2009 (4) TMI 369 - AT - Customs

Customs exemption- Notification No. 62/2007-Cus dated 3-5-2007- The appellant filed Shipping Bill for export of Iron Ore Fines claiming exemption of export duty in excess of Rs.50/- per MT in terms of Customs Notification No. 62/2007-Cus dated 3-5-2007. The Shipping Bill was assessed provisionally on payment of duty @ Rs.50/- per MT pending test report. In terms of the exemption Notification, the iron content should be less than 62%. The samples were drawn and on test, it was found that they contained Fe content of more than 62%. Consequently, the Original Authority denied the exemption and demanded the differential duty of Rs.12,00,000/-. The appellant approached the Commissioner (Appeals). The Commissioner (Appeals) confirmed the impugned order of the lower authority. Held that- If there is a long delay in testing the sample, due to evaporation of moisture, the test results would show increase in iron content, which will be unfavorable to the party. In these circumstances, we have to hold that the percentage declared by the appellant and confirmed at the destination port has to be taken as valid. Hence, we allow the appeal with consequential relief.

Summary

Issues:
1. Exemption of export duty on Iron Ore Fines.
2. Discrepancy in iron content test results.
3. Denial of re-test request.
4. Principles of Natural Justice violation.

Analysis:
1. The appellant filed a Shipping Bill for export of Iron Ore Fines claiming exemption of export duty as per Customs Notification No. 62/2007-Cus. The iron content in the samples was found to be more than 62% by the Custom House Laboratory, leading to a demand for differential duty of Rs.12,00,000. The appellant contested this, citing a test report by an accredited laboratory and an Inspection Certificate indicating iron content below 62%. The appellant argued for the acceptance of the declared percentage, emphasizing the need for adherence to CBEC's instructions and judicial precedents supporting re-testing requests.

2. The Tribunal noted the discrepancy in the test results, with the appellant's certificate showing 62% iron content, while the Custom House Laboratory indicated a higher percentage. The delay in conducting the test and the potential impact of evaporation on the iron content were highlighted. The Tribunal found the denial of the re-test request as a violation of the Principles of Natural Justice. Considering the time-sensitive nature of such tests, the Tribunal ruled in favor of accepting the percentage declared by the appellant and confirmed at the destination port, granting relief to the appellant based on this discrepancy.

3. The Tribunal's decision emphasized the importance of promptly addressing re-test requests in cases of conflicting test results, especially when significant financial implications are involved. By upholding the appellant's declared percentage and criticizing the delay and denial of re-testing, the Tribunal underscored the need for procedural fairness and adherence to established principles of natural justice in customs matters. The judgment serves as a reminder of the duty of authorities to ensure transparency and procedural correctness in resolving disputes related to duty exemptions and test result discrepancies in export transactions.