2025 (4) TMI 892 - AT - Customs

Iron ore export duty determined by Fe content on WMT basis, not DMT basis, when below 62%

M/s. AMPL Cleantech Pvt. Ltd. M/s. Khatau Narbheram & Co. Versus Commissioner of GST, CX & Customs (Appeals), Bhubaneswar

CESTAT Kolkata held that custom duty on iron ore should be determined based on Fe content using WMT basis rather than DMT basis. Following precedents in ... Liability to pay custom duty on determination of ‘Fe’ content in iron ore on WMT basis or DMT basis - HELD THAT:- The said issue has been decided by this Tribunal in M/s. Bagadiya Brothers Private Limited v. Commissioner of Customs (Port), Kolkata and Commissioner of Customs (Preventive), Bhubaneswar [2023 (9) TMI 827 - CESTAT KOLKATA] and Commissioner of Customs (Prev.), Bhubaneswar v. M/s. Jindal Steel & Power Limited [.2024 (6) TMI 914 - CESTAT KOLKATA]. Under identical facts and circumstances this Tribunal after considering the certificates issued by authorized inspection agency, held that export duty was payable at the rate of Rs. 50/- per MT as the Fe content of iron ore fines on WMT basis was less than 62%. Admittedly, in all the three cases the Fe content on WMT basis is less than 62%, therefore, the appellants are liable to pay custom duty at the rate of Rs. 50/- per MT. In that circumstances there are no merit in the impugned order. Conclusion - The Fe content on WMT basis is less than 62%, therefore, the appellants are liable to pay custom duty at the rate of Rs. 50/- per MT. Appeal allowed. The core legal issue considered by the Tribunal in these appeals is whether the appellants are liable to pay export duty on iron ore fines based on the determination of 'Fe' (iron) content on Wet Metric Ton (WMT) basis or Dry Metric Ton (DMT) basis. This question arises in the context of export duty assessment for shipments made during the period 2007-08, where the contractual agreements and initial assessments considered 'Fe' content on DMT basis, but subsequent legal and regulatory developments mandated calculation on WMT basis.Each appellant had executed export contracts for iron ore fines with specified 'Fe' content and moisture levels. The export duty was provisionally paid at Rs. 300 per metric ton based on 'Fe' content measured on DMT basis as per load port analysis reports and contractual terms. However, the appellants contended that the duty should have been calculated on the basis of 'Fe' content on WMT basis, which was below the 62% threshold, thereby attracting a lower duty rate of Rs. 50 per metric ton as per Notification No. 62/2007-Customs dated 03.05.2007.The appellants relied on a Supreme Court decision in Union of India v. Gangadhar Narsingdas Aggarwal and subsequent Customs Circular No. 04/2012-Cus dated 17.02.2012, which directed that pending assessments should be completed considering 'Fe' content on WMT basis. Despite submitting relevant documents and requesting reassessment, the Deputy Commissioner finalized the shipping bills charging duty based on 'Fe' content on DMT basis. The Commissioner (Appeals) rejected the appeals primarily on the ground of non-availability of CRCL test reports and certificates from authorized inspection agencies confirming 'Fe' content on WMT basis, without addressing the substantive legal issue.The Tribunal noted that the issue was common to all appeals and referred to its earlier decisions in several cases involving identical facts and legal questions. In those precedents, the Tribunal had held that export duty must be calculated based on 'Fe' content on WMT basis, provided the certificates from authorized inspection agencies supported such determination. The Tribunal emphasized that where the 'Fe' content on WMT basis was below 62%, the applicable export duty rate was Rs. 50 per metric ton.Applying the established legal framework and precedents to the facts of the present appeals, the Tribunal found that the appellants' 'Fe' content on WMT basis was admittedly below 62%, and hence the lower duty rate was applicable. The Tribunal observed that the impugned orders failed to consider the correct legal position and were set aside. Consequently, the appeals were allowed with consequential relief.The Tribunal's decision reinforces the principle that export duty on iron ore fines must be computed on the basis of 'Fe' content in the form in which the ore is exported, i.e., on WMT basis, consistent with the Supreme Court ruling and Customs Circular. It also underscores the importance of authorized inspection agency certificates in substantiating the 'Fe' content on WMT basis for duty assessment.In summary, the Tribunal held:Export duty liability must be determined based on 'Fe' content on Wet Metric Ton (WMT) basis, not Dry Metric Ton (DMT) basis.Where 'Fe' content on WMT basis is below 62%, the applicable export duty rate is Rs. 50 per metric ton as per Notification No. 62/2007-Customs.Certificates from authorized inspection agencies confirming 'Fe' content on WMT basis are critical evidence for assessment.Failure of lower authorities to apply the correct legal position and disregard of relevant documents warrants setting aside their orders.The Tribunal's ruling aligns with prior authoritative decisions and clarifies the correct methodology for export duty calculation on iron ore fines, ensuring consistent application of customs law and safeguarding appellants' entitlement to refund excess duty paid.