K.  Verma for  J. D. Dadachanji & Co., for the Appellant.      R. B. Datar and Miss A. Subhashini, for the Respondent.      The Judgment of the Court was delivered by      SARKARIA, J.-This is an appeal by special leave against an order  of the  Government of  India, Ministry  of Finance (Department of  Revenue and Insurance). The order was passed by  Shri   B.  Sen,  Commissioner  (Revision  applications), Government  of  India.  Indian  Hard  Metal  (P)  Ltd.,  the appellant, had imported 15 metric tonnes of wolfram ore from London. The  Customs authorities  classified  the  said  ore under item  87 of the Indian Customs Tariff and charged duty at the  rate of  60 per  cent ad  valorem amounting  to  Rs. 62,871.03P., instead  of classifying the imported ore either under item  26 of item 70(7) which are free from duty. These relevant items,  as entered  in the  Imported Tariff, may be set out as under: ------------------------------------------------------- Item  Name of Article           Nature of  Standard No.                             duty        rate of ------------------------------------------------------- 26    Metallic ores all           X Free          X       sorts except ores       and pigments ores       and antimony ore. 70(7) Cobalt chromium tungsten    X           Free       magnesium and all other       nonferrous virgin metals       not otherwise specified.       SECTION XXII (ARTICLES NOT OTHERWISE SPECIFIED) 87    All other articles not       otherwis specified.        Revenue   60 per cent                                            ad valorem.  ------------------------------------------------------      The classification  made under the residuary item 87 at

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the time of the import was upheld by the Assistant Collector of Customs;  and the  Commissioner of  Customs dismissed the appeal of  the assessee   by  an order  dated July 31, 1965, holding that  the 381  bags of  wolfram  ore  was  correctly assessable at  the rate of 60 per cent duty under item 87 of the Indian Customs Tariff, and not being covered either 471 by entry  26 or  70(7) of the Indian Customs Tariff, was not duty-free.   The appellant  preferred  a  revision  petition under s.  131 of  the Customs Act to the Government of India who declined  to interfere and dismissed the revision. Hence this appeal.      Mr. Nain, appearing for the appellant, submits that the ore in  question contained  a concentrate of 74% of tungsten from  wolfram   and   the   rest   were   impurities.   This concentration is  the result  of ’selective  mining’ process which involves crushing, washing and magnetic separation. It does not  bring about  any chemical  change in the metal. At the  minepit  in  its  natural  form,  the  ore  is  not  of marketable quality because the tungsten content in’ it, then is hardly  0.5 to 2 per cent. By the aforesaid concentrating process,  the  ore  is  converted  into  ore  of  commercial quality.  It  is  maintained  that  in  commercial  parlance wolfram ore  of marketable quality must contain a minimum of 655’o to 70% of the metal, and in one of better quality, the content may be as high as 79%. Even after being subjected to such process,  the ore  concentrate does  not  cease  to  be tungsten ’ore’ within the contemplation of item 70(7) of the Indian Import  Tariff. In  sup-  port  of  his  contentions, learned counsel  has relied  upon the judgment of this Court in Minerals  & Metals  Trading Corporation  of India Ltd. v. Union  of  India  &  Ors.(1)  and  certain  Certificates  of experts, as also an extract from the treatise on ’Tungsten’, by C.J. Smithells Chapman-Hall.      As against  this, Mr.  Datar has drawn our attention to the order,  dated  July  31,  1965,  wherein  the  Appellate Collector of  Customs has  observed  that  no  evidence  was adduced by the importer to substantiate the contentions that the ore in question had undergone no chemical process before being imported,  and that  the inference  is that  such high purification of  the concentrate  could have  been  possible only by  applying process  other than by water, crushing and magnetic separation.  It is  stressed that  the decision  of this Court in Minerals & Metals Trading Corporation of India Ltd. (supra),  is not  applicable because  in that  case the percentage of tungsten in the ore was 65% only and that much concentration could  be reached  by physical  process  only, such as,  crushing washing  etc.; while in the instant case, the  percentage  of  the  wolfram  contained  in  the  goods concerned is little over 75%.      In our  opinion, the  mere fact  that the percentage of tungsten in the ore concentrate in the instant case is about 75 per cent, does not take the case out of the ratio of this Court’s decision cited by Mr. Nain.      (1) [l973] I S.C.R. 997. 472      In  Minerals & Metals Trading Corporation of India Ltd. (supra), the  appellant had  imported  200  metric  tons  of wolfram concentrate  from Russia,  under  a  contract  which prescribed  minimum   contents  of   65  %  of  W03  in  the concentrate. The Customs authorities levied duty at the rate of 60%  ad valorem  under item  87 of the First Schedule The appellant claimed  refund on  the ground  that no  duty  was leviable as  the goods imported was an "ore" and fell, under item 27  or  70(7)  of  the  Import  Tariff.  The  Assistant

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Collector  of  Customs  held  that  the  appellant  was  not entitled to  refund because  the term "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 that case. On appeal by the importer, the  Appellate Collector  head that  the goods  in question were  in the  manufactured  form  made  by  special specifications by  dressing and  were 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  from rock  but also  from  various impurities and  had been  subjected to  such  processing  as would  take  them  out  of  the  category  of  metallic  ore mentioned in  Intern 26. This Court, speaking through Grover J., allowed  the  importer’s  appeal,  with  these  apposite observations:      "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  % WO33. This is the usable ore and it is in      that sense  that it is commercially understood. Wolfram      ore when  , mined  contains only  0.5 to 2 per cent W03      and 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 restricted to      wolfram being  material containing  0.5 to  2 per  cent      W03, 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 W03. On      that there is a 473      preponderant weight  of authority  bath of  experts and      books and  of writings  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  ore by  washing or      magnetic separation  and other  similar  and  necessary      process, it becomes a concentrate but does not cease to      be ore."                                             (emphasis added)      There is ample authority for the view that the tungsten content in  the wolfram  ore of  marketable quality may vary from 60  to 79  per cent,  and a  concentration within these limits, of  the metal in the ore can be attained simply by a process of  a  "selective  mining",  that  is,  by  physical process not  involving any chemical change in the metal. The following passage  (vide Annexure  "I’ in the record) culled out from  the Introduction  to the treatise on "Tungsten" by C.J.  Smithells   Chapman-Hall,   fully   bears   out   this conclusion:      "Mining.-Tungsten ores,  although so widely distributed      rarely occur  in massive  form. The  ores  are  usually      found in narrow veins, but in some of the rich deposits      the  veins  may  in  places  be  several  metres  wide.      Castrate is  the commonest  metallic mineral associated      with  tungsten,   but  minerals   containing   bismuth,      molybdenum,  lead  and  copper  are  frequently  found;

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    pyrite and  arsenopyrite are  objection able  minerals,      which may  be present in appreciable amounts, and other      common minerals  are quartz  and  fluorite.  There  are      several kinds of ore deposits classified as segregates,      pegmatites replacement deposits, veins and placers. The      tungsten content  of the  ore as it is mined is usually      from 0.5  to 2  per cent,  although it amounts to 6 per      cent in  rare instances.  The concentration of tungsten      ores  depends   chiefly  on   gravity  methods,  taking      advantage of  the high  density of the metal, ,although      flotation methods  are  also  used.  the  concentrates,      which contain  60-70 per  cent W03,  to or  the  better      qualities 75-79  per cent should be virtually free from      S.P, As,  sb, Bi,  Cu, Sn,  Ti, and  Mo.  Magnetic  are      employed to  separate  the  tin  and  tungsten  in  the      concentrates. Scheelite,  however, is non-magnetic, but      when it occurs with garnet, as it does in Tasmania, the      garnet may  be removed  magnetically. The concentration      of Wolframite  ores is  difficult on  account of  their      mica-like formation.  Excessive crushing  leads to high      losses in tabling and as far as 12-978 SCI178 12-978SCI/78 474      possible the  ore should  be  separated  when  coarsely      crushed "                                         (Emphasis supplied )      There is  on the record another Certificate in the form of a  letter, dated  February 3,  1965, from  the  Director, National Metallurgical  Laboratory, Jamshedpur, addressed to the Controller  of Customs, Calcutta, in which it is opined: "The  wolfram   ore  is  always  selectively  mined  in  the techllical terminology....such  "selective mining"  does not constitute a  manufacturing process. Unless selective mining is done, the tungsten ore cannot be exported or even sold in the country  of its origin. In view of the above, 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 has  passed through the manufacturing  process.   By  the   expression  ’selectively mined’, we  mean 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 piece of wolfram ore therefrom  either   by  hand  or  by  washing  or-  magnetic separation."      Then, there  is another Certificate from R. V. Briggs & Co. Pvt. Ltd., who claim to have been analysing various ores and  minerals   including  wolframite  for  over  60  years. According   to   these   experts,   wolframite   is   always concentrated as  part of  the mining  operation. The  normal method is  by washing  the crushed  ore, thereby freeing the mineral  from   the  gangue.   These  experts  have  further certified that the wolfram ore, which they have analysed for M/s. India  Hard Metals,  is processed  except for  physical concentration by  washing. It  may be  observed that  in the Minerals &  Metal Trading  Corporation  (ibid),  also,  this Court had  relied upon  a similar  Certificate  from  R.  V. Briggs & Co.      Still, another  Certificate, dated  January  13,  1965, which is  more or less to the same effect as the Certificate of the  National Metallurgical  Laboratory, was  brought  in evidence. A  similar Certificate  from this  Laboratory  was relied upon as authentic expert opinion in the earlier case, also, decided by this Court.      No authority or expert opinion has been cited before us that a  concentration of  75 per cent tungsten in wolframite

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ore of  commercial   quality, cannot  be achieved  merely by ’selective mining’,  i.e. the  physical process of crushing, washing, gravitation,  magnetic separation  or the like. Nor is there any evidence on the record to show 475 that the  mined ore  was subjected  to any  chemical process which  caused a change in the chemical structure of the ore. The finding  of the Appellate Collector of Customs that such a high  degree (75%)  of tungsten  metal virtually free from impurities in  the material,  could be attained only by some chemical manufacturing  process and  not merely by crushing, washing or magnetic separation, is not based on any evidence whatever. It  is contrary  to the  opinions of  expects  and authorities on  the  subject,  which  were  brought  on  the record. It  is  evident  from  the  passage  extracted  from Smithells’ treatise,  and the other Certificates of experts, mentioned above, that in order to bring mined wolframite ore to a  marketable quality,  it  has  to  be  concentrated  by physical methods,  such as,  crushing, washing, gravitation, magnetic separation  etc. And by such physical process only, a concentration  of WO3  varying from  60 per cent to 79 per cent in  the  ore  can  be  achieved.  Wolframite  (WO3)  of ordinary merchantable  quality contains 60 to 70 per cent of tungsten, while  wolframite ore of better commercial quality contains 75 to 79 per cent of the metal      In the  light of  the above  discussion,  there  is  no manner of  doubt that  the goods  imported by the appellants had to  be classified  as imported ore, falling either under item 26  or item 70(7) of the Import Tariff, and as such, no duty was  leviable on  them. The  appellants are, therefore, entitled to the refund of the duty paid by them on the goods in question.      In the  result, the  appeal is  allowed with costs, and the impugned  orders including  the Order dated October, 26, 1968,  of   the  Central  Government,  are  set  aside.  The respondents are  directed to  make  appropriate  orders  for refunding the  amounts collected  from the appellants by way of import duty on the goods in question. N.V.K.                                      Appeal allowed . 476