Minerals & Metals Trading
Corporation of India Ltd. Vs. Union of India & Ors  INSC 188 (24
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)
Indian Tariff Act--Import Tariff--Annexure
L--Entries 26, 70(7) & 87-Wolfram Concentrate with 65% WO3 concentrationWhether
importable, 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
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 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 hard 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
CIVIL APPELLATE JURISDICTION : C.A. Nos.
877-879 of 1967.
Appeal by special leave under Article 136(1)
of the Constitution 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
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
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 Tungston 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 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 Annexure-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 pigments ores and antimony ore x Free x 70(7)Cobalt chromium tungsten
magnesium and all other non-ferrous virgin metals not otherwise specified x
SECTION XXII (ARTICIES NOT OTHERWISE
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 and B given in
Appendix 1. The form of Contract A in the Appendix 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 as much 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
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 manufacturing 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 analyzing various ores and minerals including wolframite for
over six years 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.
Along with with the appellants statement of
the case an extract from the Brussels Tariff nomenclature 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.
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
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
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 preponderating 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 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.