TaxTMI 
TaxTMI 
2023 (12) TMI 963
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....ted at the port of discharge as to the wet quantity of shipment and the dry quantity shall be determined by deducting the free moisture from such wet quantity. In case of variation between the weight at the point of discharge and the load port the average thereof would be arrived at, for all purposes. 2. Dispute in the present appeal concerns the 'Fe' content in iron ore fines exported vide the above referred Shipping Bill and the consequent determination of value for purposes of levy of export duty. The appellant filed the Shipping Bill intimating the iron content therein as 57.30% and moisture content as 8.98%. This was said to be based on the load port analysis, report obtained from a duly recognised testing concern- M/s. Mitra S.K. Pvt. Ltd. (MSK). As per record the discharge port report/CIQ indicated the iron content as 57.53% and moisture. The appellant submits that both the load port and the discharge port report confirms the iron content as below 58% whereby the product was classifiable under heading 26011142, attracting NIL rate of duty in terms of Notification No. 15/2016-Cus dated 01.03. 2016. 3. During the earlier round of litigation, the proper officer had finalised ....
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....vernment recognized private Laboratory Report date No. of days between Shipping Bill date and Government recognized Private Laboratory Report date 1. 7545595 24.07.2017 19.09.2017 57 09.08.2017 16 5. Thus the appellant vehemently argues that the CRCL report is unacceptable as to be the basis for determining the value of the iron ore fines. Another ground for which they hold the CRCL report as non-acceptable is for the fact that despite the said report being available and generated in 2017, yet the same was not provided to the appellant till the second round of litigation. The claim being that they had been denied an opportunity to prefer an appeal and argue their case against the said report for retesting of the samples. The appellant, therefore contends that for this reason alone, the impugned order is liable to be set aside as the relied upon report is nothing short of being a fallacy. 6. The learned Authorised Representative for the department, Shri Subrata Debnath, however supports the order in appeal and points out that the iron content being over 62%, (62.4% to be precise) on Dry Weight basis and moisture content being 5.5% (that is more than 58% of iron co....
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.... to pass through 150 microns. 4. This method is not applicable to divide samples containing high moisture content, of sticky iron ore. However, samples may be sufficiently dried before division. 12.1- Moisture samples : To avoid any change in Moisture content, the Moisture determination shall be done as quickly as possible, after sample is taken. Moisture determination shall be determined as per IS 11690. 8.1. In the present case, it nowhere comes on record that the sample of Customs House Laboratory were drawn in strict adherence to the BIS Standards, as also contained in the Board's Circular. Moreover, the sample is alleged to be drawn by the Customs Officer at the back of the appellant and without the knowledge of the exporter, which is against the statutory mandates provided under Section 144 of the Customs Act, 1962. They thus state that the Test Report given on the basis of the sample which was not drawn as per BIS, cannot be considered for any proceedings and the said Test Report is not valid for the purpose of determination of Fe content or moisture content. On the other hand, the sample had been drawn by M/s. Mitra S.K. Private Limited, following the procedure l....
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....the sample and the Chemical Examiner who had tested the sample. 9. It is thus evident that the CRCL test report is not only cryptic, but it is also not clear whether the same was in accordance with the prescribed standards. The fact that the sample was tested nearly two months after its drawal and had not been stored in accordance with the prescribed conditions, the reliability of the test result, therefore is not only doubtful but also unreliable. We also note that the Board's Circular- 12/2014-Cus clearly states that the sample is to be drawn in accordance with the BIS standards. 10. It is informed that the sample was found to be kept in plastic bags and not in air tight containers with appropriate lids. As the sample has not been drawn in accordance with laid down standards, the test results thereof cannot form the basis of any decision making process. On the aspect of drawal of sample and it's reliance the Hon'ble Apex Court, in the case of M/s. Tata Chemicals Ltd. Vs. Commissioner of Custom (Preventive) Jamnagar 2015(320) ELT 45 SC, had the following to say: "Clearly the samples drawn by the Inspector in the present case, have been drawn contrary to the express provisions ....
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....Tri-Bang), "9. We also find that revenue aggrieved by such an order and they took this mater in a Civil Appeal before the Hon'ble Supreme Court and the Apex Court 1997 (89) ELT 19 (SC) have upheld the decision of the Hon'ble High Court of Bombay. The ratio of the said decision is that whenever any sample has to be tested, it has to be tested in the condition in which goods were exported. If it be so, we find that the Deputy Chief Chemist report as reproduced herein above cannot be relied upon by the Revenue. 10........................ 11. We also find that the reliance placed by the learned Counsel on the above said case has strong force. In that case also an identical issue was decided by this Bench and upheld that testing of a sample after 6 months will not give same iron content, which was found at the time of export." 12. The fact of the case that both the load port and discharge port test report confirm that the samples have been drawn in adherence to the procedure laid down under the BIS, we find that the discharge port/CIQ in the present case would be the decisive factor for the determination of the iron content in the export product. This stand is substantiated b....
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....sture the percentage would not be relatable to the lumpy iron ore weighed at the relevant point of time for the purposes of charging duty. We, therefore, do not think that the High Court committed any mistake in the view it took. Even if two views were possible the view taken by the High Court being a plausible one would not call for intervention by this court." 13.1. The test report in the present matter is also contrary to the circular issued by the CBEC. In the case cited above, Hon'ble Apex Court it has been clarified that for the purpose of charging export duty, the assessment of iron ore fines for determination of Fe content shall be on Wet Metric Ton (WMT) basis, after deducting the weight of impurities (inclusive of moisture) out of the total weight/gross weight, to arrive at the net Fe content. In the present case the Fe content of iron ore fines has been determined by the Custom House, Laboratory, Kolkata on dry basis and therefore, the said report cannot be relied upon for the purpose of finalization of the subject shipping bill. 13.2. In support of his contention, that when the samples were tested on dry basis, then the percentage of the Fe content cannot be relied u....
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....an 58%. We also note that the impugned test reports dwell at length on the manner of drawal, storage and analysis of the samples carried out, which indicates their adherence to BIS prescriptions. 17. Further, the Gangadhar case was also analysed by the Hon'ble High Court, Bombay in the case of V.M Salgaocar Brothers and Others Ltd. Vs. Union of India 2022 (9) TMI 1306 Bombay, High Court, wherein the Hon'ble High Court in para 42 of its order laid down certain guidelines and principles required to be adhered to and for ease of the analysts/chemists and others concerned. The relevant extract thereof is reproduced hereunder : "40. The Revenue carried Gangadhar's case to the Supreme Court. The Supreme Court observed that the duty was required to be determined on the weight of the commodity at the relevant point of time, namely, in the case of lumpy iron ore where the percentage of iron was 60% or more but less than 63%, the duty was restricted to Rs. 6/- per metric ton; where it was 58% or more but less than 60%, it was restricted to Rs. 5/- per metric ton and where it was less than 58%, it was restricted to Rs. 4/- per metric ton. It was observed that under both the notifications ....
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....eme Court in affirming the view of the learned Single Judge as also the learned Division Bench in the case of Gangadhar Agarwal (supra) has approved the WMT method considering the fact that the goods (iron ore) is required to be considered in its natural form at the time of its export which contain the moisture and other impurities. The following are the principles which can be culled out from the said three judgments in Gangadhar Agarwal's case in regard to the classification of the Fe (iron) content in the iron ore for the purpose of levy export duty:- (i) The iron ore when subjected to export, is exported in its natural condition so as to include impurities and moisture. (ii) It is not in dispute that there is no method or formula to determine the iron contents while the goods are in moist condition. The percentage of iron content in the iron ore is calculated by adopting a certain formula such formula has no scientific backing and the formula is based on approximate conclusion. Such formula is recognized not only in our country but also universally. (iii) It is a recognized practice to determine iron content in the goods (iron ore) in moist condition on an appropriate ....