2023 (9) TMI 827 - AT - Customs

Classification and rate of duty payable - whether for deciding the classification and rate of duty payable, the Fe %age of Iron Ore Fines is to be determined on Dry Metric Ton (DMT) basis or Wet Metric Ton (WMT) basis? - HELD THAT - The issue stands decided as early as 1997 by Hon ble Supreme Court in the case of UNION OF INDIA VERSUS GANGADHAR NARSINGDAS AGGARWAL 1995 (8) TMI 73 - SUPREME COURT and subsequent CBEC Circular No. 4/2012- Cus dated 17.12.2012 which was issued for adoption of uniform Customs procedure in all Customs Houses. In the said Circular, it was stipulated that for the purpose of charging of export duty the assessment of Iron ore, determination of Fe contents is required to be made on Wet Metric Ton (WMT) basis which in other words mean deducting the weight of all impurities (inclusive of moisture) out of the total weight/Gross Weight to arrive at Net Fe contents. While finalizing the assessment of subject S/B, the assessing officers have overlooked the most important aspect of assessment, namely, determination of Fe content for the purpose of classification/rate of duty applicable - This method of determining Fe content in WMT is elaborately by discussed by Hon ble High Court of Bombay in case of V M Salgaokar Brothers 2022 (9) TMI 1306 - BOMBAY HIGH COURT . The Court mentions that it is universally recognised and followed for determination of Iron content in natural iron fines. The assessing officers directed to determine Fe content on WMT basis by deducting the moisture given in the test reports of NABL accredited government approved Private Laboratory - it is directed to convert the %age of Fe on DMT basis to %age of Fe on WMT basis by applying the universally recognised formula for determination of classification of IOF exported - it is directed to finalise the assessments accordingly. The impugned orders are set aside - Appeal allowed.

Summary

Issues involved:
The issues in dispute in both appeals are common, involving the determination of Fe content in Iron Ore Fines for the purpose of classification and rate of duty payable.

Appeal No. C/75008/2021:
The appeal challenges the Order-in-Appeal dated 17.09.2020 passed by the Commissioner of Customs (Appeals), Kolkata. The Commissioner upheld the Order of Finalisation of Assessment of a specific Shipping Bill, basing the assessment on the Load Port Test Report and the Transaction Value on DMT price as per contract.

Appeal No. C/75450/2023:
This appeal contests the Order-in-Appeal dated 31.12.2020 passed by the Commissioner(Appeals), GST, CX and Customs, Bhubaneswar. The Commissioner upheld the assessment of Iron Ore Fines on DMT basis for the purpose of classification, despite the goods being presented for export in moist condition.

Key Details:
The Tribunal examined whether the Fe %age of Iron Ore Fines should be determined on Dry Metric Ton (DMT) basis or Wet Metric Ton (WMT) basis for classification and duty purposes. The Supreme Court's 1997 ruling and subsequent CBEC Circular mandated Fe content determination on WMT basis, deducting impurities like moisture. Various judicial pronouncements and circulars reinforced this method for duty assessment.

Judicial Precedents:
Several cases, including SOCIEDADE DE FOMENTO INDUSTRIAL PVT. LTD., Mineral Enterprises Ltd., and others, emphasized calculating Fe content on WMT basis for accurate duty assessment. The Tribunal consistently supported this approach, aligning with international norms and customs regulations.

Recent Developments:
A 2022 Supplementary Note to the Indian Customs Tariff specified that Fe content for products under heading 2601 should be calculated on DMT basis from 1.5.2022. Prior to this, WMT basis was applicable. A High Court order clarified that assessments pre-1.5.2022 should follow WMT basis for Fe content calculation.

Tribunal's Decision:
The Tribunal directed assessing officers to determine Fe content on WMT basis by deducting moisture from NABL accredited test reports. Fe %age on DMT basis should be converted to WMT basis using a standard formula for accurate classification. The impugned orders were set aside, and appeals allowed with consequential relief.

Conclusion:
The Tribunal's decision emphasized adherence to established norms for determining Fe content in Iron Ore Fines, ensuring accurate classification and duty assessment based on WMT basis calculations.