2023 (8) TMI 947 - AT - Customs

Confiscation - redemption fine - penalty - illegal export by resorting to gross mis-declaration about the Fe content - Department issued the Show Cause Notice on the ground that in all the seven cases, the Fe content was more than 64% whereas the Appellant was claiming that in all these cases, the Fe content was between 63 to 63.97, hence less than Fe content of 64% - HELD THAT - The Fe content on Dry Weight basis, arrived at by the chemical examiner, vis-a-vis the Dry Weight Fe arrived at by the Private laboratories, engaged by the Appellant, have to be considered for this purpose. Therefore, the contention of the Appellant that only the Wet Weight Fe is required to be considered for this purpose cannot be accepted. It is an admitted fact that when the iron ore is received at the port, it is in wet condition with moisture and other impurities. Therefore, the Fe content of Wet Iron Ore is to be taken to arrive at the Fe content of the Dry metric ton as per the formula. On its own, the Wet Metric Ton Fe by itself cannot be considered in this case as the issue pertains to Fe content on DMT basis. From the test reports relied upon by the Department, which have been issued by the chemical examiner, it is seen that they have simply removed the moisture content. They have only taken into consideration the moisture content and arrived at the Fe content of the Dry Metric Tons. From the Test Reports of CRCL, it is seen that they have not considered the content of any other impurities which may be in the iron ore while arriving at the at the Fe content of the dry metric tons. For the samples drawn by the appellant and given to the Private Laboratories, they have taken up the Test and then given the test results within a period of 6 to 9 days. In the case of Test Reports given by the Chemical Examiner, it is seen that the Tests have conducted with a delay of 3 to 4 months - Department, even after receiving all the documentary evidence, including the Test Report of Private Labs, BRC, etc. from the Appellant, in June 2013, failed to complete the finalization of the assessment of the Shipping Bills. It is seen that the Appellant has been regularly taking up with the Department and higher officials, including the Ministry in 2013, 2014, 2015, and 2016 to complete the assessment process but nothing was done by the Department till they issued the Show Cause Notice in August 2018. The Appellant has taken the Fe content of DMT given by the Private Laboratories and has raised the bill based on such DMT values on the overseas importer. Since initially the Appellant has taken the stand that Fe Content on DMT basis is 63 in respect of all the consignments, this resulted in higher payment by the overseas importer. On such receipt of excess amount/ additional amount from the overseas importer, the Appellant has paid the differential export duty. There is no dispute on this issue. This fortifies the Appellant's argument that the overseas importer has accepted the DMT Fe content as given by the private laboratories and made the payment. It is seen that the Test Report itself was generated with a delay of 105 to 138 days, and even after the Test was completed in 2010, the Appellant was never provided the copies of the Test Report till they were annexed to the Show Cause Notice issued in 2018. In such a case, there was scope for the Appellant to approach any other authority to get the consignment retested or to question the Test Report given by the CRCL. Appeal allowed.

Summary

Issues Involved:
1. Determination of Iron Ore Fe content for export.
2. Validity and reliability of test reports from different laboratories.
3. Compliance with procedural requirements for finalizing export assessments.
4. Consideration of payments received based on Fe content.

Summary:

Issue 1: Determination of Iron Ore Fe Content for Export
The Appellants exported Iron Ore Fines declaring the Fe content to be less than 64%. The Department, based on CRCL test reports, claimed the Fe content was over 64%, requiring exports through MMTC Ltd. The Adjudicating Authority ordered confiscation of the goods and imposed penalties, which the Appellant contested.

Issue 2: Validity and Reliability of Test Reports from Different Laboratories
The Appellant argued that their test reports from government-recognized private laboratories showed Fe content below 64%, while the CRCL reports, delayed by 105 to 138 days, indicated higher Fe content. The Appellant contended that the CRCL reports only considered moisture content and not other impurities, making private lab reports more reliable. The Tribunal noted that the private labs completed tests within 6 to 9 days, making their results more accurate due to the proximity to the sample collection date.

Issue 3: Compliance with Procedural Requirements for Finalizing Export Assessments
The Appellant provided all necessary documents for finalizing the provisional assessments in June 2013, but the Department delayed finalization and issued the Show Cause Notice in August 2016, along with the CRCL test reports. The Tribunal found the Department's delay unjustified and noted that the Appellant was deprived of the opportunity to challenge the CRCL reports due to the delayed provision of these reports.

Issue 4: Consideration of Payments Received Based on Fe Content
The Appellant received payments from overseas importers based on the Fe content determined by private laboratories, and paid differential export duty on higher amounts realized. The Tribunal emphasized that the overseas importer's acceptance of the private lab's Fe content and the corresponding payments supported the Appellant's case.

Conclusion:
The Tribunal set aside the Order-in-Original (OIO) and allowed the Appellant's appeal, granting consequential relief as per law, based on the reliability of the private lab reports, procedural delays by the Department, and the payments received based on the private lab's Fe content.