TaxTMI 
TaxTMI 
2026 (8) TMI 433
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....023), and assessing the export goods to export duty/cess at the rate of 30% under Customs Tariff Heading 26011149 of the Second Schedule to the Customs Tariff Act, 1975, has been upheld. 2. Briefly stated, the facts of the case are that the appellant, M/s. OCL Iron & Steels Limited (formerly known as 'M/s. Praful Enterprises Private Limited'), exported Iron Ore Fines of Indian Origin to M/s. BST (HK) Ltd., Hong Kong under Contract No. PE/BST/008/2023-24 dated 10.08.2023 through Shipping Bill No. 3437925 dated 24.08.2023, covering export of the goods through the vessel MV Young Harmony. During the relevant period, export duty on iron ore fines was dependent upon the Fe (Iron) content of the exported goods, with iron ore fines containing Fe content of 55% or more but below 58% being exempt from export duty under Notification No. 27/2011-Cus. dated 01.03.2011, as amended, whereas goods containing Fe content above the prescribed threshold attracted export duty under the applicable tariff entry. 3. The Shipping Bill was initially provisionally assessed upon execution of a Provisional Duty Bond and furnishing of Bank Guarantee. The export goods were provisionally classified under C....
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....L, Visakhapatnam, the Assistant Commissioner, Paradeep Customs Division, Paradeep finalized the provisional assessment vide Order of Final Assessment No. CUS/PDP/AC/EXPORT/24 dated 05.02.2025 by classifying the exported goods under Customs Tariff Heading 26011149, confirming levy of export duty/cess at the rate of 30%, determining the assessable value at Rs.23,25,95,044/-, and holding that the exported Iron Ore Fines contained Fe content exceeding 58%. While doing so, the adjudicating authority observed that the CRCL, New Delhi report was consistent with the Fe content declared by the appellant at the time of filing the Shipping Bill and the Form-I declarations furnished by the mining authorities at the time of procurement, and consequently declined to accept the appellant's contention that the export goods contained Fe below the dutiable threshold. 7.1. Against the above Final Assessment Order, the appellant preferred an appeal before the Ld. Commissioner (Appeals), G.S.T., C.X. & Customs, Bhubaneswar, inter alia contending that the contemporaneous Load Port Test Report, Discharge Port Test Report and the report of CRCL, Visakhapatnam consistently reflected Fe content below....
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....der Circular No. 30/2017Cus dated 18.07.2017, re-test, if any, was required to be done immediately, whereas in the instant case such re-testing was completed after more than 1 year 3 months from the date of shipment. It is settled law that delay affected the moisture content of the samples being tested, meaning thereby that inaccurate and unreliable readings were stated in the re-test report of CRCL, New Delhi. In this regard, reliance is being placed on the following decisions: a. Final order dated 18.08.2023 passed by this Hon'ble Tribunal in M/s Vedanta Ltd. v. Commissioner of Customs (Preventive), Bhubaneshwar, C/79383/2018; b. Final order dated 04.12.2024 passed by this Hon'ble Tribunal in Commissioner of Customs (Preventive) v. M/s Essel Mining & Industries Ltd., C/75881/2023; c. Judgment dated 15.01.2026 passed by the Hon'ble Orissa High Court in Commissioner of Customs (Preventive), Bhubaneshwar v. M/s Essel Mining & Industries Ltd., OTAPL/50/2025. (ii) The impugned re-test by CRCL, New Delhi was also in violation of the mandatory procedures and safeguards under the Customs Act, 1962 and more particularly Sections 17, 18, 51 and 144 there....
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....ct in question. The appellant's dealing with the foreign buyer ought to have been acknowledged and the contractual terms and conditions could not have been read in the manner as had been purportedly done by the Customs authorities in the instant case. It was wholly arbitrary to have insisted for realization of differential export proceeds when the correct factual position was that the appellant had not recovered any amount towards customs duty from its foreign buyer and had suffered proportionate penalty for 'Fe' content having fallen below 58%. The Customs Department ought not to have attempted to re-write the terms of the export contract between the parties or questioned fulfilment of the stipulations thereof. (ii) The present case was a fit case for interference with the impugned appellate order dated 24.04.2026 which upheld the purported final assessment order dated 05.02.2025. There does not arise any question of chargeability to export duty by effecting classification of the exported iron ore fines under Tariff Entry 2601 11 49 and denial of exemption benefit under the applicable notifications. 8.1. In view of the submissions aforesaid, the Ld. Counsel for the app....
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....60.42%, to sustain the final assessment and levy of export duty. The principal issue, therefore, to be decided by us, is whether the authorities below were justified in disregarding the contemporaneous evidences available on record and in placing exclusive reliance upon the subsequent re-test report for Final Assessment of the impugned Shipping Bill. 12. We observe that the Ld. adjudicating authority has relied upon the Board Circular No. 12/2014-Cus. dated 17.11.2014 to justify the retest and determine the duty on the basis of the said re-test report. We have perused the Board Circular cited sura. We find that the said Circular does not confer an overriding or conclusive evidentiary preference upon the Load Port Test Report or the Discharge Port Test Report where circumstances exist warranting further examination, the same does not equally confer any unfettered or arbitrary discretion upon the Department to disregard contemporaneous material evidences / CRCL Report already available with the authorities and resort to repeated testing merely because the results obtained are perceived to be inconsistent with the declaration furnished by the exporter. The power to undertake a re-d....
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....itself. 12.4. Equally significant is the fact that the report of CRCL, Vizag was founded upon representative sampling undertaken in accordance with the prescribed procedure. Representative sampling is neither an empty procedural formality nor a mere technical ritual; it constitutes the very substratum upon which scientific reliability of laboratory analysis rests. Particularly in the case of Iron Ore Fines, whose chemical composition and moisture distribution are susceptible to variation across different portions of the cargo, the methodology adopted for drawal of samples assumes paramount importance. It is precisely for this reason that the Bureau of Indian Standards, under IS 1405 (Iron Ores - Sampling and Sample Preparation), prescribes a meticulous procedure involving representative sampling through multiple increments so as to faithfully capture the true characteristics of the entire lot. The legal acceptability of any report in such cases is, therefore, inextricably linked with the integrity of the sampling process itself. Once representative samples have been scientifically drawn and analysed by the jurisdictional Customs laboratory in conformity with the prescribed proce....
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....) 60% Fe Contents (On Dry Basis) FE BONUS WILL BE USD 0.871 PER DMT FOR EACH 1% FE IN CASE OF FE ABOVE 60.00%, FRACTIONS PRORATA. FE PENALTY WILL BE USD 0.871 PER DMT FOR EACH 1% FE IN CASE OF FE BELOW 60.00%, FRACTIONS PRORATA. ... Article 11-Inspection 11.1 MINERALS LAB SERVICES PVT LTD/INSPECTORATE GRIFFITH INDIA PVT LTD/THERAPEUTICS CHEMICAL RESEARCH CORPORATION/COTECNA INSPECTION INDIA PRIVATE LIMITED shall inspect the Commodity for Quantity and Quality at place of loading at the Seller's account. Buyer may send an inspection Team, at their own expense and risk, to observe the inspection and loading of Commodity at loading Port, and Buyer may, at buyer's expense, has the right to appoint an independent surveyor to make the pre-shipment analysis and protective analysis at the loading port. . . . Article 13-Documents to be presented for Payment within 10 days after shipment date Payment 1. Signed commercial invoice for 100% cargo value based on certificate of quality and weight issued by MINERALS LAB SERVICES PVT LTD/ INSPECTORATE GRIFFITH INDIA PVT LTD/THERAPEUTIC....
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....ina for the reference of Seller. If there is any major difference in comparison between Load Port and Discharge Port results, the same to be mutually agreed between Seller and Buyer. The certificate should have Fe Content on dry Basis and wet Basis." 13.1. From a plain reading of the aforesaid contractual stipulations, it can be observed that the terms of the export contract unequivocally demonstrate that the transaction between the appellant and the foreign buyer was liable to price adjustment depending upon the actual Fe content of the exported iron ore fines, with proportionate deductions envisaged in the event of any deficiency in the agreed specifications. Admittedly, the contractual arrangement was acted upon by the parties in question. In such circumstances, the Customs authorities were not justified in construing the contractual provisions in a manner contrary to the commercial understanding between the contracting parties. Equally, the insistence upon realization of differential export proceeds, despite there being no material to indicate that the appellant had recovered any amount towards customs duty from its foreign buyer and despite the admitted de....
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....cates unmistakably demonstrate that the sale consideration ultimately stood adjusted in accordance with the agreed quality variation mechanism, resulting in a proportionate deduction on account of the Fe content falling below the contractual benchmark. The findings recorded in this regard, therefore, cannot be sustained in the eyes of law. 13.4. Moreover, the contemporaneous record, particularly the Final Invoice and the corresponding Bank Realization Certificates, does not indicate that the appellant had recovered any amount from the overseas buyer towards the export duty/cess in question. On the contrary, the material on record demonstrates that the contractual consideration itself stood reduced on account of the quality variation of the exported goods, resulting in a proportionate deduction from the sale price. In such circumstances, the assumption that the appellant had recovered the incidence of export duty from the foreign buyer is wholly unsupported by any cogent evidence and appears to have been arrived at on mere conjecture. The Revenue having failed to place on record any cogent, independent or contemporaneous material capable of displacing this consistent evidentiary ....
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....EC and BIS as seen as Para 3 above. As can be seen from the first table above, the Department has taken time between 105 days to 138 days to complete the sample testing and give the Report. On the other hand, the Government Recognized Private Laboratories engaged by the Appellant have taken just 6 to 9 days to complete this entire exercise. As there has been a huge delay between the date of collection of sample and testing of the sample by the CRCL and the number of days taken by the Private Labs are much lesser in the second case, the values arrived at by the Government Recognized Private Laboratories‟ Reports are likely to be more accurate, since they had completed the Testing nearer to the date of drawing of samples. The decisions of the cited case law are squarely applicable to the fact of the present case." 14.1.1. A similar issue has also been examined in the case of Commissioner of Customs (Preventive), Bhubaneswar v. M/s. Essel Mining & Industries Ltd. [Final Order No. 77815 of 2024 dated 04.12.2024 in Customs Appeal No. 75881 of 2023 - CESTAT, Kolkata] wherein the Bench has held that: - "7.6. This Bench, in many of the matters including the matter of Cust....
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....y of the representative sample. The rationale underlying such procedural safeguard is neither incidental nor ornamental. It is founded upon elementary scientific principles that the characteristics of a stored sample are liable to undergo alteration with passage of time, particularly where the commodity involved comprises Iron Ore Fines, whose moisture content is inherently susceptible to gradual environmental variation. The procedural discipline prescribed under the Circular, therefore, constitutes an indispensable safeguard against deterioration of the evidentiary value of the sample itself. The Revenue, having failed to adhere to such prescribed procedure, cannot subsequently derive advantage from the consequences of its own inaction. 14.3. The reasoning adopted by the authorities below that delay became wholly irrelevant since the samples were ultimately tested on a dry-weight basis, after roasting at the temperature of 105 degrees Celsius, does not commend acceptance. Such reasoning, with respect, proceeds on an erroneous appreciation of the scientific process involved. Heating the sample at the laboratory stage merely eliminates the residual moisture present in the specime....
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....ed towards Fe content below 58%, leaving no discernible circumstance warranting a fresh scientific exercise. Once the representative samples had been duly analysed by the jurisdictional Customs laboratory and the results stood independently corroborated by both the Load Port and Discharge Port Test Reports as well, there existed no justification in law to discard those reports merely because they did not accord with the declaration initially furnished in the Shipping Bill or the Pre-Shipment Analysis Report. 16. Another point which merits discussion, is that the Final Assessment Order itself places reliance upon various judicial pronouncements to emphasize that, for the purpose of classification of Iron Ore Fines, evidentiary primacy must attach only to samples drawn in the presence of Customs in accordance with the procedure prescribed under the applicable BIS standards for representative sampling. The assessing officer has, in fact, categorically recorded at page 5 of the Final Assessment Order that "in case of the reports issued by CRCL, Vizag and CRCL, New Delhi, the aforesaid practice has been followed scrupulously" while conducting the analysis. Having thus accepted the pr....
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....law. 19. In the result, the appeal stands allowed, with consequential relief, if any, as per law. (Order pronounced in the open court on 05.08.2026) ============= Document 1 à¤à¤¾à¤°à¤¤ सरकार विस मनà¥à¤¤à¥à¤°à¤¾à¤²à¤¯, राजसà¥à¤µ विà¤à¤¾à¤— सीमा शà¥à¤²à¥à¤• पà¥à¤°à¤¯à¥‹à¤—शाला नदीमजिल, सीमा शà¥à¤²à¥à¤•à¤•à¤¾à¤°à¥à¤¯à¤¾à¤²à¤¯ फोरà¥à¤Ÿà¤à¤°à¤¿à¤¯à¤¾, विशाखापतनम- ई40 001 Gimermaral of Inde Shiaistry of Finance Department of Revenue CUSTOM HOUSE LABORATORY 5" FLOOR CUSTOM HOUSE, PORT AREA VISARHAPATNAM - 530 001. Tel/Fax: 0891-2562900 e-mail . chemical_examiner @ yahoo.com TC 1022 ULR NO-TC102212200000532F CHLVSKP/QR51 TEST REPORT Date: 26 09.2023 Date: 20.09.2023 Date: 24.08.2023 Date: 24.08.2023 Lab NO: VCL/EXP/4042 SB. No: 3437925 T.M....