2017 (6) TMI 611 - AT - Customs

Valuation - export duty on iron ore - Wet Metric Ton (WMT) basis - Held that - reliance placed in the case of Commr. of Customs (Port), Kolkata Vs. SESA GOA LTD. 2014 (8) TMI 213 - CESTAT KOLKATA , where it was held that the determination of export duty on the basis of dry weight or wet weight is irrelevant as the duty to be computed on the value of the goods in dry weight condition, as agreed by the parties - appeal rejected - decided against Revenue.

Summary

Issues:
1. Determination of duty on Wet Metric Ton (WMT) basis for exportation of Iron Ore Fines.
2. Interpretation of contract terms for determining the value of exported goods.
3. Compliance with Customs Valuation Rules, 2007 and principles of natural justice in enhancing the value of exported goods.

Analysis:
1. The appeal before the Appellate Tribunal concerned the determination of duty on a Wet Metric Ton (WMT) basis for the exportation of Iron Ore Fines. The Revenue contended that duty should be charged based on the Iron Ore along with its moisture content. The Revenue relied on a Supreme Court decision to support their argument. However, the Tribunal referred to a previous case involving Commr. of Customs (Port), Kolkata Vs. SESA GOA LTD., where it was held that the duty is to be computed based on the value of the goods in dry weight condition as agreed by the parties. The Tribunal concluded that the determination of export duty on the basis of dry weight or wet weight is irrelevant when duty is levied on the transaction value agreed between the parties. Therefore, the Tribunal rejected the Revenue's appeal on this issue.

2. Another issue in the case was the interpretation of contract terms for determining the value of the exported goods. The Commissioner (Appeals) had allowed the appeal filed by the Respondent, stating that the value of the goods should be determined based on the dry metric ton quantities as specified in the contract, rather than the wet metric ton quantities. The Commissioner (Appeals) found that the lower authority had erred in not following the contract terms and had enhanced the value of the goods arbitrarily without providing any evidence or opportunity for a personal hearing. The Tribunal upheld the Commissioner (Appeals) decision, emphasizing that the value should be determined as per the terms of the contracts on a dry metric ton basis. The Tribunal found the enhancement to be unsustainable and set it aside, citing violations of Customs Valuation Rules, 2007 and the principle of natural justice.

3. The third issue revolved around compliance with Customs Valuation Rules, 2007 and principles of natural justice in enhancing the value of the exported goods. The Commissioner (Appeals) had noted that the enhancement of the value of the goods was done arbitrarily without evidence or providing an opportunity for a personal hearing, which was deemed violative of Customs Valuation Rules, 2007 and the principle of natural justice. The Tribunal concurred with the Commissioner (Appeals) and rejected the Revenue's appeal, emphasizing the importance of adhering to the rules and principles governing such enhancements.

In conclusion, the Appellate Tribunal dismissed the Revenue's appeal based on the issues of duty determination, interpretation of contract terms, and compliance with Customs Valuation Rules and principles of natural justice. The Tribunal's decision was guided by previous case law and a thorough analysis of the facts and legal principles involved in the case.