Civil Appeal No 571 of 1969
Appeal by Special Leave from the Order dated the 6th September 196826th 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 6287103P instead of classifying the imported ore either under item 26 of item 707 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
707 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 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 707 of the Indian Customs Tariff was not duty free
The appellant preferred a revision petition under section 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 05 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 707 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 vs Union of India  Ors1 and certain Certificates of experts as also an extract from the treatise on Tungsten  by CJ 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 SCR 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 707 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 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 05 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 05 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 CJ 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 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 05 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 SP 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 978SCI78 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 Ms 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 ore of commercial quality cannot be achieved merely by selective mining  ie 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 707 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
NVK Appeal allowed 


Summary:
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 707 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 section 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 707 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 707 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 vs Union of India  Ors 471 H 3
There is ample authority for the view that the 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 CJ 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