Iron ore exporter wins refund case after Fe content assessment method changed from DMT to WMT basis

CESTAT Kolkata allowed the appellant's appeal regarding refund of excess customs duty on iron ore export. The appellant exported 15,000 MT iron ore to China under provisional assessment, paying duty at Rs. 300/- PMT based on 63.22% Fe content on DMT basis. Following SC precedent and Customs Circular 04/2012, Fe content determination shifted to WMT basis. Certificate showed actual Fe content at 58.61% WMT, below 62% threshold under Notification 62/2007, attracting lower duty rate of Rs. 50/- PMT. Matter remanded to adjudicating authority for final assessment and refund processing of excess duty paid.

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Issues Involved:
1. Determination of Iron (Fe) content for export duty calculation: Dry Metric Ton (DMT) basis vs. Wet Metric Ton (WMT) basis.
2. Refund of excess customs duty paid by the appellant.

Detailed Analysis:

Issue 1: Determination of Iron (Fe) Content for Export Duty Calculation: DMT vs. WMT Basis

The Appellant, engaged in the export of Iron Ore fines, filed two shipping bills for exporting 16,000 MT of iron ore to China. The load port analysis report showed the "Fe" content as 63.22% on DMT basis. The shipping bills were provisionally assessed, and export duty was paid at Rs. 300/- per MT considering the "Fe" content on DMT basis.

The appellant argued that the duty should be assessed on WMT basis, referencing the Hon'ble Supreme Court's decision in Union of India v. Gangadhar Narsingdas Aggarwal [1997 (89) E.L.T. 19 (SC)] and Customs Circular No. 04/2012-Cus dated 17.02.2012, which directed the assessment of iron ore fines on WMT basis. The appellant contended that the "Fe" content on WMT basis was below 62%, which should attract a lower duty rate of Rs. 50/- per MT as per Notification No.62/2007-Customs dated 03.05.2007.

The Tribunal observed that the Ld. Deputy Commissioner had finalized the shipping bills on DMT basis, contrary to the Supreme Court's decision and the Board's circular, which mandated assessment on WMT basis. The Tribunal reiterated that the goods must be assessed in the form and manner they are presented for assessment, emphasizing that iron content for charging export duty should be determined on WMT basis.

Issue 2: Refund of Excess Customs Duty Paid by the Appellant

The appellant sought a refund of excess customs duty paid, arguing that the "Fe" content on DMT basis was below 62%, and thus, the duty should be Rs. 50/- per MT instead of Rs. 300/- per MT. The Ld. Commissioner (Appeals) rejected the appeal due to the non-availability of CRCL test reports and certificates from authorized inspection agencies showing "Fe" content on WMT basis.

The Tribunal noted that the issue was no longer res integra, referencing various judgments, including M/s. Bagadiya Brothers Private Limited v. Commissioner of Customs (Port), Kolkata [2023 (9) TMI 827 - CESTAT KOLKATA], which held that "Fe" content should be determined on WMT basis. The Tribunal also cited the Hon'ble High Court of Bombay's decision in V.M. Salgaocar and Brother Pvt. Ltd. v. The Assistant Commissioner of Customs (Export) [2022 (9) TMI 1306], which universally recognized the method of determining iron content on WMT basis.

The Tribunal concluded that the appellant was entitled to a refund of the excess customs duty paid, as the "Fe" content on WMT basis was certified to be 58.61%, which is less than 62%. Therefore, the customs duty should be Rs. 50/- per MT.

Conclusion:

The Tribunal set aside the impugned order and the Finalisation order dated 10.02.2017, remanding the matter back to the adjudicating authority to finalize the provisional assessment on WMT basis. The appellant was deemed eligible for a refund of the excess duty paid at the time of export.

Order Pronounced:

The appeal was disposed of on the above terms, with the order pronounced in the open court on 19.07.2024.

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