2019 (5) TMI 491 - AT - Customs

Liability of Export Duty - Iron Ore Fines - N/N. 15/2016-Cus dt. 01/03/2016 - quantum of Fe content - liability of export duty of 30% if Fe content is more than 58% - HELD THAT - The Commissioner (Appeals) took the view that the Fe content is to be estimated on the basis of discharge Port Report by ignoring the report of the Chemical Examiner. It is evident that copy of test report of Chemical Examiner, relied by the Original Customs Authority for assessment, has not been made available to the respondent. Before relying on such a report, the basic principles of natural justice require that the respondent, should be given a chance to rebut the report of the chemical examiner including the misgivings on the manner of drawing of samples and testing thereof. The assessment is required to be done Denovo after giving a copy of the Chemical Examiner Report along with the copy of Test Memo prepared by Customs at the time of drawing the samples - matter is remanded to Original Authority for Denovo Assessment.

Summary

Issues:
Dispute over export duty liability on Iron Ore Fines based on Fe content discrepancy between load port and discharge port analysis reports. Challenge of relying on Chemical Examiner's report without providing a copy to the respondent. Allegations of improper sample drawing and testing procedures. Interpretation of Customs Notification No.15/2016-Cus regarding Fe content thresholds for duty exemption.

Analysis:
The appeal concerned the disagreement between the load port and discharge port analysis reports regarding the Fe content of exported Iron Ore Fines. The respondent declared 57.30% Fe content based on the load port analysis, while the discharge port analysis showed 57.53%. However, the Chemical Examiner's report indicated a significantly higher Fe content of 62.4%, leading to a dispute over the assessment of export duty.

The Commissioner (Appeals) overturned the Original Authority's decision, citing procedural irregularities in the sample drawing process and the lack of disclosure of the Chemical Examiner's report to the respondent. The Commissioner emphasized the importance of adhering to Indian Standards and Customs guidelines in sample collection for accurate assessment.

The Tribunal acknowledged the discrepancies and procedural lapses in the assessment process. It highlighted the respondent's right to challenge the Chemical Examiner's report and emphasized the principles of natural justice, requiring the respondent to have an opportunity to contest the report's findings, including through cross-examination if necessary.

Consequently, the Tribunal set aside the impugned order and remanded the matter to the Original Authority for a Denovo Assessment. The Tribunal directed the provision of the Chemical Examiner's report and Test Memo to the respondent for a fair reassessment, ensuring transparency and adherence to proper procedures in determining the export duty liability based on the Fe content of the Iron Ore Fines.

In conclusion, the judgment focused on upholding procedural fairness, ensuring the respondent's right to challenge critical reports affecting export duty assessment, and emphasizing the need for accurate and transparent sample collection and testing procedures in line with established standards and guidelines.