MONO STEEL (INDIA)LTD vs UNION OF INDIA THRO SECRETARY
- Court
- Gujarat High Court
C/SCA/10346/2012 JUDGMENT DATED: 22/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10346 of 2012
With
R/SPECIAL CIVIL APPLICATION NO. 16153 of 2012
With
R/SPECIAL CIVIL APPLICATION NO. 17012 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
==============================================================
Approved for Reporting Yes No
==============================================================
MONO STEEL (INDIA)LTD & ANR.
Versus
UNION OF INDIA THRO SECRETARY & ANR.
==============================================================
Appearance:
MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2
MR ANKIT SHAH(6371) for the Respondent(s) No. 2
VIRAL K SHAH(5210) for the Respondent(s) No. 1
==============================================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 22/07/2026
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. With consent, Special Civil Application No. 10346 of 2012 is
taken as a lead matter.
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BRIEF FACTS:
2. Petitioner No.1 is Company being Messrs Mono Steel India Ltd.
engaged in the business of manufacture of goods like sponge iron and
the petitioner no. 2 is the Director of the petitioner Company.
2.1. The commercial production of the company commenced from
December, 2005 and the goods manufactured by the petitioner
company are excisable goods and hence, the petitioner company is
paying customs duties on the goods manufactured in and cleared
from the factory.
2.2. For the manufacture of sponge iron, one of the main raw
material is iron ore and iron ore pellets which are being used by the
petitioner company in relation to manufacture of its final products.
2.3. The petitioner company is procuring the raw materials from the
local sources as well as by way of imports. The iron ore in the form of
pellets is being imported by the petitioner company and are classified
under Chapter heading, i.e., CTH/SH No.26011210 and as per the
notification dated 01.03.2006, they are chargeable to nil rate of
additional customs duty. The petitioner Company has been filing bills
of Entry for clearance of such goods claiming the nil rate of customs
duty in view of the above exemptions and the bills of entry so filed by
the petitioner for all imports of iron ore pellets has been finally
assessed by the Customs Authority, Kandla Port, and all the
consignments of iron ore pellets so imported by the petitioner
Company have been allowed to be cleared for home consumption on
payment of appropriate duties but without charging any custom
duties on such goods.
2.4. It appears that pursuant to the impugned Circular No. 9/2012
dated 23.03.2012, the petitioner company was issued a show-cause-
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notice dated 02.04.2012, proposing to recover additional customs
duty on nine consignments of iron ore which were allowed to be
cleared on proper assessment of duties by the Customs Authority
from April, 2011 to February, 2012. The statement of the petitioner
no. 2 was also recorded by the competent officer regarding the process
of manufacturing of iron pellets. Thus, the petitioner company has
assailed the Circular No.09/2012 dated 23.03.2012 under which the
proceedings against the petitioner company has been undertaken for
demand of the additional customs duty.
SUBMISSIONS ON BEHALF OF THE PETITIONERS:
3. Learned Advocate Mr. Paresh Dave appearing for the petitioners
at the out set has submitted that the impugned notification dated
23.03.2012 issued by the Central Board of Excise and Customs (for
short, “the Board”) is required to be quashed and set aside since, the
Board has tried to interject and impose the provisions of Customs
Tariff Act, 1975, with Central Excise Act, 1944.
3.1. In support of his submissions, he has placed reliance on the
Division Bench judgment of Madras High Court in the case of
Commissioner of Customs vs. M/s A.K. Impex (Judgments dated
28.03.2024 passed in CMA (MD) Nos. 961 and 1204 of 2023) while
referring to the Notification No. 4/2006-CE and has submitted that all
the form of ores falling under the Chapter heading Nos. 2601 to 2617
of the First Schedule, the rate prescribed is nil.
3.2. It is submitted that the additional customs duty is levied
correspondingly in view of the general exemption as stipulated in the
notification dated 01.03.2006. While referring to Chapter No. 26 of the
Customs Tariff Act, 1975, it is pointed out that Note-2 refers the
headings Nos. 2601 to 2617 and the Terms “Ore” means minerals or
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mineralogical species actually used in the metallurgical industry for
the extraction of mercury and the iron ore pellets found under
Chapter No. 26 of the Customs Tariff Act, 1975, are found under Tariff
Item No. 26011210.
3.3. In juxtaposition to Chapter 26 of the Customs Tariff Act, 1975
learned advocate Mr. Dave has pointed out that Chapter 26 of the
Central Excise Act, 1944, more particularly, Note-4 which mentions
that the process of converting ores into concentrate shall amount to
manufacturing and thus, it is submitted that since, Note-4 is not
incorporated in Chapter 26 of the Customs Tariff Act, 1975, and
which can never be manufactured as it is always outside India and by
the impugned circular, the respondent - Board has tried to interject
the two acts which operate in different fields.
3.4. Finally, it is submitted that the respondent authority has
applied the said circular retrospectively and ordered differential
customs duty from the petitioner from the date of the notification
dated 06.04.2011 to 08.02.2012.
3.5. In this regard, learned advocate Mr. Dave has placed reliance on
the judgment of the Supreme Court in the case of Suchitra
Components Ltd. vs. Commissioner of Central Excise, Guntur, 2007
(208) E.L.T. 321 (S.C.). Thus, it is submitted that by the impugned
circular, the Board issued a negative clarification since the Central
Excise is levied on manufacture of goods in India, whereas Customs is
levied on goods imported into India and they are governed by two
separate and independent statutes. Thus, it is urged that the
impugned circular may be set aside.
3.6. Learned advocate Mr. Dave has submitted that to the extent of
retrospective effect having been given to the impugned circular dated
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23.03.2012, till the issuance of the aforesaid circular, the Circular
No.696-12/2003 dated 26.02.2003 was already operating in favour of
the trade. He has referred to this said circular and has pointed out
that by that circular it was clarified that the word “Ore” given in the
meaning of the integrated steel plant also includes ore concentrates
and hence, it is urged that the impugned circular dated 23.03.2012
cannot be applied retrospectively.
SUBMISSIONS ON BEHALF OF THE RESPONDENT:
4. In response to the aforesaid submissions, learned Senior
Standing Counsel Mr. Ankit Shah has submitted that the petitioners
in response to the show-cause-notice dated 02.04.2012 issued by the
Directorate of Revenue Intelligence, Ahmedabad have admitted that
the iron ore pellets which are imported by them are produced and
manufactured after processing of the iron ore concentrates in the form
of balls of size of 5mm to 20mm.
4.1. It is submitted that the Customs Tariff Heading mentioned on
the bills of entry is bearing No. 26011210 and after this, iron ore
pellets have undergone the process of agglomeration which amounts
to manufacture as defined under Section 2(F) of Central Excise Act,
1944. It is submitted that the ores and concentrates (pellets) are two
distinct commodities though, classified under same chapter heading
and accordingly, by the impugned circular, the Board having clarified
about the conversion of ores into concentrates would amount to
manufacture and it will be applicable to the case of the petitioner.
Thus, it is submitted that the writ petition may not be entertained.
OPINION AND CONCLUSION:
5. We have heard the learned advocates appearing for the
respective parties and as urged by learned advocate Mr. Dave for the
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petitioners, we are only examining the effect of the impugned circular
dated 23.03.2012 whether it would be prospective in nature or
retrospective.
5.1. It is not in dispute that prior to issuance of the aforesaid
circular, the circular dated 26.02.2003 was operating in favour of the
trade and the ore concentrates, which is under the Chapter Heading
No. 2601 which was exempted and treated as Nil under the
notification dated 01.03.2006, more particularly, under General
Exemption No. 52A, however, by the impugned notification, in view of
the Note-4 of the Central Excise Act, 1944, the clarification of process
of converting ores into concentrates would amount to manufacture
has been borrowed and accordingly, the same is clarified by the
impugned circular which has resulted into the recovery of the
additional customs duty from the petitioner by giving retrospective
effect from 06.04.2011 to 08.02.2012.
5.2. The relevant part of the impugned circular dated 23.03.2012 is
incorporated as under:
“2…….
It was also seen that the recent changes in the Central
Excise Tariff treating the concentration of ore as amounting to
manufacture would not in any way change the definition of Ore
or Concentrate for the purpose of classification. This has been
reiterated in a number of judgments and also vide Board Circular
No.696/12/2003-CX dated 26.2.2003.
3. In view of Chapter Note-4 to Chapter 26 of CETA, 1985
inserted vide Finance Act 2011, Ores and Concentrates are two
distinct products. Thus, Concentrates suffer Central Excise duty
being a manufactured product. The implication for imported
Concentrates is that the benefit of exemption of additional duty of
Customs leviable under Section 3 of Customs Tariff Act, 1975 in
terms of a notification that applies only to Ores is no longer
available to Concentrates, even if Concentrates and Ores fall
under the same tariff heading.
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4. Thus, it is concluded in the Conference that the benefit of
exemption notification under Sr. No.4 of the Notification 4/2006-
CE dated 1.3.2006 will be available only to imported Ores and
not to imported Concentrates.
5. Suitable instructions may be given to the field formation and
all pending assessments, if any, may be finalized accordingly.
Difficulty faced, if any, may be brought to notice of the Board.”
5.3. Thus, by the impugned circular, the Board has concluded that
the exemption notification under Serial no. 4 of the notification under
4/2006 dated 01.03.2006 will be available only to imported goods and
not to imported concentrates.
5.4. The circular appears to be clarificatory in nature, however, by
the said circular, traders like the petitioners have been subjected to
recovery of additional customs duty with retrospective effect.
5.5. We may, at this stage refer to the decision of the Supreme Court
in the case of Suchitra Components Ltd. (supra) which reads thus:
“2…….
We have heard Mr. A.R. Madhav Rao, learned counsel for
the appellant and Mr. K. Radhakrishna, learned Senior Counsel
for the respondent. We have perused the orders passed by the
lower Authorities and also of the Tribunal. The point raised by
the learned counsel for the appellant is covered by the recent
judgment of this Court in Civil Appeal No.4488 of 2005,
Commissioner of Central Excise, Bangalore versus M/s. Mysore
Electricals Industries Ltd., reported in 2007 (204) E.L.T. 517. In
the said Judgment, this Court held that a beneficial circular has
to be applied retrospectively while oppressive circular has to be
applied prospectively. Thus, when the circular is against the
assessee, they have right to claim enforcement of the same
prospectively.”
5.6. The Supreme Court while placing reliance on its earlier
judgment in the case of Commissioner of Central Excise, Bangalore
Vs. M/s Mysore Electricals Industries Ltd., 2007 (204) E.L.T. 517
(S.C.) the Supreme Court has reiterated that a beneficial circular has
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to be applied retrospectively while an oppressive circular has to be
applied prospectively and when the circular is against the assessee,
they have right to claim enforcement of the same prospectively. In the
instant case, the respondents by issuing the Circular have adopted
the meaning of “manufacture” under Note 4 of the Central Excise Act,
1944, and has made applicable to the Customs Tariff Act, 1975, with
retrospective effect. Each of the Acts operate in different spheres. The
issue of adopting the explanation of ‘manufacture’ under Note 4 of
Chapter 26 of Central Excise Act, 1944, and imposing it in the
Customs Tariff Act, 1975, is not examined by us. The respondents
have not denied that till the issuance of the Circular dated
23.03.2012, the petitioners were exempted under Notification dated
26.02.2003 under CTH 2601 which included “Ore concentrate” in
“Ore” falling in CTH 2601 to 2617 of General Exemption No.52A of
Notification dated 01.03.2006. Thus, the impugned circular dated
23.03.2012 cannot be applied retrospectively imposing financial
liabilities of payment of additional custom duties on the traders. It is
informed to us that the petitioners have been regularly paying the
additional customs duty in view of the circular dated 23.03.2012.
6. In view of the above, the writ petitions are allowed in part. The
impugned show-cause-notices are hereby quashed and set aside.
(A. S. SUPEHIA, J)
(VAIBHAVI D. NANAVATI,J)
KUMKUM/1
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