2014 (8) TMI 213 - AT - Customs

Valuation of export of iron-ore fines - levy of export duty is on ad valorem basis - Department proposed to calculate the duty on the wet weight - Held that - Hon ble Supreme Court has decided the question whether for the quantification of export duty chargeable on the specific criterion of weight, as the basis, be on the dry weight or on wet weight of the iron-ore fines. Needless to say, when the charge of export levy was on specific rate basis, that is on the weight of the iron-ore, irrespective of its value, then the basis of dry or wet weight, of the goods become relevant for determination of the quantum of duty. Whereas, in the present case, the duty is levied on the basis of the transaction value agreed between the Respondent and the overseas purchaser on the criterion of dry weight of iron ore fines. - Therefore decision in the case of UOI Vs. Gangadhar Narsingdas Agarwal 1995 (8) TMI 73 - SUPREME COURT OF INDIA distinguished. Therefore, the determination of export duty on the basis of dry weight or wet weight, in our opinion, is irrelevant as the duty to be computed on the value of the goods in dry weight condition, as agreed by the parties. - Decided against Revenue.

Summary

Issues:
- Dispute over calculation of export duty on iron-ore fines based on dry weight or wet weight basis.
- Interpretation of contract terms for determining FOB value and assessable value for charging duty.

Issue 1: Calculation of Export Duty
The Appeals filed by the Revenue concern the calculation of export duty on iron-ore fines exported by the Respondent. The Department proposed to calculate the duty on the wet weight basis, contrary to the contract terms based on dry weight per metric ton. The ld. Commissioner (Appeals) ruled in favor of the Respondent, emphasizing that the duty should be charged based on the dry weight as per the contract terms. The Revenue contested this decision, citing a Circular and a Supreme Court judgment. However, the Tribunal noted that the duty is on an ad valorem rate basis since June 2008, rendering the wet weight calculation irrelevant. The Tribunal upheld the ld. Commissioner's decision, stating that the duty must be computed on the value of the goods in dry weight condition as per the contract, making the Revenue's Appeals meritless.

Issue 2: Interpretation of Contract Terms
The second point of contention in the Appeals involved the interpretation of contract terms for determining the FOB value and assessable value for charging duty. The ld. Commissioner (Appeals) analyzed the terms of the contract and concluded that the FOB value should be calculated based on dry metric ton quantities, as specified in the contract. The ld. Commissioner also determined that duty should be charged based on the FOB price of the goods, contrary to earlier findings. The Tribunal reviewed the findings and upheld the decision, stating that the duty must be charged on the FOB price of the goods as per the contract terms. Additionally, the Tribunal ordered the refund of duties paid on short-shipped quantities. The Revenue's challenge based on a Supreme Court judgment was dismissed as irrelevant to the ad valorem rate basis of duty calculation. Consequently, the ld. Commissioner's Order was upheld, and the Revenue's Appeals were dismissed.

In conclusion, the Tribunal resolved the issues by emphasizing the importance of adhering to contract terms for calculating export duty and assessing values for duty charges. The judgment clarified the basis for duty calculation and upheld the ld. Commissioner's decision in favor of the Respondent, dismissing the Revenue's Appeals as lacking merit.