Wet Metric Tonne basis governs Fe content assessment for pre-amendment iron ore exports; retrospective DMT treatment is impermissible.

For export assessments of iron ore fines made before the Finance Act, 2022 amendment, Fe content is to be determined on a Wet Metric Tonne basis, reflecting the condition of the goods at the time of export and the binding uniformity circular. The later Dry Metric Tonne method cannot be applied retrospectively to those transactions. Where an adjudication sustains duty demand on a DMT basis for the pre-amendment period, it rests on an incorrect legal footing and cannot be sustained; fresh consideration must follow on the correct WMT basis, with a proper opportunity of hearing and observance of natural justice.

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Issues: (i) whether the Fe content of exported iron ore fines for the relevant period, which preceded the Finance Act, 2022 amendment, was required to be determined on Wet Metric Tonne basis or Dry Metric Tonne basis; (ii) whether the Order-in-Original sustaining duty demand on DMT basis could be upheld and whether the matter required remand.

Issue (i): whether the Fe content of exported iron ore fines for the relevant period, which preceded the Finance Act, 2022 amendment, was required to be determined on Wet Metric Tonne basis or Dry Metric Tonne basis.

Analysis: The levy of customs duty on export goods is governed by the charging and valuation scheme under the Customs Act, under which the taxable event, valuation date, and clearance for export are linked to the condition of the goods at the time of export. The circular issued to secure uniformity in assessment clarified that Fe content of iron ore was to be assessed on Wet Metric Ton basis by deducting impurities, including moisture, to arrive at net Fe content. For exports made prior to the later amendment, the applicable method remained the pre-amendment WMT method, and the subsequent DMT approach could not be applied retrospectively to those transactions.

Conclusion: The assessment for the relevant exports was required to be made on WMT basis, not DMT basis, and the contrary view was held to be erroneous.

Issue (ii): whether the Order-in-Original sustaining duty demand on DMT basis could be upheld and whether the matter required remand.

Analysis: The adjudicating authority proceeded on an incorrect basis by treating the Fe content as more than 58% on DMT basis for pre-amendment exports, despite the governing statutory framework and binding circular. The order, therefore, could not be sustained. At the same time, the factual controversy on liability, classification, and evidentiary matters, including the treatment of materials relied upon behind the petitioner's back, required a fresh adjudication by the customs authority in accordance with law and with observance of natural justice.

Conclusion: The Order-in-Original was set aside and the matter was remitted for fresh adjudication on WMT basis after affording a reasonable opportunity of hearing.

Final Conclusion: The writ petition succeeded to the extent that the impugned adjudication was annulled and the customs authority was directed to re-decide the liability afresh on the correct legal basis.

Ratio Decidendi: For export transactions governed by the pre-amendment regime, Fe content of iron ore fines must be assessed on the basis of the condition of the goods at export, following the binding uniformity circular, and a later dry-basis methodology cannot be retrospectively applied to those exports.

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