TaxTMI 
TaxTMI 
2026 (2) TMI 566
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....rt in India, by manipulating test reports and submitting the same to the Customs Authorities at the time of export. 1.1. Pursuant to the aforesaid information, enquiries were conducted by the officers of DRI, which revealed that:- (i) M/s KPSPL is a Private Limited company wherein Shri Debabrata Behera is the Managing Director and Smt. Susmita Behera, wife of Shri Debabrata Behera is the other Director of M/s KPSPL. (ii) Primary activity of M/s KPSPL was trading of iron ore in domestic as well as overseas market and Shri Debabrata Behera negotiated with their overseas buyers for consignments of iron ore exported by them. They exported most of the iron ore shipments through Paradip Port to their overseas buyers i.e. M/s Global MinorePte Ltd., Singapore, M/s Synergy Resources HK Ltd., Hong Kong, M/s KTP Exports Pte Ltd., Singapore, etc. (iii) Vide Notification No. 15/2016-Customs dated 01.03.2016, Export duty on Iron Ore Fines (below 58% Fe content) was reduced to NIL, whereas Export duty on Iron Ore Fines (58% Fe content and above) still remained the same i.e. 30% ad valorem. (iv) Owing to difference in the duty structure between two grades of ....
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....stoms Tariff Item (CTI) 2601 1142. Similarly, for Contract No.IOP/KP/003 dt. 10.03.2017, M/s KPSPL filed Shipping Bill No.4810523 dt. 17.03.2017 under CTI 2601 1131for export of 22,950 WMT of iron ore fines for the aforesaid vessel at Paradip Port. As per Certificate of Quality issued by M/s SGS India Pvt. Ltd. for 30,910 WMT (28,548.476 DMT) iron ore fines, the 'Fe' content was 57.94% and for 22,950 WMT (21,217.275 DMT) of iron ore fines, the 'Fe' content was 63.92%. It is pertinent to note that these two artificially separated Shipping Bills for different weight and Fe content i.e. 30,910 WMT- Fe 57.94% & 22,950 WMT-Fe 63.92%, were exported to the same buyer in the same vessel. 1.4. The investigation conducted revealed that M/s. KPSPL has paid duty @ 30% for the Shipping Bill with Iron Ore Fines having high grade 'Fe 'content more than 58% and claimed NIL rate of duty for the other Shipping Bill for iron ore cargo having 'Fe ' content less than 58%. The overall Fe content in the combined cargo being more than 58%, export duty @ 30% ad valorem appeared payable by the exporter. With this modus operandi, M/s KPSPL appeared to have evaded payment of appropriate export duty @ 30% o....
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....dings initiated vide show cause C. No. notice VIII(10) 128/SCN/KPSPL/CUS(P)/BBSR/2020/2208-13 dt. 30.03.2021 against the following, considering the same to be unsustainable on merits: (1) M/s. Kashvi Power and Steel Private Limited, Plot No.1234-P, Govindaprasad, Bomikhal, Bhubaneswar, Odisha 751010, (2) Shri Debabrata Behera, Managing Director, M/s Kashvi Power and Steel Private Limited, Plot No.1234-P, Govindaprasad, Bomikhal, Bhubaneswar, Odisha 751010, (3) M/s. Inspectorate Griffith India Private Limited, HIG-34, Gourav Vihar, Jagannath Marg, Madhuban, Paradip, Odisha - 754142 and (4) M/s. SGS India Private Limited, Unit No. MU 33, Madhuban Market Complex, Paradip, Odisha - 754142, 1.7. Aggrieved against the dropping of the demands, the Revenue has filed this appeal. 2. In their Grounds of Appeal, the Revenue has raised the following points: (i) The Adjudicating Authority (AA) while dropping the entire proceeding initiated vide SCN dated 30.03.2021 has solely relied upon the test reports issued by the Central Revenue Control Laboratories (CRCL) Kolkata and did not consider test reports issued by SGS India Pvt. Ltd (SGSIPL) - an....
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....re submitted by KPSPL themselves during the investigations. (iv) To support his sole reliance on test reports issued by CRCL Kolkata, the AA has cited (at para 7.3.2 of the impugned O- I- O) the judgment in case of 'Reliance Cellulose Products Ltd. Vs. Collector of C. Ex., Hyderabad' [1997 (93) E.L.T. 646 (S.C.)] passed by Hon'ble Supreme Court of India. It is to submit that the ratio of above cited judgement is not applicable to the instant case. In the aforesaid cited case, the samples of impugned goods were first tested by departmental Chief Chemist. Later, samples were re-tested by Chief Chemist, CRCL Delhi on the request of Reliance Cellulose Products Ltd (Hereinafter referred as the 'Company'). Both the times, the test results were same and in line with the Departmental stand. So, the company requested again to draw fresh samples of the impugned goods and to retest those samples. This request of the company was denied by then Assistant Collector of Central Excise, Hyderabad I Division and subsequently SCN No. V/68/17/154/82 Vol. I dated 11.8.86 was issued to Reliance Cellulose Products Ltd. based on those test reports. The matter went up to the Hon'ble Tribunal where....
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....But in the present case besides only CRCL Test reports, other authorised agencies Test reports are available. Thus the facts of the two cases are completely different. In view of the above, it is clearly evident that the AA has erred in placing reliance on the above said judgement of the Hon'ble Supreme Court. (vii) Further the AA has also placed reliance on the case of 'Commissioner of Customs Vijayawada vs. Essel Mining & Industries ltd. 2019 (370) E.L.T. 928 (Tri. - Hyd.)' decided by Hon'ble CESTAT, Hyderabad. In this case, Hon'ble CESTAT agreed with the findings of the first Appellate Authority and also reproduced relevant portion of those findings in its order. In this case, the party had requested for re- testing of the samples at a different laboratory and the remnant samples were sent to the CRCL, New Delhi for re-test. Even after getting test Results from CRCL New Delhi, the department got the samples tested at another laboratory for which no intimation was given to the party. The first appellate authority held it as violation of principles of Natural Justice and ruled in favour of the party. In this backdrop only the test reports of CRCL, New Delhi were upheld by....
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.... sole reliance on CRCL test reports (though the ratio of the said case law is not applicable to the instant case as discussed in above paras), on the other hand he has simply overlooked the fact that in the same case law the Hon'ble Court has taken into account the test reports of Iron ore shipment at destination port as well as test reports of private testing agencies. In the instant Case, for Iron ore shipments exported by KPSPL, available test reports of destination/Discharge port (CIQ) as well as test reports of private testing agencies SGSIPL have reported Fe content above 58%. (x) Further, in regards of test reports by CRCL Kolkata, it is pertinent to mention that these test reports were neither mentioned nor relied upon in the said Show Cause Notice issued to the company. The said test reports by CRCL Kolkata were mentioned by the company in their reply in defense which was subsequently taken up by the Adjudicating Authority and relied upon in the O- I- O. The fact being, if the CRCL test reports (based on which the whole case is being dropped) were not relied upon in the SCN and the Adjudicating Authority wished to rely on the same (for dropping the proceedings aga....
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....n Ore consignment into two separate consignments of Iron Ore, exported per vessel 'M. V. Fortune Wing' by KPSPL. However, it appears that the AA has failed to appreciate the fact that such manipulation by KPSPL was not only brought out clearly in the investigation report but also was admitted by Shri Kamal Mohanty, Manager, SGS India Pvt. Ltd. (SGSIPL- authorized testing agency deputed by KPSPL). Vide his statement dated 05.04.2018 recorded under section 108 of the Customs Act, 1962, Shri Kamal Mohanty has stated that the SGSIPL never tested two separate cargos of Iron Ore exported per vessel 'M.V. Fortune Wing' by KPSPL. It was only after the sailing of the said vessel and after written instruction form KPSPL, they artificially split the test report into two grades one lower and other higher one. The said fact is corroborated by another testing agency Inspectorate Griffith India Private Limited (IGIPL), which had also tested the same cargo as per work order of overseas buyer i.e. M/s Global Minore Pte Ltd., Singapore. M/s IGIPL had issued a single Certificate of Quality (CIQ) for the aforesaid vessel. Apart from the aforesaid oral evidences there were also document....
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....port were in consonance with the discharge port test reports (CIQ). Therefore, it clearly established that 'Fe" content of the exported Iron ore by KPSPL were above 58%. A table showing test results of various testing agencies are shown below which clearly establishes the fact that majority of the test results shows iron ore content above 58%: Sr. No. Name of the Vessel Testing Agency as per Contract WMT Exported 'Fe' content in percentage (%) as per respective test report Declared at Load Port M/s IGIPL M/s SGSIPL M/s CIIPL M/s LITIPL Discharge Port (CIQ) 1. M.V. PRABHU MIHIKA IGIPL/SGSIPL 53,732 57.92 57.92 61.68 ---- ---- 59.40 2. M.V. MENALON IGIPL / SGSIPL 55,300 57.78 57.78 62.63 62.58 ---- ---- 3. M.V. ITHOMI IGIPL / LITIPL 55,000 57.88 57.88 62.32 ---- 60.30 4. M.V. FORTUNE WING SGSIPL 30,910 57.94 60.82 57.94 ---- ---- 59.87 22,950 63.92 63.92 ---- ---- (xvii) As per Section 17 ....
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....s no difference in the value declared in the Shipping Bills vis-à-vis Invoices and remittance received owing to variation in 'Fe' % age and Moisture % age. (c) In terms of Para (3) clause (c) and clause (d) of the Circular No. 12/2014, dated 17th November, 2014, the proper officer vested with the jurisdiction to re-determine the value only when variation has impinged upon the price, not otherwise, in the instant case it is admitted fact on record that there is no variation in the price due change of 'Fe', moreover, para 4 of the circular is also complied, since the remittance received matches with the Final Invoice(s) . Hence, the assessment is made in terms of the Circular No. 12/2014, dated 17th November, 2014. (d) The instant case is squarely covered by the decision of the Hon'ble Apex Court in Steer Overseas Pvt. Ltd. v. Commissioner - 2022 (381) E.L.T. A34 (S.C.), wherein the Hon'ble Apex court affirmed the decision of the Tribunal. In that case, the Tribunal had held that the test report of the private laboratory in respect of samples drawn by the exporter without the knowledge or the presence of the Departmental officers cannot prevail over the test ....
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.... 5.1. In the present appeal, we find that the Revenue is of the view that the overall Fe content in the combined cargo being more than 58%, export duty @ 30% ad valorem was liable to be paid by the exporter. Thus, we observe that the main issue involved in this appeal is the percentage of 'Fe' content in the goods exported. It is seen that samples were drawn by the officer of the Customs in the presence of the Respondent and send to CRCL for test, as per the mandate of the Customs Act, 1962. However, Revenue has not relied upon this Test Report and relied upon some test conducted at Private labs. In this regard, we also take note of the fact that the private testing agencies have not drawn the samples in the presence of the officer of the Customs. Hence, such sample and report thereto are not admissible as credible evidence in the eyes of law. We observe that this view is supported by the decision of the Hon'ble Apex Court in Steer Overseas Pvt. Ltd. v. Commissioner [2022 (381) E.L.T. A34 (S.C.)], wherein the Hon'ble Apex court has affirmed the decision of the Tribunal that the test report of the private laboratory in respect of samples drawn by the exporter without the knowledge ....
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.... customs duty 'Fe' content as per CRCL report [A] [B] [C] [D] 1 5384026 dt. 12.04.2017 (M.V. Prabhu Mihikaa) 53.3% 61.68% 53.3% 2 8320143 dt. 29.08.2017 (M.V. Menalon) 56.9% 62.63% 56.9% 3 8387522 dt. 01.09.2017 (M.V. Ithomi) 56.4% 62.78% 56.4% 4 8472055 dt. 05.09.2017 (M.V. Ithomi) 56.4% 62.78% 56.4% 5 4801526 dt. 17.03.2017 (M.V. Fortune Wing) 60.4% 60.08% 60.4% 6 4801523 dt. 17.03.2017 (M.V. Fortune Wing) 57.6% 60.08% 57.6% 5.4. The Ld. AA opined that the first and second sets of test reports, under column [B] and [C] respectively, have been issued by private testing agencies. In those cases, the test samples of export goods were not drawn in presence of Customs authorities. It is not known to Customs, how and when those test samples were drawn. Those tests, done by private testing agencies, give substantially contrasting test result thus putting question mark on the credentials of either of tests and results thereof. On the other hand, the samples tested by CRCL, Kolkata were drawn by the Customs authorities in presence of the authorized representatives of the e....
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.....7 2 5.7. We observe that the Ld. AA found that in respect of shipping bills no. 5384026 (MV Prabhu Mihikaa) and no. 8320143 (MV Menalon), the sales proceeds as per BRC matches with the value declared in the final Invoice raised by the exporter M/s KPSPL. The minor variation attributes to the bank/regulatory charges. In respect of the shipping bills no. 8387522 & 8472055 (MV Ithomi), the sales proceeds as per BRC matches to value declared in the shipping bills. The AA found that there is no suppression / mis-declaration of Fe content on the part of M/s KPSPL. The AA further observed that in respect of the shipping bills no. 4801526 & 4801523 (MV Fortune Wing), the sales proceeds have not yet been received by the exporter. The Ld. AA in paragraph 7.3.3.7 concluded that the value of iron ore fines considered in the SCN for the purpose of computation of differential Customs duty is not sustainable. We do not find any infirmity in the finding of the Ld. AA. 6. Accordingly, we uphold the findings of the Ld. AA and hold that there is no merit in the appeal filed by the Revenue on this score. 7. As regards the allegation in paragraph 10.5 o....
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.... hold that there is no merit in the issue raised by the Revenue on this count. 7.2. As regards allegation that "Shri Debabrata Behera, Managing Director of M/s KPSPL, in his statements given before DRI, Goa, has admitted that he was aware about the misdeclaration of 'Fe' content of iron ore fines exported by M/s KPSPL", it is a settled issue that adjudication proceedings under Customs Act, 1962 cannot solely be based on inculpatory statements of witnesses and noticee alone. The Department is bound to prove case based on balance of probabilities as per well-recognized principle of law in case of departmental adjudications. 7.3. Regarding the allegation that "analysis of 'Fe' content of cargo at the discharge port (in China), done by CIQ (China Entry Exit Inspection and Quarantine Bureau) also indicate that the 'Fe' content was more than 58%". In this regard, we are of the view that as per the contracts entered into between M/s KPSPL and the overseas buyers, the sale was on FOB basis and "The buyer shall pay to the seller 100% as payment on CAD basis of the value as per load port, weight, Fe and moisture basis analyzed at the load port." Essentially it means that the exporter i....