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PETITIONER: MINERALS & METALS TRADING CORPORATION OFINDIA LTD.

       Vs.

RESPONDENT: UNION OF INDIA & OTHERS

DATE OF JUDGMENT24/08/1972

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. PALEKAR, D.G.

CITATION:  1972 AIR 2551            1973 SCR  (1) 997  CITATOR INFO :  R          1977 SC 597  (34)  R          1979 SC 397  (3,4,6,9)  D          1985 SC1201  (12)

ACT: Indian  Tariff Act--Import Tariff--Annexure  L--Entries  26, 70(7)  & 87-Wolfram Concentrate with 65% WO3  concentration- Whether  lmportable,  duly  free  as  Metallic  ore-Normally acceptable merchantable quality of ’ore’ alone relevant. Interpretation   of  statutes--Taxing  statutes-Meaning   in commercial  sense  and  not in scientific  sense  should  be followed.

HEADNOTE: The   appellant   imported  200  metric  tons   of   wolfram concentrate,  under  a  contract  which  prescribed  minimum contents  of  65% of WO3 in the  concentrate.   The  Customs authorities levied duty at the rate of 60% amount 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 26 or 70(7) of the  Import tariff.   The Assistant 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  the present  case.   On appeal by the  appellant  the  Appellate Collector  held  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 entry 26. In appeal to this Court the appellant contended that for the purposes  of  levy  of ditty under  entry  26  the  normally acceptable  merchantable  quality of wolfram  (containing  a minimum 65% W03) is relevant and riot wolfram in mined form. Allowing the appeals, HELD : Wolfram ore when mined contains only 5 to 2 per  cent

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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 5 to 2 per cent W03, it would be  mainly rock which can not be imported in large quantity and it will have  no  market.   It  is only  usable  ore  with  65%  W03 concentration  that is relevant for levy of duty.  What  has to  be seen is what is meant in International trade  and  in the  market by Wolfram ore containing 65% or more W03.   The said  concentrate  is  achieved  by selective  mining  and washing  or  magnetic separation.  It does not  involve  any manufacturing  or  processing  with  chemical  for  removing impurities.   The concentrate, therefore, does not cease  to be an ’ore’.within the meaning of item 26. [1002C-F] HELD,   further,  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  by those dealing in them in their commercial sense. [1002H] 998

JUDGMENT: CIVIL APPELLATE JURISDICTION : C.A. Nos. 877-879 of 1967. Appeal by special leave under Article 136(1) of the  Consti- tution of India from the order No. 2846-2848 of 1966,  dated 25th and 29th November, 1966 of the Govt. of India, Ministry of Finance in Custom Revision Application. M.   C.  Setalvad,  B. Sen, M. K. Banerji, P.  C.  Bhartari, 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 P. C. Bhartari  and  Ravinder Narain, for the interveners. The Judgment of the Court was delivered by Grover, J. These appeals by special leave are from an  order of the Government of India passed in November 1966  refusing to refund the duty charged on 200 metric tons of Wolfram Ore imported by the appellant Corporation from the U.S.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  goods  apart   from   other components  was to contain W03 the 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 Bombay 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  claimed refund on the ground that no duty was leviable as the  goods imported  fell  either under item 28 or 70(7)  of  the  said Schedule.  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 Tung- ston Oxide with small portion of iron and manganese  oxides. The  term ’ore’ mentioned in the text of item 26  I.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 assessment u/i 26 I.C.T. as they are not in  the condition  in  which  they are  mined.   Further  the  goods

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imported are Wolfram Ore Concentrate and not Wolfarm Ore  as mixed.   Concentration of ore is considered a  manufacturing process which will exclude its assessment u/i 26 T.C.T. 999 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  books 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 not only from the rock  but  also from various other impurities and  had  been subjected  to such processing as would take them out of  the category  of  metallic ore.  Thus the correct  position  was that  the goods imported were intermediary articles  between ore  and metal and had been ’correctly assessed  under  item 87. The  relevant entries in the Import Tariff contained in  An- nexure-L of the special leave petition may be set out: ____________________________________________________________ Item               Name of Article   Nature of Standard No.                                      duty rate of _____________________________________________________________                       MINERAL PRODUCTS 26.  Metallic ores all sorts except ochres and other pig- ments ores and antimony ore               x   Free  x 70(7)Cobalt chromium tungsten magnesium   and all other non-ferrous virgin metals not otherwise specified                                 x Free cified. SECTION XXII (ARTICIES NOT OTHERWISE SPECIFIED) 87. All other articles not otherwise  specified                              Revenue  60percent                                         ad valcrem" _______________________________________________________________ The short question that has to be decided is whether Wolfram Ore  W03 65% falls within item 26 which covers metalic  ores of  all sorts with the exceptions mentioned therein.  It  is and  cannot be disputed that Wolfram 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  Stroud’s   Judicial Dictionary, Vol. 3 page 2020.  It is stated that "ore" is  a metal  in its crude state separated from the rock.   In  the well known treatise on TUNGSTEN, its Metallurgy,  Properties and Applications by Colin J. Smitbells, 3rd Edition., it  is stated that Tungsten ores rarely occur in massive 1000 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 instances.   The  concentration  of  tungsten  ores  depends chiefly  on  gravity methods, taking advantage of  the  high density of the, metal, although floa tation 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

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and B given in Appendix 1. The form of Contract A in the Ap- pendix 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  &  Company contains the following statement :               "   In accordance with  International Wolfram’               Ore  Contract ’B’ which is the standard  form,               on  which  the vast majority  of  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 ore concentration  operations               are necessary which involve crushing,  washing               and  similar  process separating  the  useless               gangue  to  bring  it to  a  minimum  65%  W03               content without which it is not regarded as an               acceptable 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   of  normal   wolframite   mining               activities". According  to  a  letter dated February  3,  1965  from  the Director   of  National  Metallurgical  Laboratory  to   the Controller  of  Customs 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 manufactoring process.   Unless  selective mining  is done the tungsten ore cannot be exported 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 1001 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 analysingvarious ores  and  minerals including wolframite for  over  sixyears this ore is always concentrated as part   of   the    mining operations. The normal method is by washing the crushed ore, thereby freeing the mineral from the gangue. The certificate from  Derby  &  Co. London has  already  been  referred  to. Alongwith  with  the appellants  statement of  the  case  an extract   from  the  Brussels  Tariffnomenclature  has  been attached  as  annexure A. In Chapter XXVI with  the  heading Metallic  Ore etc. para 26.01 deals with Metallic  Ores  and Concentrates........ The relevant 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.

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             For  the purposes of the present hearing,  the               term concentrates" applies to ores which  have               had part or all of the 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-chemical               or chemical operations, provided that they are               normal to the preparation of the ores for  the               extraction  of metal.  With the  exception  of               changes  resulting from calcination,  roasting               or  firing  (with or  without  agglomeration),               such  operations must not alter  the  chemical               composition   of  the  basic  compound   which               furnishes the desired metal.               The  physical or  physico-chemical  operations               include    crushing,    grinding,     magnetic               separation,      gravimetric       separation,               floatation, screening, grading,  agglomeration               of  powers (e.g., by sintering  or  pelleting)               into  grains, balls or briquettes (whether  or               not  with the addition of small-quantities  of               binders),  drying,  calcination,  roasting  to               oxidise  or magnetise the ore, etc.  (but  not               roasting    for   purposes   of    sulphating,               chloridating, etc.)               1002               The   chemical   processes   are   aimed    at               eliminating   the   unwanted   matter    (e.g.               dissolution)." Among  the ores specifically mentioned to which  the  labove 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  (Annexure  E). After giving the necessary 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 ,as 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 contains a minimum    65% W03.   This is the unable ore and it is in that sense that    it      is commercially understood.     wolfram ore when mined    contains only 5 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  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 preponderation  weight  of  authority both  of  experts  and book,,  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 or by washing or magnetic  separation and  other  similar  ,and necessary  process  it  becomes  a concentrate but does not cease to be ore.  Unless the ore is

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roasted or treated with any chemical it cannot be classed as processed. It is common ground that the wolfram ore which was  imported by  the  appellants was never subjected 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 by 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 1003 26  of the Import Tariff and no duty was leviable  on  them. The  appellants 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. S.B.W.                     Appeals allowed. 1004