Iron ore fines Fe content calculation on WMT versus DMT affirmed as factual basis; appeal dismissed by court

Dispute concerns whether Fe content of exported iron ore fines must be calculated on wet metric tonne (WMT) or dry metric tonne (DMT) and whether this raises a substantial question of law. The analysis relied on prior authority that samples must be tested in the condition of export (gross weight including moisture), noting delayed laboratory testing can reduce moisture and alter DMT results; therefore the WMT-based certificate was accepted as fact. The appellate tribunal's concurrent factual finding endorsing WMT assessment and resulting nil export duty under applicable classification was treated as not raising any substantial question of law, and the revenue appeal was dismissed.

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Issues: (i) Whether the appeal involves a substantial question of law under Section 130 of the Customs Act, 1962 challenging the CESTAT's order; (ii) Whether the CESTAT was correct in affirming that Fe content for determination of export duty prior to 01.05.2022 is to be calculated on Wet Metric Tonne (WMT) basis and in accepting load-port/NABL private laboratory reports (SKM) and transaction value over the CRCL (DMT) test report.

Issue (i): Whether the appeal involves a substantial question of law under Section 130 of the Customs Act, 1962.

Analysis: The questions advanced by the Revenue principally challenge concurrent factual findings about sampling, basis of Fe calculation and acceptance of transaction value supported by invoices and bank realisation certificates. The points relied upon were either governed by settled precedent of coordinate Benches and higher courts or raised factual disputes. The statutory test for admission under Section 130 requires a debatable question of law not settled by binding precedent and with material bearing on rights of parties.

Conclusion: No substantial question of law is involved; the appeal does not satisfy the threshold for admission under Section 130 in favour of the appellant.

Issue (ii): Whether Fe content for determination of export duty (for shipments prior to 01.05.2022) is to be determined on WMT basis and whether load-port/NABL private lab reports and the contract-based transaction value prevail over CRCL DMT reports for levy of export duty.

Analysis: Authorities and prior decisions establish that assessment of exported iron ore must reflect the condition at export (including moisture) and, for the relevant period, Fe percentage was to be calculated on WMT. The commercial contract, final invoices and bank realisation certificates showing payment based on load-port test reports formed the transaction value under Section 14. The CESTAT and Appellate Authority applied these principles, considered sampling timing and representativeness, and relied on coordinated tribunal and court decisions and CBIC circulars directing comparison of load-port/discharge reports and deference to transaction value where contract terms so provide.

Conclusion: The CESTAT correctly affirmed determination of Fe on WMT basis and acceptance of the load-port/NABL private testing reports and transaction value over the CRCL DMT report for the shipments in question; this conclusion is in favour of the respondent (assessee).

Final Conclusion: The appeal is dismissed for lack of any substantial question of law and on the merits the concurrent findings affirming WMT-based determination and reliance on contractually agreed load-port test reports are upheld.

Ratio Decidendi: For export consignments prior to 01.05.2022, Fe content for levy of export duty is to be determined on Wet Metric Tonne (WMT) basis and, where the transaction value/price actually paid or payable is determined by contract and supported by load-port/discharge test reports and bank realisation, those reports and the transaction value govern assessment under Section 14 of the Customs Act, 1962.

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