2024 (12) TMI 801 - HC - Customs

Determination of whether Export duty is payable - validity of placing reliance on the contractual specifications, where the export is being made under contract specifications - HELD THAT - It is not found that revenue though had the test report as a document submitted for final assessment, accepted the final assessment made on basis of information obtained from the private test report. This crystalizes into a position on facts that there was no dispute regarding the private test report inasmuch as, no doubt can be cast on it. The exporter preferred appeal. Revenue supported the final assessment order. We have been shown that the first appellate authority found from the final assessment order, material relied upon to levy the demand of export duty was, inter alia, the private test report. It appears, both the assessing authority as well as the first appellate authority proceeded on DMT basis to levy and sustain demand of export duty. There have been submissions made, based on information appearing from the report dated 7th July, 2017 that on drawing of samples as on 31st March, 2017, there is indication the test was conducted in July. If that is not so, there is no indication from the report as to when the test was conducted. All this inclines to accept petitioner s contention that the report is itself doubtful. Revenue relies on circular dated 17th November, 2014. In paragraph-3 it was said that the matter had been examined. In order to bring in uniformity, transparency and consistency in assessment of export of iron ore fines and pellets, it had been decided on procedure, given in the circular. The orders made by the assessment authority, first appellate authority and the Tribunal also taken into account. There is no indication of any controversy regarding application of the circular, as appearing from said orders. The question is answered in the negative and in favour of respondent - appeal dismissed.

Summary

Issues:
Determining export duty based on contractual specifications.
Validity of final assessment order for export duty.
Reliance on private test report for assessment of export duty.
Consistency in assessment procedures for iron ore fines.
Applicability of different methods for determining iron content in export duty assessment.

Issue 1: Determining export duty based on contractual specifications
The appeal was filed by the revenue challenging the order of the Customs, Excise and Service Tax Appellate Tribunal regarding the determination of export duty based on contractual specifications. The question raised was whether reliance on contractual specifications is permissible for determining export duty. The Tribunal found that the goods entered for export attracted nil export duty based on the specifications.

Issue 2: Validity of final assessment order for export duty
The final assessment order was made after provisional assessment pending submission of required documents. The revenue argued that the Tribunal erred in not considering a test report that favored the revenue. They relied on a previous decision and the contract specifications which required supply on a Dry Metric Ton (DMT) basis. The respondent, however, argued that the final assessment was based on the private test report and upheld by the first appellate authority.

Issue 3: Reliance on private test report for assessment of export duty
The respondent contended that the final assessment order was based on the private test report and that the revenue had accepted this assessment. They argued that the revenue cannot take a different position before the Tribunal. The respondent highlighted the principle that a party cannot take inconsistent positions in court, citing relevant case law.

Issue 4: Consistency in assessment procedures for iron ore fines
The respondent argued that the iron ore fines should be assessed based on Fe content at Wet Metric Ton (WMT) basis, which was below 58%, making the goods exempt from export duty. They emphasized the importance of using the correct method for determining iron content for export duty assessment and cited relevant judgments to support their position.

Issue 5: Applicability of different methods for determining iron content in export duty assessment
The respondent further argued that the export duty should be levied on a WMT basis, while the contract was based on DMT weight. They emphasized the distinction between methods used for trade and for export duty assessment. The Tribunal ultimately ruled in favor of the respondent, rejecting the revenue's contentions and upholding the assessment based on the private test report.

In conclusion, the High Court dismissed the appeal and answered the question regarding export duty determination in the negative and in favor of the respondent, emphasizing the importance of consistency in assessment procedures and the reliance on the private test report for the final assessment order.