2024 (5) TMI 1155 - AT - Customs

Classification of Iron Ore fines as Iron Ore lumps - Export - Valuations - Levy of export duty - Whether on reclassification of small quantity of Iron Ore fines as Iron Ore lumps on the ground that the export consignments contained certain Iron Ore particles of size 10 mm and above to the extent of 16.29% and more than 5%, would attract a different rate of duty as Iron Ore fines or otherwise - HELD THAT - In this case, going by the evidence on record, it is obvious that the consignment exported is for Iron Ore fines and in fact, there is penal clause for having any Iron Ore lump in the mixture. Therefore, it is not a case where the Iron Ore lump has been deliberately exported rather it is part of the Iron Ore fines due to certain involuntary processes undertaken in which such particles size also are shipped in. It is not the case of deliberate mixing of Iron Ore fines and Iron Ore lumps. In fact, if one considers BIS Standard there is already a tolerance limit provided for Iron Ore lump up to 5%, meaning that there could be inevitable Iron Ore lumps present even if the consignment is of Iron Ore fines. Therefore, the entire consignment of mixture having certain percentage of Iron Ore lumps has to be treated as Iron Ore fines only and cannot be artificially segregated into Iron Ore fines and lumps for the purpose of levying of export duty. Therefore, the demand confirmed and upheld by the Commissioner (Appeals) is not sustainable on this ground. Value Determination Issue - It is an admitted position that the price negotiated is based on certain parameters like moisture content, Fe content, etc., at the end of buyer s port and therefore, the final invoice may be higher or lower as compared to the provisional invoice. Based on the confirmed parameter verified at the receiver s port, final invoice has been raised for the consignments in question and the same amount has been realized as confirmed by BRC and accordingly, the transaction value has to be accepted in the instant case. Therefore, on this count also, there is no ground for rejecting the transaction value as also for demanding additional duty on this account. Therefore, on both counts, appeals are allowed.

Summary

Issues Involved: Classification of Iron Ore fines as Iron Ore lumps for the purpose of levying export duty, determination of value for export goods.

Classification Issue: The appellant, engaged in exporting Iron Ore fines, faced a demand for differential Customs duty due to a percentage of Iron Ore fines being classified as Iron Ore lumps. The question was whether this reclassification based on the size of Iron Ore particles above 10 mm would attract a different rate of duty. The appellant argued that the classification as Iron Ore lumps was incorrect under the Customs Tariff Act, citing General Rules for Interpretation. The Revenue contended that BIS standards required separate classification for Iron Ore fines and lumps based on particle size, with distinct duty rates and exemptions for each. The Tribunal analyzed the evidence and ruled that the consignment should be treated as Iron Ore fines, as the Iron Ore lumps were not deliberately mixed but part of the fines due to involuntary processes, and the demand was not sustainable.

Value Determination Issue: Regarding the re-determination of value for the exported Iron Ore, the department argued that the transaction value was not contested by the exporter. However, the appellant contested this, citing invoices and bank certificates to support the transaction value. They referred to Board Circulars and a relevant judgment to emphasize the importance of transaction value in valuation of export goods. The Tribunal found no grounds to reject the transaction value, as it was based on negotiated parameters like moisture and Fe content, and the final invoice matched the confirmed parameters at the receiver's port. Consequently, the Tribunal allowed the appeals on both counts, emphasizing the acceptance of the transaction value and rejecting the additional duty demand.

*(Operative Part of the Order was pronounced in the Open Court)*