TaxTMI 
TaxTMI 
2025 (10) TMI 1203
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....28(4) of the Customs Act, proposing to redetermine the value in respect of those transactions where the appellants / exporters had received excess amount than the value declared at the time of exportation for assessment of duty and demand the differential duty, and proposing to confiscate the quantum of iron ore exported. The Notice also contained proposals to demand interest and impose penalties. In respect of the appellant M/s Bharat Mines and Minerals, there was an additional issue of demand of differential customs duty based on the change in rate of tax, vide Notification no.79/2008-cus. dated 13.06.2008. After due process of law, the demands were confirmed and penalties were imposed by the respective adjudicating authorities as detailed in the respective Orders in Original. The appeal preferred by the appellant VS Lad and Sons before the First Appellate Authority didn't succeed and the Appellate Authority upheld the Order in Original. Aggrieved by the impugned orders, having preferred these appeals, the appellants are before this Tribunal. 2. Shri B. G. Chidananda Urs, Advocate, appeared on behalf of both the appellants and submitted as under: a) Appellants are in ....
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....rals that all the shipments of iron ore were cleared on final assessment basis and there is no shipping bills pertaining to the said appellant pending finalisation. e) Without prejudice, the charge against the appellant was that the moisture deducted was more than the moisture certified by the assayer at the discharge port which has resulted in less quantity of DMT and that the appellant has suppressed the existence of the document like certificate issued by assayer at the discharge part, commercial invoice raised after shipment of goods to overseas buyer for realisation of export proceeds etc. That the valuation of export goods are to be undertaken at the time and place of exportation and the events that happened after exports were effected will not affect the assessment of export goods. Reliance is placed on the decision of Hon'ble Tribunal in Hira Steel Ltd. Vs. CCE, 2016 (343) ELT 1058 (Tribunal Mumbai) affirmed by Hon'ble Supreme Court in Hira Steel Ltd. Vs. Commissioner, 2018 (361) ELT A (283) (SC). It was for the proper officer to arrive at the value on which export duty is applicable on presentation of the goods for exportation and when all the basic facts were dis....
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....ssessment of duty, and resultant demands of the differential duty invoking extended period of limitation along with interest, and consequential liability of the exported goods to confiscation and imposition of penalties, are tenable. (ii) Whether the demand of differential customs duty based on the change in rate of tax, vide Notification No.79/2008-cus. dated 13.06.2008, is tenable. 6. Concededly, the period involved in the present disputes are prior to April 2011. Given that Self-assessment was introduced in Section 17 of the Customs Act, 1962, with effect from April 8, 2011, through changes made in the Finance Act, 2011, it is elementary that the amended provisions cannot be pressed into action in relation to transactions prior to coming in force thereof, unless the amending Act clearly provides the applicability of such amended provisions to operate retrospectively or by necessary implications. There is nothing coming forth from the Act that indicates such retrospective application. In the absence of any such mandate discernible in the Act, we are unable to perceive the law to be operative retrospectively and it can but only operate prospectively, that is, from the ....
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....t in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill of entry or the shipping bill, as the case may be." 8. It can thus be seen that in the old regime, once an importer or exporter had entered any goods under Section 46 or 50 of the Act respectively, the said goods were required to be examined and tested by the Proper Officer without undue delay under sub-section (1). Based on such examination and testing, the duty, if any, leviable on such goods, would be assessed by the Proper Officer, save as otherwise provided under Section 85 of the Act. Further, the proper Officer, in carrying out the exercise of assessing duty was empowered under sub-section (3) of Section 17 of the Act to require the importer or exporter or any other person to produce such documents and/or information, as stipulated therein. Again, under sub-section (4) of Section 17, the proper Officer was, inter alia, authorised to re-assess duty, if he found, on examination or testing, the goods or otherwise, that any statement made, while entering goods for clearance, or, in the document, or, information so furnished was not true in respect of any ma....
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....nt. For the relevant period, from the notifications submitted by the appellant it is seen that the variation was only in the ad valorem rate to be applied. We find from the comments of the Revenue as submitted by the Ld.A.R. that the Department has conceded that the shipping bills were assessed based on the quantity, value and declarations furnished and that as per available records, no samples were drawn for testing before let export order was issued. 11. That apart, it is seen that the Central Board of Excise & Customs, vide Circular No. 4/2012-Cus., dated 17-2-2012, in the wake of several references received, inter alia, clarified as under :- "2. Hon'ble Supreme Court in the matter of Civil Appeal No. 7539 of 1995 in case of Union of India v. Gangadhar Narsingdas Aggarwal [1997 (89) E.L.T. 19 (S.C.)] in order to arrive at the Iron (Fe) contents out of Iron Ore, had held that- 'that is because the duty is relatable to weight and therefore, once the iron content is determined keeping in mind the total weight, the percentage can be determined separating the iron contents from the rest of the impurities inclusive of moisture and thereafter ascertain in which cat....
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....e lumps) and CTH 2601 11 41 (iron ore fines) undertaken by the petitioners from the Mormugao Port, seeking benefit of "Nil", rate of export duty, under an exemption notification dated 1-3-2011. In regard to the said exports of the petitioners, the Revenue issued letters for finalization of assessment under Section 18 (2) of the Customs Act between May 2021 to December 2021, seeking to deny classification claimed by the petitioners on the "Wet Metric Ton" (WMT) basis and to recover export duty at the rate of 30% as prescribed under the Second Schedule to the Tariff Act. The petitioners contended that in passing the impugned orders-in-original, the Assessing Authority has been guided by the GA Circular which, according to the petitioners is illegal and could not be taken into consideration by the Assessing Officer to pass the impugned orders-in-original to levy customs duty on the export of iron ore as undertaken by the petitioners. The Hon'ble High Court found that the dispute which has arisen in the said proceedings was in regard to the method by which the iron (Fe) content in the iron ore is required to be determined for the purposes of levy of duty on the petitioners' export ....
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....s (iron ore) in moist condition on an appropriate basis by finding out the iron content in dry sample analysis. What is relevant is the condition in which iron ore is presented to the customs authorities for export namely, the condition of the goods on the date of the export. If the condition of the goods on the date of the export is such, that it contains impurities and moisture and that it is not purely only iron ore then, in that regard, the universally applied formula would become applicable to determine the percentage of iron ore in the condition of the goods on the date of the export. (iv) The Government having accepted one principle in holding the exporter to the condition of the goods on the date of the export, a different principle cannot be adopted while determining the customs duty. Thus, if the weighment of the exportable goods is made while it is in moist condition, then it cannot be accepted that the iron content cannot be determined while the goods are in moist condition. (v) It is not correct for the Revenue to take a position that as it is not possible by a physical analysis to determine the iron ore content in moist lumpy iron ore or moist iron o....
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....re is any deviation or modification in the nature the iron ore under the Tariff Act and the Schedules read thereunder as they presently stand. Mr. Shah has submitted that the only change which is effected from the year 2008 is in the rate of the duty, which earlier being at the per ton basis is now changed to ad valorem and not the classification. 44. In our opinion, the petitioners in the present context are correct in contending that in the process of determination of the appropriate rate of export duty on iron ore, it entails a determination of three issues, firstly, the classification of the iron ore under the Second Schedule of the Tariff Act to be undertaken based on the scheme of classification namely the headings and sub headings under the First Schedule to the Tariff Act, secondly, the classification under the First Schedule would enable determination of the appropriate sub headings of classification, which is based on the percentage of Fe (iron) content in the iron ore. This is the stage where the Wet method would be required to be adopted; thirdly, based on the appropriate classification (headings or sub headings), the appropriate prescribed basis of levy under ....
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....r levy of export duty being adopted; and secondly, an analysis of the iron content in the iron ore for the purpose of trade and commerce by applying the dry method, which is recognized for the purposes of trade on the basis of which invoicing would take place between the parties. It is for such reason, it is not correct for the Revenue to contend that the dry method which is being used for the purpose of trade and commerce be made applicable for the purpose of determination of its classification for the purposes of levy of export duty on export of raw iron ore in its natural form. Such hypothesis insofar as tariff entries are concerned, appears to be totally unacceptable as recognized by Supreme Court in its decision in Gangadhar Agarwal's case. In any case, there cannot be any confusion that the iron ore of which the iron content is determined in the laboratory as reflected in the certificate issued by the laboratory is not the form of the actual iron ore being exported. The export of the iron ore is in a natural form containing moisture and impurities. 48. The respondents thus could not have discarded the wet (WMT) method purporting to co-relate the same to the rate ....
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.... is another factor which in our opinion would support the petitioners' contention namely that the wet (WMT) method was consistently followed even after the new regime on the ad valorem basis was introduced w.e.f. 13 June 2008 for all these years from the time the principles of law recognizing the Wet method, had found approval of the Supreme Court in Gangadhar Agarwal's case in the year 1995 (9 August 1995). It was not thought appropriate by the legislature to take any legislative steps to have a regime different from what was recognized and followed, as laid down in the said decision of the Supreme Court or in other words to substitute the Wet (WMT) method. This is clear from the fact that such modification from the Wet method to the Dry method, has been very recently introduced by an amendment which is brought about w.e.f. 1st May 2022, by the Finance Act 2022, when a supplementary note has been incorporated in the Third Schedule in relation to the products under the heading 2601 to provide that the percentage of Fe (iron) content wherever specified shall be calculated on the Dry weight or Dry Metric Ton (DMT) basis. The amendment reads thus: "(20) in Chapter 26,....
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....any change in the classification as insofar as determination of Fe(iron) content is concerned for the purpose of the levy of the export duty. Such change to introduce the dry method is brought about only w.e.f 1 May 2022 by the Finance Act, 2022. It cannot be that the peculiar (natural) form in which the goods are subjected to export would be ignored. 55. Ms. Desai's next submission that what would be relevant to be seen is that the contract itself is on Dry Metric Ton (DMT) and hence the contention of the petitioners that the duty should be on the Wet Metric Ton (WMT) is not well founded. It is clearly seen that this was the identical situation in Gangadhar Agarwal's case namely that the export duty was paid by Gangadhar on the Dry method and subsequently a refund application was made by him contending that the export of the iron ore being in the natural form, the Wet method ought to have been followed and such contention of Gangadhar was allowed by Single Judge as confirmed by the Division Bench and ultimately by the Supreme Court. Thus, in our opinion, Ms. Desai's contention on the contract itself being on Dry Metric Ton (DMT), would not be of any relevance.....
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.... purpose of the levy of the export duty. The Hon'ble High Court has not only culled out the principles in Gangadhar Agarwal's case, but also applied them, and in no uncertain terms, held that the classification of the iron ore under heading 2601 for the purpose of determination of export duty on iron ore would necessarily be on the wet (WMT) method basis and the dry (DMT) method would be applicable with effect from 1 May 2022 by virtue of the Finance Act, 2022. 20. Be that as it may, the admitted position in the instant case is that the Department too has failed to draw any samples or test the same in the condition in which it existed when presented for export. Therefore, the impossibility of restoring the situation at this belated stage to status quo ante in order to determine the correct percentage of FE content on the basis of wet metric ton basis, as was applicable for the relevant period and the consequent impossibility of determining the correct assessable value/transaction value in respect of these exports of the appellant, also necessarily weighs only in favour the appellant. 21. Therefore, for the reasons elaborated above, on the first issue under discussion, we ....
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....?", the Honourable High Court proceeded to answer the same. The relevant portions of the said decision are reproduced below: "5. Section 16 of the said reads thus : "SECTION 16. Date for determination of rate of duty and tariff valuation of export goods. - (1) The rate of duty and tariff valuation, if any, applicable to any export goods, shall be the rate and valuation in force, - (a) in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51. (b) in the case of any other goods, on the date of payment of duty. (2) The provisions of this section shall not apply to baggage and goods exported by post." 6. We are concerned with clause (a) of sub-section (1) of Section 16 which provides that in case of goods entered for export under Section 50, the date of determination of rate of duty and tariff valuation of export goods will be the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under Section 51 of the said Act. Sections 50 and 51 ....
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....reads thus : "Examination Report Inspected the lot, checked the description. Quantity actually loaded will be determined on the basis of draught survey Report." The Shipping Bills show that Let Export Order was signed on 28th February, 2007 by the Superintendent Central Excise and on the same day an order "allowed for shipment in full" was passed by the said officer. Admittedly, as of 28th February, 2007, only cess was payable on export of iron ore. There is no dispute that cess of Rs. 25,000/- and Rs. 17,000/- respectively was paid against the shipping bills on 28th February, 2007. Admittedly, on 28th February, 2007 no export duty was payable and what was payable was the export cess which was admittedly paid on the same day. The remarks made by the Superintendent of Central Excise show that he was satisfied that the goods were not prohibited goods and, therefore, he passed an order ''allowed for shipment" on 28th February, 2007 and signed "Let Export Order" on the same day. Thus, the order permitting clearance and loading of goods for exportation under Section 51 of the said Act was made on 28th February, 2007. Thus, 28th February, 2007 is the date for d....